Amazon’s Antitrust Paradox (2017)(yalelawjournal.org)
yalelawjournal.org
Amazon’s Antitrust Paradox (2017)
https://www.yalelawjournal.org/note/amazons-antitrust-paradox
25 comments
You don't have to be a complete monopoly to fall into anti-trust abuse. Amazon has absolutely abused their market position against quite a number of mfg's.
Amazon definitely has a monopoly on audiobooks and ebooks.
One such niche is buying books.
Neither are perfect monopolies, however to deny that they wield significant monopoly power is patently absurd.
Monopoly power is not simply an issue of consumer choice - there are considerations around prices, coercion, competitive barriers and other outcomes, not just for consumers, but for competitors, suppliers, workers, investors, citizens, etc.
Monopoly power is not simply an issue of consumer choice - there are considerations around prices, coercion, competitive barriers and other outcomes, not just for consumers, but for competitors, suppliers, workers, investors, citizens, etc.
Right, so Microsoft holding a near-monopoly on desktop operating systems was not found to be illegal, but leveraging that power in anti-competitive ways was. Similarly Amazon doesn't have to control a monopoly on online retail, web service hosting, etc. It just has to be found to use it's dominance in illegal ways and it's not clear to me that it has done so. Similarly with Apple.
One nuance I'm not clear on is power gained through the monopoly ownership of a proprietary technology. So for example Apple was able to exert considerable influence over AT&T and later get unprecedented concessions from carriers in order for them to support the iPhone. Arguably their power over the App Store gives them similar leverage. But is that anti-competitive if it simply flows from the superiority of their proprietary software? Arguably no, it's entirely fair enough. They are not using dominance of the market, but legitimately exploiting their ownership of their platform. But couldn't Microsoft have used the same argument for Windows?
I'm genuinely conflicted on this. Simply gaining advantage by being 'better' can't be enough to be illegal surely? That would create truly bizarre and user-hostile incentives. However when you gain a monopoly position and then exert that power, it becomes anti-competitive. How do we tell when a company crosses the threshold? Nobody in 1997-2010 could argue Apple had monopoly power in the phone market and it had almost exactly the same policies back then. Now maybe it does hold some form of monopoly or at least market dominating power, but applies basically the same policies, so is that now illegal? Maybe policies appropriate for a smaller player can be inappropriate beyond a certain scale.
That might be true, I'm willing to accept that. As a customer in 1998 I chose to by an iPhone and accepted Apple's controls over the platform as beneficial, but a new purchaser now might feel compelled to do so due to Apple's dominance of the App ecosystem and resent the locked down nature of the system. That person might legitimately cry foul and maybe have an honest grievance. How does that work? How are Apple supposed to know that their existing, standing policies have now become a violation of the law where previously they were not? It genuinely perplexes me.
One nuance I'm not clear on is power gained through the monopoly ownership of a proprietary technology. So for example Apple was able to exert considerable influence over AT&T and later get unprecedented concessions from carriers in order for them to support the iPhone. Arguably their power over the App Store gives them similar leverage. But is that anti-competitive if it simply flows from the superiority of their proprietary software? Arguably no, it's entirely fair enough. They are not using dominance of the market, but legitimately exploiting their ownership of their platform. But couldn't Microsoft have used the same argument for Windows?
I'm genuinely conflicted on this. Simply gaining advantage by being 'better' can't be enough to be illegal surely? That would create truly bizarre and user-hostile incentives. However when you gain a monopoly position and then exert that power, it becomes anti-competitive. How do we tell when a company crosses the threshold? Nobody in 1997-2010 could argue Apple had monopoly power in the phone market and it had almost exactly the same policies back then. Now maybe it does hold some form of monopoly or at least market dominating power, but applies basically the same policies, so is that now illegal? Maybe policies appropriate for a smaller player can be inappropriate beyond a certain scale.
That might be true, I'm willing to accept that. As a customer in 1998 I chose to by an iPhone and accepted Apple's controls over the platform as beneficial, but a new purchaser now might feel compelled to do so due to Apple's dominance of the App ecosystem and resent the locked down nature of the system. That person might legitimately cry foul and maybe have an honest grievance. How does that work? How are Apple supposed to know that their existing, standing policies have now become a violation of the law where previously they were not? It genuinely perplexes me.
There is significant evidence Amazon has used it's dominant position and potentially sold products at a loss to undercut and remove competition.
https://slate.com/technology/2013/10/amazon-book-how-jeff-be... https://www.theverge.com/2019/5/13/18563379/amazon-predatory...
https://slate.com/technology/2013/10/amazon-book-how-jeff-be... https://www.theverge.com/2019/5/13/18563379/amazon-predatory...
> It just has to be found to use it's dominance in illegal ways and it's not clear to me that it has done so.
Amazon had a struggling video business, but that wasn't a problem, because they had a near monopoly on online shopping, so they bundled the cost of the video service into the delivery discount program 'amazon prime'.
Amazon had a struggling video business, but that wasn't a problem, because they had a near monopoly on online shopping, so they bundled the cost of the video service into the delivery discount program 'amazon prime'.
By itself that's probably not a violation if it doesn't actually hurt anyone, Netflix still seems to be doing fine. Lets assume that changes though and Prime video comes to dominate, then it could be a violation. This is my point, it seems like it's only a violation if it works, or works too well. There's a lack of clarity, at least to me.
They aren't harming netflix yet, because even with a captive audience, the offering isn't good enough to make people feel like they don't also need netflix. I'd be very surprised if there hasn't been significant harm to second tier services though - people might want to supplement netflix with something, but if they already have amazon prime, they're probably a lot less likely to supplement it with now tv, Hulu, etc
But isn't that the exact opposite of a monopoly? They are creating more competition in another space that is difficult to enter.
