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Claims that Amazon has a monopoly on anything need at a bare minimum to engage carefully with antitrust literature on market definition. If you are going to sa

Claims that Amazon has a monopoly on anything need at a bare minimum to engage carefully with antitrust literature on market definition. If you are going to say they monopolize X, then X needs to be a plausibly defined market. Example: they have a 40% share of online retail and you want to assert that that constitutes a monopoly. Is “online retail” a relevant market as consumers see it? (Probably not, bc they retain the ability to go to stores in person!) Is it a relevant market in the sense that Amazon has the ability to exert upward pressure on prices in that market? (Surely not. The search costs in online goods markets are zero.) You are going to have a very hard time arguing that they monopolize that market (or any other) if you can’t at least define it, show that your definition is credible, and show that they exert some market power in that market. When you fail to engage with the issue of market definition seriously, you run into the problem the government did recently when they made a monopolization claim against Facebook. The judge specifically called them out for failing to define the market they were going to accuse Facebook of monopolizing. That was in this field an embarrassingly basic error to make. (They did file an amended complaint but I still expect they will lose this case.) Needless to say this author is totally ignorant of this literature. Source: economics professor who teaches antitrust to undergrads and grads.

pwillia7 4y ago
To run afoul of antitrust law you don't need to be a monopoly though, you only need to engage in monopolistic behavior to harm competition and/or consumers -- at least if you buy another company.
makeitdouble 4y ago
I think you are right, and that makes it scarier. Either, as you say, high profile year long researched lawsuits are directed by incompetent people, either the standard set to define a monopoly has become irrelevant (which could also be because of the companies adjusting for them to make them irrelevant to their activities). Which could explain why these kind of regulation only seem to be coming from the EU and a bit from SEA. Your insights reads to me like the US doesn't have a clear path forward at this point.
- huitzitziltzin 4y ago
  > Your insights reads to me like the US doesn't have a clear path forward at this point Market concentration is a huge problem in the US economy and makes many foods much more expensive. Take hospital services for example. My claim is that a ton of time and energy is wasted focusing on Amazon as an example of a firm which is a monopoly, which it simply is not. I would love to see vigorous enforcement of existing rules but it should be directed at markets where there is a plausible case to be made.
Retric 4y ago
The definition of a marker isn’t arbitrary, the question is what’s an equivalent good and where can you get it. If you’re buying lumber then going to GameStop isn’t going to work. That alone destroys the argument that retail is a single uniform market. Instead there are thousands of different markets making up retail including everything from ebooks, cars, bedding, and so forth. Amazon only needs to have a monopoly on any one of those and then leverage that monopoly illegally to get into hot water. Considering everything they bundle into Amazon Prime they are on serious thin ice.
- huitzitziltzin 4y ago
  > The definition of a marker isn’t arbitrary, the question is what’s an equivalent good and where can you get it. Correct. Exactly my point. > That alone destroys the argument that retail is a single uniform market. This is not my claim. My claim is that (at a bare minimum) the market Amazon competes in includes Walmart, target and other large retailers. The market is not “online retail.” > Considering everything they bundle into Amazon Prime they are on serious thin ice. No. Bundling is a totally separate antitrust issue. Also none of the items in the Prime bundle raise antitrust concerns. If you want an example of a tech firm taking a serious antitrust risk with a bundled good, the best example right now is Microsoft teams.
  - Retric 4y ago
