A lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.
The impact of Amazon’s monopoly power is felt big time by us as we’re being squeezed with no place left to go online especially post-iOS change.
Our second option used to be the Facebook/Instagram/TikTok to Shopify connection but with that being dead in the water most of us have had to commit 100% to FBA to be able to stay afloat.
With the increase in inflation and Amazon abusing its power to significantly raise its prices for FBA and force us to use its advertising services our revenues have been severely impacted.
This doesn’t include their unwillingness to meaningfully fight counterfeits
Or that they penalize you if you attempt to drive sales elsewhere with lower pricing on other sites
Bloomberg did a write up on this a few months back:
"Chuck Gregorich, who sells fire pits and outdoor furniture, says turning a profit on Amazon is getting harder. One of his popular fire pits costs $200, of which Amazon takes $112 for its commission, warehouse storage, delivery and advertising. That leaves him with $88 to pay the manufacturer, ship the product in from China and cover his overhead."
I have a hard time sympathizing here. They farm out manufacturing to China and logistics/warehousing to Amazon, and then also lend brand to a marketplace they don't own. Assuming this is how FBA selling works on Amazon, it sounds like the low profits they make are just a byproduct of them not actually doing much work.
You make a good point, but I think the parent point is true as well. You still have people actually producing work, unable to compete on these platforms where Amazon will literally make a copy of their product at a lower price.
This is the result of commoditizing 'starting a business' to the point of near-worthlessness in the bottom 50%+. Like you say, I don't value the businesses that simply re-sell re-labeled products without ever interacting with anything very much. But let's not confuse the 'spam' of the problem with the squashing of actual business that this is historically known to cause.
Amazon is basically allowing sellers to carry all the risk while product testing and marketing a product.
If it does well enough, Amazon can use the same manufacturer and release a branded "Amazon Basics" version that pops up in the same search for the same product but cheaper as Amazon doesn't have to pay someone else $112 for the listing and warehousing, and the original seller that did all of the actual "work" (as far as making it a profitable venture) is SOL.
Throw in a few dozen word salad named drop shippers who undercut Amazon in exchange for increased shipping times and the originator is wedged out of the market or cut to razor thin margins for years of effort.
Yes, but the argument is that drop-shippers aren’t really producing any value.
It’s not like they’re putting banners over their product pics saying “hey, you know you can buy this exact same product for like half the price on alibaba if you’re willing to wait a couple more weeks for it right?”.
I don’t like Amazon consolidating this much power either but if they can push you out of your business that easily you weren’t the critical component of it.
Show me a business that Amazon couldn't destroy just for kicks.
Also, it's not like you have any choices. If you manufacture your products yourself, you have to fund a massive venture to handle the workload. If you outsource the products, then the companies you pay to manufacture your stuff can easily make knockoffs and then let drop shippers undercut you with inferior versions of your own products.
Look at a lot of the stuff for sale on Temu for instance. There are hundreds if not thousands of products that were invented, tested, and designed by Western companies that you can now buy a reasonable facsimile of on Temu for a quarter of the price.
This includes art work, enamel pins, battery packs, woodworking tools.
You're on a hard path either way, but if you make it to the point where you have a standout product knowing that at the final step Amazon can easily step in and price you out of existence, even if they had to take a loss on it just to destroy you, they could and there's not a damn thing you can do about it.
That should be broken up. Monopolies are bad. Monopsonies are bad. They are bad for the country, bad for the people, and bad for the flow of money.
I hope we see record fines against them and that everyone affected by this gets to be part of an earth shattering nuclear verdict.
Apple Iphone, airpods, ipad, macbook. Google search. Coke. Boeing. Caterpillar. Goldman Sachs. AirBnB. Exxon. AutoDesk. BlackRock. CME. Costco. JP Morgan Chase. Mastercard, Visa, Nike, TSMC and a thousand others.
They started out as a retailer, and opened up a bunch of their infrastructure to competitors. The idea that they'd make it easy for competitors using their infrastructure to beat them makes zero sense.
