>I don't think she realizes that splitting up amazon and amazon basics will do little to nothing.
I think amazon : amazon basics is a great example of antitrust/unfair monopoly the same as google search : almost all consumer facing google products.
Both amazon and google search are the dominate online market leaders in their respective categories. In amazons case they unfairly use their market position to begin offering amazon private label products on their platform. They know what users are looking for, spend the most on, and they can give their own products dominate positions in the UI. In the case of google they too unfairly use their position as a market leader against their own customers (advertisers), so say you are a hotel booking platform and spend $x with google, google knows the market (searches, clicks, etc...) so google launches their own hotel booking, gives their in-house service priority in search results over existing market incumbents and self bids on google search advertising for key industry terms to drive up costs of advertisers to keep in business.
It’s kind of like standard oil buying up the railroads so they owned the supply chain and no other oil could be moved. It’s unfairly using your market position, not to compete, but to be anti competitive to the detriment of consumers.
I’d like to see the tech giants prevented from unfairly using their market dominance to stifle competition. As we saw with the break up of standard oil...competition is good for consumers.
> In amazons case they unfairly use their market position to begin offering amazon private label products on their platform. They know what users are looking for, spend the most on, and they can give their own products dominate positions in the UI.
1) How is that different than a department store? If you go into housewares at Macy's you'll see their own branded stuff along with other brands. So at issue is not the practice itself, but rather that the digital marketplace makes it easier and more efficient.
2) The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup. The play is not to undercut all the power strip sellers (to take an example) and once they are out of business, jack up the price. The play is to take the margin due to marketing and brand equity from the sellers and split it between the consumer and Jeff Bezos, so rather than being harmed, the consumer benefits from this.
I think it is different. When a department store buys a third-party product, it pays for it and the Store bears the risk of the item not selling. If Macy's decides to make their own brand, they did so by transferring risk from manufacturer to themselves in the beginning; if a product didn't sell enough, they had stake in it. There are some successes (store-brands) and some failures (brands they bought, never worked)
In the Amazon Basics case, AMZN doesn't own inventory for the product at all. All the risk is to be borne by the 3rd party manufacturer. When Amazon looks at its data and sees a product succeeding, it creates a Basics product with no risk - it knows this thing sells. There is no way Amazon can 'fail' per se.
This essentially is the difference. Any manufacturer is likely scared of success on the Amazon Marketplace. If too successful, it can be Amazon-Basic'ed.
> The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup.
I think in the short-term for that product - yes, the consumer finds a cheaper product, but Amazon will always have an economies-of-scale advantage.
However, long-term, I think innovators will not know if making a highly successful product (which is always difficult to sell cheap because scale isn't achieved) is worth it.
If Macy's sells a third party product (say, a piece of cookware) and sees it doing well, then makes and sells a copy of it they don't seem to have taken more risk than Amazon.
It also feels pretty similar to what fashion designers have accused department stores of doing for decades: letting them take the risk, then "following fast" (or stealing designs, depending on your perspective) when something turns out to be popular.
> How is that different than a department store? If you go into housewares at Macy's you'll see their own branded stuff along with other brands. So at issue is not the practice itself, but rather that the digital marketplace makes it easier and more efficient.
It's 100% the exact same thing. Go to Walmart and see thousands of "Great Value" products and you'll get the exact same thing. Warren is off her rocker on this one. We have real tech monopolies in the Cable/ISP industry but we're talking about Amazon and Facebook.
The issue comes with the monopoly status. If a company controls a certain % of marketshare, that behavior crosses into anti-competitive.
If 90% of retail stores were Walmart because they owned a significant percentage of real-estate in key markets (thus, preventing other retailers from moving in), then their Great Value offerings would also be anti-competitive.
Amazon's behavior is a textbook anti-competition. They literally build copies of products offered by other merchants on their site, then rank them higher in search results, often times, driving the merchants out of business.
> If a company controls a certain % of marketshare, that behavior crosses into anti-competitive.
That's just incorrect. There's nothing wrong with controlling 100% of the market share, as long as you don't use your position to illegally prevent competition.
> Amazon's behavior is a textbook anti-competition.
That completely counters the point you just made. Amazon accounts for maybe 5% of retail sales, and Walmart is closer to 15%. Even in the eCommerce market their share is around 50%. Vastly lower than the 90% you threw out there.
> They literally build copies of products offered by other merchants on their site
Every retail company does this through suppliers. It's called "white label" and it's an industry standard. And Amazon does not build them, they license another companies product.
> then rank them higher in search results,
Citation needed.
> often times, driving the merchants out of business.
Again, citation needed. Particularly the "often times".
> as long as you don't use your position to illegally prevent competition.
Which is why I said, literally, "their behavior crosses into anti-competitive." You can compete with vendors, or you can control most of the market. But you can't do both: control the market, then use that advantage to drive competition out of business.