    > My claim is that (at a bare minimum) the market Amazon competes in includes Walmart, target and other large retailers. The market is not “online retail.” Walmart and Amazon do compete in many markets, but that doesn’t mean Walmart competes in every market that Amazon does. Rare books are available from Amazon but not Walmart. Also online retail is the only market in areas that are only served by online retail. Just as it’s irrelevant if there are multiple ISP’s nationally or internationally if only one ISP serves your island. > Also none of the items in the Prime bundle raise antitrust concerns. It’s not that Prime is inherently a problem, the issue is it meets the second half of an anti trust case where if they have any actual monopoly then proving unfair competition becomes easy. Free shipping is a great tag line, but risky from a legal standpoint.
andrewjl 4y ago
On your point re market power, from Amazon’s Antitrust Paradox. > These missteps suggest a failure to appreciate two critical aspects of Amazon’s practices: (1) how steep discounting by a firm on a platform-based product creates a higher risk that the firm will generate monopoly power than discounting on non-platform goods and (2) the multiple ways Amazon could recoup losses in ways other than raising the price of the same e-books that it discounted. > On the first point, the government argued that Amazon was not engaging in predation because in the aggregate,Amazon’s e-books business was profitable. This perspective overlooks how heavy losses on particular lines of e-books (bestsellers, for example, or new releases) may have thwarted competition, even if the e-books business as a whole was profitable. That the DOJ chose to define the relevant market as e-books—rather than as specific lines, like bestseller e-books—reflects a deeper mistake: the failure to recognize how the economics of platform-based products differ in crucial ways from non-platform goods. 254 As a result, the DOJ analyzed the e-book market as it would the market for physical books. > One indication of this failure to appreciate the difference between physical books and e-books is that the government and Judge Cote treated Amazon’s below-cost pricing as loss leading,255 rather than as predatory pricing.256 The difference between loss leading and predatory pricing is not spelled out in law, but the distinction turns on the nature of the below-cost pricing, specifically its intensity and the intent motivating it. Judge Cote’s use of “loss leading” revealed a view that “Amazon’s below-cost pricing was (a) selective rather than pervasive, and (b) not intended to generate monopoly power.”257 On this view, Amazon’s aim was to trigger additional sales of other products sold by Amazon, rather than to drive out competing e-book sellers and acquire the power to increase e-book prices.258 In other words, because Amazon’s alleged short-term aim was to sell more e-readers and e-books—rather than to harm its rivals and raise prices—its conduct is considered loss leading rather than predatory pricing. What both the DOJ and the district court missed, however, is the way in which below-cost pricing in this instance entrenched and reinforced Amazon’s dominance in ways that loss leading by physical retailers does not. [1] https://www.yalelawjournal.org/note/amazons-antitrust-paradox https://www.yalelawjournal.org/note/amazons-antitrust-parado...
- huitzitziltzin 4y ago
  That article is widely derided on the economics side of antitrust. I don’t know anyone who thinks it made a serious persuasive argument. Instead the author started with “Amazon bad” and worked backward to a set of implausible premises attempting to justify that conclusion (and failing, in my view). I voted happily for Biden but Lina Khan is an appointment he never should have made. Indeed, she is reported to have bad relationships with most of the professional staff inside the FTC, probably because she does not take their actual expertise seriously.
Jasper_ 4y ago
This was literally the same rhetoric used by Ma Bell in that antitrust case: "You think digital communication is a market? It's not! Communication is the market, and consumers already have the option of mailing a letter, or messaging by telegram!" Defendants always want the market as wide as possible (to look like they're just a small fish in a wide ocean) while prosecution wants the market as narrow as possible. This will get sorted out. The big difference between Ma Bell and now is that antitrust is graded on the consumer welfare standard, which hilariously says that as long as prices go down, it's not an antitrust violation.