Those are good ones but i was thinking of local stuff like grocery (which they tried and are currently failing) and gas (not that i use it). Also, real services like plumbing, electric, vehicle maint. ... Angies list got that corner ;)
The list is extremely long as you say. Amazon isn't good at much except cheap third party stuff made by contract manufacturers in china, books, and AWS.
That's pretty circular. To the extent any company, A, relies on company B to operate, A can be destroyed by B, according the definition of "rely".
So the logical response wasn't to assume you were being circular. The logical response was to assume you were inferring Amazon is big enough and capable enough to squash any business.
The 'they' here is Amazon. This is how it should be read: "Amazon started out as a retailer, and opened up a bunch of their infrastructure to competitors. The idea that they'd make it easy for competitors using their infrastructure to beat them makes zero sense.
I have a lot of friends in the manufacturing business that range from self-employed to military-backed conglomerates. None of them use this tool. Are they all Luddite idiots, or is this Amazon search tool, backed by their swiss-cheese supply chain, just not that useful?
I think it's the same as the overall enshitification of all products and product quality. Consumers now value cheap fast shipping and low prices over everything else. Amazon delivers that, with the tradeoffs in product quality, support, etc. Other things are low quality too, like the product listings themselves. Often, for example, the listed dimensions or other specs (thread type, grade strength, etc) are missing or just wrong. That's much less true for sites like McMaster. But nobody values that anymore.
Every cent Digikey looses they loose by being Digikey. Of all large suppliers, they are by country miles the worst and we try everything to avoid them.
Farnell, Mouser, LCSC beat them handily. And their pages are already bad.
Wow! I have had nothing but amazing experiences with DK over the last 20 years, especially compared to everyone else. Maybe it has to do with being in Canada, though. The DK warehouse is just across the border and when you order DDP I think they bring your stuff over by truck and then distribute it. Have not once ever had a surprise customs charge from them, while other suppliers have all screwed me in one way or another (lol always great when one order gets split into three boxes and UPS charges brokerage fees separately on each one)
It’s not connecting for me how breaking up monopolies is going to stop Chinese clones of Western products from winning price wars. It might change how the margin gets carved up between the people who make the clones and various middlemen but how would it stop the overall trend of cloned products?
I would expect if Amazon disappeared, since people can’t go there to search for products to buy anymore, they’d use Google instead, or some other product search aggregator sites. They’d presumably still list the cheap sellers first (or whoever pays for an ad slot). That would be a huge change in the e-commerce industry, FTC can argue it benefits consumers because the prices of everything will be cheaper without Amazon’s fees, but I’m not seeing how to reduces the prevalence of cloned products.
Alas, no. Just because there are certain rules, and just because people say that those rules are for a specific reason, doesn't imply any actual causality between the reasons given and the rule existing.
Especially anti-dumping rules are most often just exploited as a tool to get a competitor in trouble.
Heh, a couple of years ago (maybe true still?) Canada had a 99%! tariff on aluminum extrusion from China. And it was still cheaper than domestically sourced material at twice the price.
According to Amazon's rebuttal to the charges, 80% of all retail is still brick-and-mortar. Amazon has tried it a few times, but remains essentially an online only service.
If your business depends on potential competitors for it's existence, then being eventually forced out seems like a pretty natural conclusion.
We're reaching the point in the economy where racing to the lowest cost, such as Temu, comes with great damage to the world. It's spyware that collects data on the american consumer across applications, and the products are made with illegal forced labor.
If people keep choosing to reward dishonest cheaters and criminals just to get something for lower cost, we are not in a good place. And either cheating or disguising the true nature of your company is becoming the easiest way to stand out in a commoditized world.
> if they can push you out of your business that easily you weren’t the critical component of it.
Alternative suggestion: modern monopolistic corporations are disproportionately powerful. If they can topple a country to sell bananas cheaper, they sure as hell can kill a small business, no matter how relevant that business is.