> Even in the eCommerce market their share is around 50%.
50% is a staggeringly high market share. For reference, Toyota has less than 10% market share.
> And Amazon does not build them, they license another companies product.
Those companies are accusing amazon of literally copying their unique products. We're not talking about buying batteries or something from a supplier. Amazon is literally copying existing products that do well.
Here's an ex-employee discussing the topic:
> Amazon sees your product is doing very well, they have the retained performance data, and Amazon copies to their best of their ability as a “generic version.” Through subtle advertising, and imitations of the successful attributes of your product, their product cuts straight to the top ranked in your categories.
> Which is why I said, literally, "their behavior crosses into anti-competitive."
Yes, and I'm saying that it isn't true. Merely owning majority market share doesn't make a company anti-competitive. Anti-competitive behavior does. And while it takes the latter following the former to work, it certainly isn't guaranteed.
> You can compete with vendors, or you can control most of the market. But you can't do both: control the market, then use that advantage to drive competition out of business.
They absolutely can drive competition out of business as long as they aren't using their position to do so illegally. Gmail shut down a lot of email providers, not through anti-competitive behavior but through providing a more compelling product. Amazon has yet to successfully drive any supplier out of business. There's an argument that they broke Toys R Us, but that wasn't anti-competitive, that was through introducing toys that weren't severely overpriced. Walmart assisted with that.
> 50% is a staggeringly high market share. For reference, Toyota has less than 10% market share.
Toyota is in a nearly 100 year old industry which has multiple multi-national companies competing. iRobot has a 62% market share but nobody is looking to take down big vacuum.
50% market share of a sub-market within a major market is a weak argument. While they have 50% of online market share, they have something like 9% of actual retail sales, which is considerably less than Walmart.
Your argument was that Amazon ranks them higher in search results. Both of these articles are discussing Amazon using white-label suppliers to build competing products. That's not the same thing. Every major retailer has been building white-label and private-label products for decades.
> Those companies are accusing amazon of literally copying their unique products.
You'll notice what they aren't doing is suing Amazon for patent-infringement. The very article you posted shows that while Amazon makes competing products, they don't violate patents.
> Amazon is literally copying existing products that do well.
No they are making competing products. That's not copying, that's called "competition".
> their product cuts straight to the top ranked in your categories.
That should have been a very clear indicator for you, but you kind of missed the point. Amazon doesn't rank their products higher. The ranking algorithm is generic, and largely tied to top selling items in a category. When you see two products that are very similar, and one is half the cost of the other, you buy the cheaper market.
It seems, to me at least, your issue isn't Amazon. Your issue is the consumer market doing exactly what it's always done.
You seem to be breaking up my arguments into segments so that you can ignore the big picture.
A. Amazon controls almost 50% of market-share.
B. Amazon uses their platform data to determine which products vendors sell are high-margin, then replicates those products and sells them at a lower cost.
C. Amazon-branded products appear higher in search results, which eventually drive the original vendors out of business. Whether this is explicit, or happens by virtue of intimate understanding of Amazon's algorithms is irrelevant.
Individually, A, B, and C are not anti-competitive, but Amazon is doing A and B and C at the same time, which crosses into anti-competitive behavior. Technically, B & C together are enough to warrant anti-trust investigations.
> 1) How is that different than a department store? If you go into housewares at Macy's you'll see their own branded stuff along with other brands. So at issue is not the practice itself, but rather that the digital marketplace makes it easier and more efficient.
The difference would be Amazon's [alleged] monopoly power.
> 2) The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup. The play is not to undercut all the power strip sellers (to take an example) and once they are out of business, jack up the price. The play is to take the margin due to marketing and brand equity from the sellers and split it between the consumer and Jeff Bezos, so rather than being harmed, the consumer benefits from this.
That seems like a very charitable way of describing the situation, and even if accurate may only remain true in the short term. Whether undercutting branded sellers is the goal or not, that's exactly what's happening--even as you charitably describe it. What happens ten years down the road when those brands are gone due to Amazon's allegedly benevolent undercutting?
I'm not sure about the ultimate merits here (in fact, I'm a bit skeptical of the claim that Amazon has all of the market power that some say it does). But I think you may be dismissing this all a bit too quickly.
> The difference would be Amazon's [alleged] monopoly power.
I don't see Amazon as being particularly more of a monopoly than Walmart. If Amazon was a traditional brick and mortar business, would we even be having this conversation?
I think the difference is that they are better at pissing people off essentially by transgressing status quo norms. Most tech companies are too right for the left and too left for the right in addition to their "upsetting their perceptions of the natural order" aspects.
A big chain consumes the market and puts others our of businesses and it is just how things are. A new internet company goes from niche to cannot be ignored and it is scary change despite the impact being essentially the same.