pwillia7 4y ago

To run afoul of antitrust law you don't need to be a monopoly though, you only need to engage in monopolistic behavior to harm competition and/or consumers -- at least if you buy another company.

makeitdouble 4y ago

I think you are right, and that makes it scarier. Either, as you say, high profile year long researched lawsuits are directed by incompetent people, either the standard set to define a monopoly has become irrelevant (which could also be because of the companies adjusting for them to make them irrelevant to their activities). Which could explain why these kind of regulation only seem to be coming from the EU and a bit from SEA. Your insights reads to me like the US doesn't have a clear path forward at this point.

huitzitziltzin 4y ago
> Your insights reads to me like the US doesn't have a clear path forward at this point Market concentration is a huge problem in the US economy and makes many foods much more expensive. Take hospital services for example. My claim is that a ton of time and energy is wasted focusing on Amazon as an example of a firm which is a monopoly, which it simply is not. I would love to see vigorous enforcement of existing rules but it should be directed at markets where there is a plausible case to be made.

Retric 4y ago

The definition of a marker isn’t arbitrary, the question is what’s an equivalent good and where can you get it. If you’re buying lumber then going to GameStop isn’t going to work. That alone destroys the argument that retail is a single uniform market. Instead there are thousands of different markets making up retail including everything from ebooks, cars, bedding, and so forth. Amazon only needs to have a monopoly on any one of those and then leverage that monopoly illegally to get into hot water. Considering everything they bundle into Amazon Prime they are on serious thin ice.

huitzitziltzin 4y ago
> The definition of a marker isn’t arbitrary, the question is what’s an equivalent good and where can you get it. Correct. Exactly my point. > That alone destroys the argument that retail is a single uniform market. This is not my claim. My claim is that (at a bare minimum) the market Amazon competes in includes Walmart, target and other large retailers. The market is not “online retail.” > Considering everything they bundle into Amazon Prime they are on serious thin ice. No. Bundling is a totally separate antitrust issue. Also none of the items in the Prime bundle raise antitrust concerns. If you want an example of a tech firm taking a serious antitrust risk with a bundled good, the best example right now is Microsoft teams.
- Retric 4y ago
  > My claim is that (at a bare minimum) the market Amazon competes in includes Walmart, target and other large retailers. The market is not “online retail.” Walmart and Amazon do compete in many markets, but that doesn’t mean Walmart competes in every market that Amazon does. Rare books are available from Amazon but not Walmart. Also online retail is the only market in areas that are only served by online retail. Just as it’s irrelevant if there are multiple ISP’s nationally or internationally if only one ISP serves your island. > Also none of the items in the Prime bundle raise antitrust concerns. It’s not that Prime is inherently a problem, the issue is it meets the second half of an anti trust case where if they have any actual monopoly then proving unfair competition becomes easy. Free shipping is a great tag line, but risky from a legal standpoint.

andrewjl 4y ago

On your point re market power, from Amazon’s Antitrust Paradox. > These missteps suggest a failure to appreciate two critical aspects of Amazon’s practices: (1) how steep discounting by a firm on a platform-based product creates a higher risk that the firm will generate monopoly power than discounting on non-platform goods and (2) the multiple ways Amazon could recoup losses in ways other than raising the price of the same e-books that it discounted. > On the first point, the government argued that Amazon was not engaging in predation because in the aggregate,Amazon’s e-books business was profitable. This perspective overlooks how heavy losses on particular lines of e-books (bestsellers, for example, or new releases) may have thwarted competition, even if the e-books business as a whole was profitable. That the DOJ chose to define the relevant market as e-books—rather than as specific lines, like bestseller e-books—reflects a deeper mistake: the failure to recognize how the economics of platform-based products differ in crucial ways from non-platform goods. 254 As a result, the DOJ analyzed the e-book market as it would the market for physical books. > One indication of this failure to appreciate the difference between physical books and e-books is that the government and Judge Cote treated Amazon’s below-cost pricing as loss leading,255 rather than as predatory pricing.256 The difference between loss leading and predatory pricing is not spelled out in law, but the distinction turns on the nature of the below-cost pricing, specifically its intensity and the intent motivating it. Judge Cote’s use of “loss leading” revealed a view that “Amazon’s below-cost pricing was (a) selective rather than pervasive, and (b) not intended to generate monopoly power.”257 On this view, Amazon’s aim was to trigger additional sales of other products sold by Amazon, rather than to drive out competing e-book sellers and acquire the power to increase e-book prices.258 In other words, because Amazon’s alleged short-term aim was to sell more e-readers and e-books—rather than to harm its rivals and raise prices—its conduct is considered loss leading rather than predatory pricing. What both the DOJ and the district court missed, however, is the way in which below-cost pricing in this instance entrenched and reinforced Amazon’s dominance in ways that loss leading by physical retailers does not. [1] https://www.yalelawjournal.org/note/amazons-antitrust-paradox https://www.yalelawjournal.org/note/amazons-antitrust-parado...

huitzitziltzin 4y ago
That article is widely derided on the economics side of antitrust. I don’t know anyone who thinks it made a serious persuasive argument. Instead the author started with “Amazon bad” and worked backward to a set of implausible premises attempting to justify that conclusion (and failing, in my view). I voted happily for Biden but Lina Khan is an appointment he never should have made. Indeed, she is reported to have bad relationships with most of the professional staff inside the FTC, probably because she does not take their actual expertise seriously.

Jasper_ 4y ago

This was literally the same rhetoric used by Ma Bell in that antitrust case: "You think digital communication is a market? It's not! Communication is the market, and consumers already have the option of mailing a letter, or messaging by telegram!" Defendants always want the market as wide as possible (to look like they're just a small fish in a wide ocean) while prosecution wants the market as narrow as possible. This will get sorted out. The big difference between Ma Bell and now is that antitrust is graded on the consumer welfare standard, which hilariously says that as long as prices go down, it's not an antitrust violation.