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This is straight out of FTC Chairwoman Lina Khan’s original article Amazon’s Antitrust Paradox https://www.yalelawjournal.org/note/amazons-antitrust-paradox htt
by yonran 3y ago
This is straight out of FTC Chairwoman Lina Khan’s original article Amazon’s Antitrust Paradox https://www.yalelawjournal.org/note/amazons-antitrust-paradox https://www.yalelawjournal.org/note/amazons-antitrust-parado.... Amazon is willing to match any competitor’s price in order to build market share while not triggering predatory pricing antitrust review (which did not consider network effects). But the price is low only as long as the competitor is there. When small competitors finally give up (since they cannot offer the same free shipping variety as Amazon) and drop out of the market, Amazon will raise the price in the long run and capture monopolistic profits. Repeat for each new market that they compete in.
- obblekk 3y agoThis is important. Not just that amzn algorithmically finds the optimal market clearing price. They may be finding an optimal dumping price to reduce competition and then an optimal profit maximizing price to capture monopoly profits. If true, this would be a clear violation of anti trust law, despite being algorithmically implemented at scale. Unclear if intentionality matters for the law - even if the algorithms learned this behavior implicitly as the solution to a legal objective, it could be illegal.
- aga98mtl 3y agoThis theorical talk of monopolistic profits does fit the market reality. There are at least a dozen retailers for every type of product Amazon sells. Can you provide an example of a product where Amazon enjoys a monopoly (or even something close to a monopoly)?
- azemetre 3y agoWell what is your definition of monopoly? Amazon, like other big tech, like to use their highly profitable BUs (Amazon AWS, Google ads, Meta ads) to prop up other failing BUs. This is extremely anti competitive. We should not be shepherding a new tech baron era, but enforce competition in markets. Competition should be the highest thing we value in an economy. This experiment of consolidations, mergers, and acquisitions since the 80s has been disastrous. We're reaching the point where we should break up nearly every multinational conglomerate, they've abused too much and suffered too little.
- scarface_74 3y agoWhat definition of “market” would you classify Amazon as a monopoly?
- timmaxw 3y agoyonron's comment made a specific claim: "Amazon will raise the price in the long run and capture monopolistic profits." aga98mtl pointed out this isn't actually true in practice. It sounds like you're describing a different form of potentially anti-competitive behavior, which is not the same as the one yonron accused Amazon of.
- smoldesu 3y agoAmazon is certainly leveraging anti-competitive power here, but I think your justification is wildly off-track. Our goal shouldn't be to force FAANG into a frenzy where they constantly depose one-another, but to stimulate the market for competitive growth. Making companies less-certain about new or novel releases would be the worst way to do that. Some of the world's most innovative products were designed by subsidized Business Units. The original Mac Lisa wouldn't have been developed if it wasn't propped-up by the success of the wildly-popular Apple II/IIc. Even though it failed, there's not a single nerd on either side of the Apple row that would call that anticompetitive or a mistaken product.
- scarface_74 3y agoCan you name one product of note that you can only get from Amazon?