These aren’t drop shippers. They are importing the product and paying to store that product before a sale is made. The shop is taking on a risk that the inventory won’t sell, and the customer gets the product far faster.
What’s the problem here? If you don’t have a durable competitive advantage then you’re going to get eaten up. First movers should not get a license to continue to reap a profit in a competitive market absent real innovation, which would come in the form of reputation (trademark) or technology (patent). Drop shippers who can be displaced by Amazon in the way you discuss have neither. They already made a profit on the front end, so don’t feel bad for them just because they can’t continue to rent-seek.
But Amazon is the 7-11 (and more)! It is the customer facing part of the business that houses and delivers the beef jerky to the ultimate customer. 7-11 sees that jerky sells, that lots of brands can sell jerky, that consumers don’t seem to care about the brand of jerky as long as it says teriyaki, and so 7-11 now sells 7-11 basics teriyaki jerky.
The FBA middlemen are more like traveling salesmen - they take an order, send it in to HQ, and HQ ships it to the 7-11. They don’t do anything but take orders. They are Tom Smykowski - they take the plans to the engineers!
You’re complaining that the storefront that the goods are sold through has its own sales information. The amount of sales you have through Amazon may be a trade secret, but it is not a trade secret from Amazon.
If we're coming up with brick and mortar analogies, it's got to be grocery stores and generic branded items. Kraft Mac vs Great Value.
It's hard for me to say Amazon shouldn't be able to do it while every grocery store can, but there seems to be a quantitative difference because of the ridiculous number of options online vs the finite shelf space of a brick and mortar.
All the same economic games are played. Items are placed on specific shelves to drive specific sales, etc. Sale numbers are known by the store and they get their cut.
The distinguisher is supposed to be in the quality. Premium vs generic. That doesn't seem to play out healthily in Amazon's marketplace.
Maybe one difference is the consumable nature of the grocery products vs what one typically buys online (Amazon batteries as opposed to an animal carrier). Or maybe we have given up too much with the consolidation of grocery chains the last few decades and that is equally problematic.
I think that a lot of the same problems exist in generic brands at supermarkets. Supermarkets already have a lot of ways to pressure suppliers, and “own brand” products are weaponised extensively.
I’m all in favor of suppliers competing with each other, as that’s in the best interests of society overall. But when the platforms/marketplaces themselves participate in that competition they have tremendous advantages, which is anti-competitive, and it benefits no one but themselves.
But Amazon refuses to be the actual seller taking the risk in the first place. They aren’t buying jerky from anybody and then selling it. Until they decide to make their own based on the actual seller’s data.
Your local grocery store has store brands that compete with the name brands. Your local grocery store also charges for shelf placement.
Amazon is actually more open than other stores about this information, giving product rankings so that you could decide to knock off popular products too.
Except that overlooks Amazons intentionally messed up search function. Amazon, unlike grocery stores, doesn't really put all of the items into the same location.
On amazon, if you want to browse "electric bike tires with motors" you will have to browse through dozens of full electric bikes, electric scooters, hoverboards, tires without motors, tricycles, and all sorts of close but not quite what you're looking for items to find 1 that you might be interested in.
Want to price shop them? Good luck finding others to compare with.
It would be like looking for a 5 lb bag of white sugar in the grocery store so you go to the sugar isle and finding 1 half pound bag of brown sugar amongst all of the flour and seasonings and honey and agave nectar and sweet n low in the first 100 feet.
Any grocery store organized like that would fail and be replaced by a company with decent organizational flow.
But amazon makes money by charging the vendors on its market for visibility, in addition to listing fees, storage fees, and whatever else.
Amazon has a perverse incentive to not show you, the customer, what you are looking for when there is anything else close enough to what you are looking for that they will make more money for selling to you.
There isn't a better word than evil for this, even if it is the benign sort of evil that only added to the chaos and misery of the world without directly harming anyone.
Also, in direct response to the Gp, grocery stores buy sales data that contains their sales + their direct competitors down to the product level. It is anonymoized but freely available.