Imagine how you would feel if people weren't buying your bicycles because the water company was charging inflated prices for water and giving away free bicycles.
Incidentally, the fact that Amazon can choose to set the price for 'free, fast delivery of packages' so high that they can slide a video streaming system in there for 'free', is one of the signs of monopoly power, and bundling as a way to push into unrelated industries is a well accepted example of monopoly power abuse.
> But isn't that the exact opposite of a monopoly? They are creating more competition in another space that is difficult to enter.
The key is that they're using their monopoly power dominance of one industry to gain advantage in an unrelated industry.
Incidentally, the fact that Amazon can choose to set the price for 'free, fast delivery of packages' so high that they can slide a video streaming system in there for 'free', is one of the signs of monopoly power, and bundling as a way to push into unrelated industries is a well accepted example of monopoly power abuse.
> But isn't that the exact opposite of a monopoly? They are creating more competition in another space that is difficult to enter.
The key is that they're using their monopoly power dominance of one industry to gain advantage in an unrelated industry.
It could be argued that it is similar to predatory pricing, where you accept a loss on your offering to drive competitors away before increasing the price.
Amazon video as its own service would not be able to survive so it is unfair on services that just try to do video.
Amazon video as its own service would not be able to survive so it is unfair on services that just try to do video.
First line of the abstract:
>Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space.
I haven't read it all, but think it's the basically the same paper than I saw earlier last year, and it was very good. It's a deep discussion of why the way we think today about monopoly and antirust laws has been abused, and aren't functioning anymore in this day and age. "There's other companies" is not nearly enough.
I really recommend it, it's long but a worthwhile read.
>Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space.
I haven't read it all, but think it's the basically the same paper than I saw earlier last year, and it was very good. It's a deep discussion of why the way we think today about monopoly and antirust laws has been abused, and aren't functioning anymore in this day and age. "There's other companies" is not nearly enough.
I really recommend it, it's long but a worthwhile read.
When I worked at Amazon I was required to take legal training on the used of the words 'market', 'marketplace', 'market segment', and how to frame speech about Amazon's relationship with competitors. I was an individual contributor programmer. I always wondered how much of that training was really about CYA and how much was indoctrination.
> The Note closes by considering two potential regimes for addressing Amazon’s power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties.
The common carrier approach always seemed like the most rational way to address problems like this. One of the ways companies like Amazon dominate markets is by offering the best products/services. I don’t think there’s an effective way to regulate that away. But if they’re forced to offer their services as common carriers, then the risks of them actually monopolizing their position is greatly reduced.
The common carrier approach always seemed like the most rational way to address problems like this. One of the ways companies like Amazon dominate markets is by offering the best products/services. I don’t think there’s an effective way to regulate that away. But if they’re forced to offer their services as common carriers, then the risks of them actually monopolizing their position is greatly reduced.
Really I think if anyone should be forced into common carrier behavior it should be the financial system because of their involvement in payment transfers and power of abuse in cutting off avenues of donation and payment.
While Amazon's infastructure is neat and useful curation is still a valid task which is incompatible with a common carrier status and would be appropriative as it would raise serious questions if they could remove listers for anything not illegal. Like say "autism cures" involving bleach enemas or a guide to engaging in pedophilia. Not to mention functional integral aspects like search ranking would be a matter of "fairness" instead of trying to serve the customer or the company. I can see no way that a forced common carrier on Amazon will be anything but a disaster.
While Amazon's infastructure is neat and useful curation is still a valid task which is incompatible with a common carrier status and would be appropriative as it would raise serious questions if they could remove listers for anything not illegal. Like say "autism cures" involving bleach enemas or a guide to engaging in pedophilia. Not to mention functional integral aspects like search ranking would be a matter of "fairness" instead of trying to serve the customer or the company. I can see no way that a forced common carrier on Amazon will be anything but a disaster.
Absolutely agreed on financial institutions and common carrier services.
Except as it stands, they're both a market and a seller directly. Similar to Facebook is both a platform and a publisher.
The problem is that a lot of the time the rules are in stark contrast depending on which you are. In the Amazon case, I think product commingling, without distinct labeling is a significant muddy water scenario.
The problem is that a lot of the time the rules are in stark contrast depending on which you are. In the Amazon case, I think product commingling, without distinct labeling is a significant muddy water scenario.
Great piece! For reference, here’s the comment thread the first time posted:
https://news.ycombinator.com/item?id=13562968
That was a weird trip back in time.
Really curious how people feel today, especially in the light of potential anti-trust action against Google.
Really curious how people feel today, especially in the light of potential anti-trust action against Google.
Amazon needs to be broken up. Marketplace should be distinct from Amazon retail. They can compete on the independent platform like anyone else.
Serious question - why are store brands okay for every other chain then? It is a popular slogan-meme but I am puzzled as to why that common practice which predates them is suddenly abusive for them aside from cynical pretexts.
Idk, but I find it especially funny because the ones Amazon basics is competing in are the silliest businesses to try and protect. Almost all of them just buy the same product from china and have the manufacturer slap their label on it. There are dozens of these "brands" whose only function is to handle the batch ordering, shipping it to amazon who then actually handles the logistics, and customer support which usually just involves trying to bribe anyone who gives a bad review into changing their rating.
It's not even like Amazon bans the other brands from selling on their store. They are free to keep competing with amazon for the same exact product. It sounds like they just don't want more competition for their low value add business.
It's not even like Amazon bans the other brands from selling on their store. They are free to keep competing with amazon for the same exact product. It sounds like they just don't want more competition for their low value add business.
Stores don't run marketplaces. They buy outright from their suppliers.
I don't have a reason to use either company outside obscure niche circumstances.