Jeff Bezos: "Alexa, buy me something from Whole Foods."
Alexa: "Sure, Jeff. Buying Whole Foods now."
Jeff Bezos: "WHA- ahh go ahead."
after the revolution we'll just nationalize Amazon and our distribution problems will be solved [...] alternative, of course, a monstrous, extremely unequal, neo-feudalist surveillance state
Amazon isn’t yet a monopoly on the scale of Standard Oil, which at one point controlled 90% of US oil refining. But massive tech companies like Amazon and Alphabet (née Google) have a similar impact (paywall), warping the US economy by swallowing up competitors, choking off access to their platforms, and fueling income inequality. Their immense size and the concentrations of wealth they produce is making policymakers nervous, and a backlash of some form may be brewing. Calls for regulators to check the power of the new tech giants are beginning to grow louder.
Just consider the numbers. According to New York Times figures for the US, Amazon now accounts for 43% of all online retail sales; half of all online shopping searches start on Amazon (eat your heart out, Google); in 2016, the company had revenues of $63bn from online sales – which is more than the next top 10 online retailers combined; it controls 74% of ebook sales, and is soon set to become the biggest clothing retailer in the US. AWS, for its part, has become a $10bn annual revenue business with more than 50% of big companies preferring it to rivals – market share is expected to reach 64% in three years.
By any common-sense yardstick, therefore, Amazon wields monopoly power and its activities should trigger action by regulators. The problem is that US antitrust (competition) law has long parted company with common sense. The rot set in when Robert Bork published The Antitrust Paradox in 1978, in which he argued that competition law had become too focused on preventing cartels, price-fixing and mergers that create monopolies, and should return instead to what he claimed was its original concern with protecting consumers. This view was then energetically promulgated by the influential Chicago Law School and seems to have become the conventional wisdom of competition authorities across the world.
Crudely put, the implication of the Bork view is that no matter how big or dominant a company becomes, if there’s no evidence that its dominance is harming consumers, then there’s no antitrust concern. And the digital giants that now dominate the landscape have driven a coach and horses through this loophole. Google and Facebook, for example, argue that since they are providing superb free services that are highly valued by consumers, then punishing them simply for their market dominance would amount to penalising excellence and efficiency.
While customers have flocked to its low prices, speedy delivery and customer service, it’s a different matter for suppliers. Even as they benefit from instant access to a massive online customer base, Amazon's market size gives it the power to inflict increasingly tough terms on its partners, driving down prices and passing on the savings to customers.
“If people thought Walmart was bad, Amazon’s taken it to an entirely new level,” said Mark Coker, founder of SmashWords, an early ebook distributor. “They want to eliminate everyone who stands between the producer of the product and the store.”
Amazon declined to comment for this report.
Another concern: as more people enter the Amazon ecosystem, that makes it harder for producers to sell to customers outside it.
Lina Khan, a legal fellow with the Open Markets program at the New America Foundation, worries this will be detrimental to the economy.
“We have to ask whether there are costs to this dominance that we might in the long term regret,” she said. “Amazon has emerged as a gatekeeper. Are we comfortable with one company picking the winners and losers in e-commerce?”
There's little relief from anti-trust law because these laws focus on consumer welfare, which Amazon excels at, she said.
The implication here is not that Amazon’s Prime Video service is more popular than TV; the main reason most people subscribe to Amazon Prime is still the fast delivery of products.
But it is an indication that Prime is moving toward becoming a “no-brainer” for more than just wealthy Americans. To that end, Amazon has been courting lower-income American households with discounts for those on government assistance, as well as a monthly payment option for those who don’t want to cough up $99 for an annual subscription.
These growth tactics are important, since more than 80 percent of America’s wealthiest households already pay for Prime. And Amazon knows that Prime is the core of its retail business: Prime members spend more in a year than non-Prime members do, shop more frequently than others and price-compare less, according to studies.
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