Edit: Also companies like Google scan emails for information. Amazon stopped including prices in their emails because Google was getting a direction stream of sales data with full costing info.
They are really saying, though, that without barriers to entry and in a competitive market, players that don't innovate don't survive.
>First movers should not get a license to continue to reap a profit in a competitive market absent real innovation, which would come in the form of reputation (trademark) or technology (patent).
The problem with that is that this is not a competitive market, so the player that wins is not innovating, they just have market power because of their size.
But that is definitionly winning the competitive market. Amazon has a competitive advantage because they have the largest inventory and almost always the cheapest prices, or at least speedy delivery for a marginally increased cost.
That is the definition of winning a competitive market. The consumers win.
The problem is being both the platform and a competitor.
They have an inside advantage that no one else on the planet outside of ebay and Alibaba (and its ilk) have.
It entrenches them and enriches them unjustly. They make profit off of their competitors and have the option of destroying anyone who rubs them the wrong way without repercussion. The capitalistic market cannot speak on the matter as there is a monoposonistic gatekeeper on the market path.
They didn't open their capabilities to competitors. That is completely false.
No one who sells on Amazon is a competitor. If you are selling on Amazon you are a customer, and every once in a while, Amazon comes in and starts selling your goods for less than you can because they decided they would make more money without you in the picture.
For a little proof, try to find Ammoon products on Amazon. They used to be everywhere. And the information isn't exactly public but there was a falling out between Ammoon and Amazon and now you can't buy Ammoon products on Amazon, but you can find Lekato and Sumimma and Joyo and Cuvave knock offs of the exact same products, and not long after this happened, Amazon started selling cheap guitar pedals under their Amazon Basics brand.
You may say, sure, whatever, but the primary product Ammoon sold was the cheapest ($35) looper pedal on the market.
Amazon undercut that price (to $26.50) and also booted their closest competitor and biggest customer in the guitar pedal looper segment.
In an enormous number of cases Amazon both sells products and the same exact product from a different supplier, and they sold the product before opening up the store to others. That's the definition of a competitor.
The fact that they didn't sell every single product on planet earth doesn't mean they aren't a competitor. They are practically in the "easy to manufacture by a third party in china consumer products" market. If a company adds so little value that Amazon's 5th rate people (The best minds at Amazon aren't sitting up at night worrying about the guitar pedal looper market) can beat them, they aren't adding value. And, one single distribution channel (the amazon website) doesn't define a market (with almost zero exceptions, amazon's website not being one).
> And, one single distribution channel (the amazon website) doesn't define a market (with almost zero exceptions, amazon's website not being one).
if amazon captures a large ratio of people buying goods online, i would certainly consider amazon itself a market. But unless they also control some other aspect of the online market, it would be hard to claim they're a monopoly tbh.
_Anyone_ can setup an e-commerce site and sell online. Amazon doesn't quite fully control the hosting, IP and backend servers completely!
Where's the harm for consumers here? All I see is that I can now buy guitar pedals for a fraction of the price. Isn't consumer harm the point of anti trust?
How many companies will not enter the market because of Amazon's monopoly? How many products will never get invented because of the awareness of the system?
And even with this, with a monopoly it is not a race to the bottom. Once the monopoly is in place, you can raise the costs to whatever you want and the market has no choice but to grin and bear it or go without.
The whole Amazon Basics thing, cannibalizing sellers, should be illegal. It just victimizes people trying to make a living in a crap job market where online sales are closing street shops.
Sellers are offering a generic product without barriers to entry like trademark, patents. Somebody else notices and contracts the same manufacturer to produce it or finds someone else who will (or makes it themselves). The new entrant sells it for cheaper.
All I see is basic economics. Business cannot stay afloat if their marginal cost exceeds marginal revenue. This is the best outcome for consumers.
The business takes a risk in developing and acquiring a product and Amazon uses the sales data and its platform to pick out winning products and undercut the price. The business is the victim.
The business should protect their product with a patent or other trademark then. Nobody is forcing people to provide Amazon data by selling products on Amazon.