Combine that with openly envious old media and their selective condemnation. I honestly suspect the real reason is that tech companies don't buy enough TV ads for their liking given the softball treatment of ones that do frequently like cable.
Again, there's a lot more to think about. What about prices? Even if manufacturing costs remain the same, costs for consumers are likely to rise per unit quality in the absence of meaningful competition. There will also be additional downward pressure on prices paid to those factories if there are fewer (or one one) buyer.
As I said before, I'm not convinced that all of these things will actually happen. But the answer can't be as simple as "who cares...Amazon is just cutting out the middle man."
On #1 I too had the same question, but I think the difference there is that department/grocery stores are re-sellers. They've already bought the goods from the third-party and are choosing to re-sell it at a markup. Amazon on the otherhand is a platform which only enables the initial sale.
They call it the back margin. Brands buy shelf space, position, pay for offers and promotions, extra payments (effectively a fine) if volume targets are not reached, etc.
Tesco infamously had 24 ways of extracting extra money from suppliers via back margin. The front margin is the traditional agreed buying price.
Regarding your second point, that is only good for the consumer in the short term. In the long term it harms consumer choice by making it untenable for smaller companies to sell on Amazon when they know a cheaper AmazonBasics version will be released as soon as they see any success.
> I think amazon : amazon basics is a great example of antitrust/unfair monopoly
Store brands have been around *forever."
> They know what users are looking for, spend the most on, and they can give their own products dominate positions in the UI.
If you own a grocery store, you have every right to place the store brand products wherever you think they will sell best. You could (gasp) not sell any name brands at all! And if your grocery store becomes successful, you're allowed to sell advertising inside it however you want.
> It’s kind of like standard oil buying up the railroads so they owned the supply chain and no other oil could be moved.
Railroads are to some extent natural monopolies, and they have a massive barrier to entry. E-commerce websites do not. Many businesses of all sizes still sell products directly from their website and do fine. Now if Amazon bought UPS and FedEx and refused to ship any other packages, that would be different. But all they're doing is running their "department store" the way they want to. If consumers want a competitor, they're free to start one with next to no initial cost.
>It’s kind of like standard oil buying up the railroads so they owned the supply chain and no other oil could be moved.
kind of, but not really at all. Google and Amazon aren't preventing anybody else from using their services - getting other people to use their services is kind of their whole business model. If you want to compare Google or Amazon to transporting oil on railroads, it'd be like if the company that owned nearly all the railroads owned a couple of oil wells (but not all of them) and still transported everybody else's oil for a fair price.
I agree. But if we are going to split up the store platform and the store brands, now youre going to have to split up Target, Walmart etc. Anyone besides Ikea who sells their own store brand and runs as a platform for others to sell their products.
Any grocery store can do the same thing amazon is doing, use data about sales to push clones and store brands of popular products. What percent of products at Target are store brand now? Target is like an Ikea with 3rd party products sprinkled in it, which is what Amazon wants to become.
The difference is that none of those examples dominate their market. The problem isn't "Amazon uses their platform to promote their own products" it's "Amazon uses their market dominance to promote their own products which might not otherwise be competitive"
dominating the market and holding a monopoly are not the same thing. Amazon has a dominant position in many markets, but are not a monopoly on any market unless you re-define the market to be amazon's portion of it.
Does amazon have a retail monopoly? absolutely not. An online retail monopoly? still no. An online book selling monopoly? okay, now we're getting closer but still not a monopoly. A kindle books monopoly? yeah, by definition.
I agree, I just think its Wal-marts playbook, and to single Amazon out is more political than do-goodery. In Wal-marts case its floorspace, in Amazon's its eshelf and datacenter storage.
> gives their in-house service priority in search results over existing market incumbents and self bids on google search advertising for key industry terms to drive up costs of advertisers to keep in business.
It would help if the competition in hotel booking, Expedia, Orbitz, ETC weren't all literally owned by a single fucking company now. The sites are entirely rigged against the user.
I think amazon : amazon basics is a great example of antitrust/unfair monopoly the same as google search : almost all consumer facing google products.
Both amazon and google search are the dominate online market leaders in their respective categories. In amazons case they unfairly use their market position to begin offering amazon private label products on their platform. They know what users are looking for, spend the most on, and they can give their own products dominate positions in the UI. In the case of google they too unfairly use their position as a market leader against their own customers (advertisers), so say you are a hotel booking platform and spend $x with google, google knows the market (searches, clicks, etc...) so google launches their own hotel booking, gives their in-house service priority in search results over existing market incumbents and self bids on google search advertising for key industry terms to drive up costs of advertisers to keep in business.
It’s kind of like standard oil buying up the railroads so they owned the supply chain and no other oil could be moved. It’s unfairly using your market position, not to compete, but to be anti competitive to the detriment of consumers.
I’d like to see the tech giants prevented from unfairly using their market dominance to stifle competition. As we saw with the break up of standard oil...competition is good for consumers.