Amazon is customer oriented and acts like a monopolist and a monopsonist in all of its markets. Is it, in fact, seeking to replace the market with rule by one man? Is that what these large mega-corporations seek to do? Should they be broken up?
Matt Stoller: Why We Need to Break Up Amazon – and How to Do It | naked capitalism
I think something the author misses in this article is that he presumes Amazon (and other big companies) to be in the wrong, when perhaps they are more literally just extremely successful companies. All companies aim to beat their competitors, to gain market share, and to make profits, Amazon has just been really successful at it.
ReplyDeleteAmazon has never merged or acquired a company that necessarily infringes on antitrust laws. However, their anti-competitive pricing is a violation of the sherman act. But, if you eliminate Amazon, we'd probably see another company just like it rise. I don't think Amazon should be broken up, even if they are so dominating. I think they are more so just very successful and if they were to be broken up, another "Amazon" would occur with the rise of a different company.
I understand the author's point that Amazon is becoming extremely large and there are several issues with its current business plan. I agree that Amazon does have access to its competitors information through the Amazon Cloud (if they are using that product) and this would give them an unfair advantage. Similar to this is the idea that Amazon has retail information based on its third party marketplace and thus can know which items to stock and alter the prices on. However I am curious to know how much of this information is available to other companies. Is Amazon currently gaining market share as a result or are they gaining market share from some other method? Also I disagree with the claim that Amazon should separate its book market simply because it has greater than 50% of the market share. Internet Explorer and Windows OS both have greater than 50% and the author is not calling for their break up. While I do agree that Amazon should be analyzed to decide whether it is breaking any anti-trust laws, I think that the author takes the break up to much more of an extreme than is necessary.
ReplyDeleteI disagree with you, Cam. If you actually look at the profit margins for Amazon, they are negative. This hints at their true business model: undercut prices of competitors. Minimize the loss upfront by using technology to replace current workers. Then once they have such a large share of the market, they can jack up prices.
ReplyDeleteIf we broke up Amazon by law, no other company could do the same thing. They would be in violation of the law. It would be easier to monitor because we would already have a case study from Amazon; so if another company did try to rise up with a similar business model they could be stopped. Sometimes the government has to take matters into their hands to help the economy in the long-term even though it hurts the economy in the short-term.
The predatory pricing strategy that TJ mentioned is a very large issue and could be grounds for anti-trust action. While I personally do love the prices I currently receive on Amazon, it would be monopolistic behavior for them to predatory price their way into the market, and then boost prices once they gain a large enough share in it.
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