There is no victimhood if the business voluntarily transacts.
1. Manufacturing does not happen in America anymore.
2. The proliferation of counterfeiters does not allow dropshippers to scale to a meaningful size. Everyone is game to Alibaba.
Within our industry of paper goods, our manufacturers have to get their parts and raw materials from overseas.
The larger FBA mom and pops will design and market their products here in the US using American workers and have them manufactured overseas completely or in-part.
The impact of Amazon’s monopoly power on American online product businesses is less jobs that pay well.
- Less accounting and bookkeeping jobs
- less marketing jobs
- less design jobs
- less seller fulfilled packing and logistics jobs
Nothing you mentioned harms consumers. To me it sounds like the situation is as follows:
- Amazon offers a marketplace to sellers, which happens to be the largest marketplace with the most potential buyers.
- Amazon charges a fee to list on their site.
- Amazon doesn't let buyers sell their products for lower on a site that isn't Amazon. (Makes sense; they want to be paid for attracting consumers.)
- Buyers are cost sensitive and buy the cheapest product.
The outcome seems to be the most favorable condition for consumers. The complaint here seems to be that Amazon is so efficient that people would prefer to buy from them.
Cept the part about Amazon not letting you sell your goods cheaper elsewhere. That keeps the price inflated and is anti-competitive since it squashes competition from other marketplaces, not because their platform is better, mind you, but because they have all the power.
Amazon only controls their market. You play by their rules if you sell with them, and that is totally valid. You can sell your product for any price you want so long as you don't use Amazon or don't undercut them if you choose to use them.
That is totally valid. Amazon provides the eyes; they don't want to provide a service for free. Think of all the people that go to best buy to feel a product and then buy it online. Amazon doesn't want that to happen to them.
That's the point. They are by far the largest player in the game, and can ( and do) use their size to squash competition. You don't have to use their marketplace but as a small business you don't have many options that can compete.
Hell, they're even extremely anti-competitive with their employees. Their NDAs are very restrictive and have threatened non-senior employees with them, even ones that they let go.
Yeah, but if you search and replaced the part where the $88 is to pay the manufacturer, and instead say it is to pay they employees and the cost of materials, it's not like that suddenly looks like a viable business.
Except it has been for decades. In traditional retail, the split is 60% store, 40% seller. So your same $200 product would be $80 to the seller, not $88. And manufacturers have been operating with that split for a long time.
You're talking about gross margin/mark up, and there really isn't a "traditional retail margin". It varies a lot by product, but, as an example, the typical mark up for grocery stores is 15%. I used to do retail sales for appliances, including BBQs. The markup could get as high as 50%, even more for high end BBQs that sell in the $800+ range, but was generally more like 30%... and discount outlets or online retailers, it was much more like the grocery store mark up. A $200 BBQ with a markup of 150% like you're describing is not a thing I ever saw.
Are talking about markup from cost of goods? The manufacturer costs usually take into account their overhead; assembly line, warehousing, transport, running the business, profit etc. Amazon is taking over some of those things for sellers, so yes they take a bigger percentage than a normal retail store.
Comparing to retail is not apples to apples. The overall margins on Amazon tend to be lower across the board. So, yes, there's a problem with comparing directly with retail in general. Amazon is taking on distributor costs, but they aren't really doing anything to reduce manufacturer costs. Manufacturers still need an assembly line, warehousing, shipping (to get it to Amazon), & running their business... maybe they're not getting any profit, but that's the problem we're talking about.
While amazon is covering their own warehouse & fulfillment shipping costs, that's really that different from costs normally borne by retailers who have warehouses and handle delivery to their retail outlets.
And saying just don't use FBA is no solution either. Shipping large heavy stuff is expensive, and I best Amazon has much better rates negotiated with the carriers.
Storage plus shipping through FBA isn’t cheap. The problem isn’t that FBA is expensive, the problem is that selling on Amazon but not via FBA is heavily punished with placement and appearance leading to poor conversion rates.
Yes this is the issue for consumers as well. The first 16 pages of every search are nearly identical low quality fba products. Need a search layer to find the small sellers!
Why? This doesn't make any sense. Why would a vertically integrated business that provides the most efficient outcome for the consumer need to be broken up?
The thing is, an importer adds real value to their clients by selecting the products, taking the risk of moving the goods, etc.
You are right that the current state of dropshipping is an abomination, and there's not much left to save of that job. But the reason for that is that more and more of the job and benefits from that business are being taken by Amazon, and the sellers are left with that doesn't really justify their position.
What they're left with - being a plausible scapegoat and discovering new products - is not their choice, it's the part that is not profitable to Amazon.
"This is the result of commoditizing 'starting a business' to the point of near-worthlessness in the bottom 50%+."
Is this not just a market effect of saturating the market with competition because suddenly running a business is comparatively easy (communications technology, platforms and existing logistics and production networks) to any other era.
I can probably start a company drop shipping crap on Amazon in a short amount of time with a smartphone from my bedroom. The barrier to entry has dropped, rather quickly.
Very similar to the music industry, where technology has made producing music so easy the market is growing by tens of millions of new songs every year.
The slices of pie are getting very thin indeed. Especially when there are only a few pie delivery services to choose from and they take their slice first.
So Amazon making good fat margins on every small business that sells on Amazon is demonstration of an ineffective market. And hence why the FTC are stepping in.
I cannot speak for every location, but Amazon isn’t the cheapest in the UK. I would say it is about average.
Where Amazon wins is the range of stock and its next day deliveries. Which means most people default to Amazon because it’s quicker and easier than shopping around. But you can definitely get cheaper if you were to shop around.
Also by Amazon owning the whole pipeline, from stock to delivery, they can squeeze costs down and thus improve their margins. For example, I guarantee you that other online retailers are paying more to ship their products than Amazon are.
I agree fully, but Amazon is still the "cheapest" when you consider the all in price of cost_of_goods+cost_of_delivery|want_goods_in_fewer_than_two_days.
Amazon has the most efficient business, which allows them to survive on lower margins and attract buyers because of the vertically integrated pipeline they've created.
Your example of other companies selling the same product at cheaper prices helps to illuminate the fact that there isn't any real impact from the supposed anti-competitive behavior to the consumer. Cheaper prices still exist! Amazon hasn't become the sole provider.
> I agree fully, but Amazon is still the "cheapest" when you consider the all in price of cost_of_goods+cost_of_delivery|want_goods_in_fewer_than_two_days.
Why say you agree when you only go on to disagree with me?
I've bought plenty of things cheaper on other sites. Delivery included. There have been things that were cheaper on Amazon as well. This is why I said it's about average. But there are so many variables at play here (location, items you're looking to purchase, etc) that it might just be easier to agree to disagree.
> Amazon has the most efficient business, which allows them to survive on lower margins and attract buyers because of the vertically integrated pipeline they've created.
Those vertically integrated pipelines come with significant cost savings though. That's why they do it. And because it saves them $$$, it then also increases their margins.
> Your example of other companies selling the same product at cheaper prices helps to illuminate the fact that there isn't any real impact from the supposed anti-competitive behavior to the consumer. Cheaper prices still exist! Amazon hasn't become the sole provider.
Those two arguments aren't mutually inclusive. Other companies might be offering cheaper prices but making a loss in the hope that loyalty will win customers in the long run. Or other corners might get cut that could ultimately lead to that businesses demise, such as not hiring skilled staff, not following health and safety or other local laws, etc. And even if none of the aforementioned is true, it still doesn't mean that Amazon aren't being anti-competitive.
Also "anti-competitive behaviour" applies to how they block other businesses from competing. You cannot be "anti-competitive to the consumer"
Yeah, that’s really the anti-competitive part. The vertical integration is so incredibly difficult to compete against.
At some point you have no choice but to give them a slice of your revenue and some control of your product, lest your access to customers is severely limited.
Amazon inflating rates after capturing the market, permitting counterfeits, and penalizing sellers offering lower prices off-Amazon, has nothing to do with market efficiency or commoditization.
You've explained what gives Amazon the leverage to set such terms, and why they'd want to set such terms, but you haven't explained why preventing other platforms/sellers from competing on price isn't anti-competitive - you merely asserted that it is so.
It's not anticompetitive because they aren't restricting competition off their platform. They are simply stating that to participate in their marketplace you must adhere to a set of rules.
It is no different than Nike, who requires no discounts on specific products, etc. Amazon isn't prohibiting selling on non-Amazon platforms. Amazon is prohibiting undercutting them if you choose to sell with them.
> It's not anticompetitive because they aren't restricting competition off their platform.
Yes, they are. They are using their influence and market power to prevent others from competing on price, using the threat of economic retribution on their platform. If this isn't anti-competitive, then nothing short of sending assassins on your competitors is.
Nonsense. They are only able to influence your behavior if you use them. It is completely self selected.
It is the exact same thing as is argued by social media companies: they have the right to moderate the content posted on their platforms because it's their platforms. You can do whatever you want on your own site.
> They are only able to influence your behavior if you use them.
Yes, companies cannot influence behavior of people or businesses that have no business relationship with them, direct or indirect. In other words, you are saying that indeed, the only anti-competitive action is sending armed thugs to sabotage your competition. Everything else, every contractual condition, is fair game.
> the only anti-competitive action is sending armed thugs to sabotage your competition
I'm saying that entering a voluntary transaction knowing the terms of the trade does not amount to anti-competitive behavior. Nobody forced you into the trade. Nobody prohibited you from entering the trade.
Entering the trade with clear conditions is voluntary. You could easily just not do business with that partner. Here that would be not using Amazon's marketplace.
Simultaneously, there must be harsh penalties for abusing that system. See Samsung's use of a patent on display technology to label third party displays as counterfeits, despite not using that patent nor misrepresenting themselves as Samsung screens.
Running a business being easy is limited to these low-value drop-ship businesses. Running an actual business is hard. What they’re doing is just arbitrage: buying in bulk from Ali Baba and selling individually on Amazon. No value would be lost if these companies went away. Compare that to a bookstore or cafe being closed in your town.
Yes - some of the complaints seem legitimate (e.g. burying search results really far low - that hurts me as a buyer, and hurts the seller).
But complaining that you need to use Amazon's warehouses to be part of Prime? That's rather obvious! You can always sell as non-Prime. Many do and are successful at it!
Basically, Amazon allowed many businesses to exist by creating a very convenient way to sell. Chances are a lot of businesses selling on Prime who are complaining would not have been able to exist at all.
It's not new, but admission to the program has been unofficially paused for years. They just announced in the last few weeks that they're relaunching the program.
They farm out manufacturing to China, but if they designed the products, this isn’t very different from having Foxconn assemble iPhones. But of course, now the Chinese manufacturer could sell their design directly and undercut them, since they aren’t Apple.
If they are using a design from the manufacturer, I have no sympathy for them. They are just trying to make money by adding some marketing and connecting dots together.
I'm not sure most of these sellers are actually designing their products.
There's an increasing trend of foreign manufacturers copying (or even simply producing unlabelled variants) popular products then white labelling them. You see this all over Amazon where there are dozens of brands selling the exact same product with their name stamped on it. Those products are always some slight variation of a bit name.
* Solo Stove - dozens of identical knock-offs
* Power screwdrivers - Nearly limitless variations of the popular brands
* Theragun/Hypervolt - Literally dozens of knock-offs with slight variations in packaging.
a quick google search turns up this store. whether they designed these firepits themselves or it's a catalog design from a chinese seller, i don't think it's really fair to compare it to an iPhone. and given the sheer number of designs in his store, i think it's a fairly safe bet that they're reselling catalog products from chinese sellers.
Not really a straight comparison. That one on alibaba has a 100 unit minimum. But yeah, for some extra money, the dudes on alibaba will slap your logo and print your packaging.
But Amazon adds real value. They built out a huge logistics and PoS system. They have warehouses everywhere. They have millions of subscribers for Prime which gets people to buy large amounts of stuff on the site.
Any business owner is free to build their own website, set up payments, set up accounts with FedEx and UPS, and rent some warehouse space. That’s a tough row to hoe!
Yeah, but they created a moat and became sticky. Netflix knew they were a middleman too so they started to produce their own content years before the streaming wars. I worked for one near the border that bought American industrial parts and sold it to Mexican factories. I helped build their quoting and ERP software, but the boss wanted to build a platform for him and his competition to try to become sticky and build a moat. Middlemen should always be finding ways to stay in the process.
That's literally the meaning of being a monopoly: There are no other distribution channels that can compete with Amazon. They are a distribution monopoly.
There is no monopoly in distribution. The vast majority of items are bought offline. Walmart, Costco, Target, Kroger and on and on and on and on.
The world wide web + google and facebook make finding eyeballs open for all. Fedex, UPS and USPS make shipping products open to all. Stripe makes accepting payments open to all. Cheap 3rd party manufacturing makes making things open to all.
We've probably never been further from a monopoly in any of the areas in question. The reason it's so damn hard to make any money selling random products is that there is just so much competition.
Most things aren't bought on Amazon, but if you're a middleman droppshipping stuff from China, Amazon is an easy way to get in front of a lot of eyeballs.
It's not clear to me why droppshippers deserve special care and treatment by the FTC.
The chair of the FTC is Lina Khan. As a law student, she wrote this article [1] for the Yale Law Journal. It attracted so much attention in the antitrust law community that it led to her becoming the youngest FTC chair in history.
She has literally been building this case against Amazon since she was a student. It’s not just about dropshippers. It’s also about how Amazon uses automated price controls, guided by scraping of competitors, to engage in dumping [2] and predatory pricing [3] to wipe out competing e-commerce sites. Since everything is automated, prices can change in a matter of seconds, so once competitors are destroyed, prices go back up automatically.
From what I recall, the reason why her argument was recognized is because it solved a thorny problem of US anti trust law, proving harm.
Currently, in the US what matters is showing that consumer welfare was harmed. AINAL but proving harm is not easy - Amazon in particular reduces prices to the end customer, increases choices and makes sales easier.
This is where most arguments died, however her approach had enough merit to pursue.
However, it seems her approach and argument has changed, and is more couched in terms of current legalese - more focused on showing consumer harm than applying a new legal approach.
Distribution channels are endless, and as large as Amazon is, they are only one amongst many, albeit with plenty of vertically integrated advantages.
In the case of a firepit, local consumer channels would likely be speciality shops, hardware and big box with probably a couple of layers of distribution and logistics in between. That market however is more likely to offer $500-$1000 firepits, because that's the way it WAS before Amazon, ALi, etc etc opened up new digital channels to drive down volume, manufacturing and up quantity (which eventually results in either greater margins or lower prices).
Those same non Amazon channels will also sell Joe FBA's $200 firepit as well, perhaps for $400 using those other channels.
To access and operate a business around those traditional / other channels however is nowhere near as simple as "order 50 of these on Ali" + "sell these as FBA on Amazon" = $profit.
It's a lot of work. I wouldn't necessary call Amazon a shortcut, but it's a path to market that is easier, but at a cost.
It wouldn’t matter if they could, Amazon can still acquire and sell them for less regardless.
The only viable business here would be a product you’re self-manufacturing or having made bespoke, and even then you better hope you can get some recognition behind your trademark before the chaps out in Shenzhen get a hold of it.
Food cost in restaurants in similarly shocking. They operate on metrics similar to BOM. Might shock you to find out how much that $40 pizza cost in dough, sauce, cheese and toppings. (Probably just a couple bucks).
I'm a $5m+ Amazon seller here, so many wrong assumptions in the comments, hard to know where to begin...
- Firstly, not every Amazon seller is a drop shipper, or private label products. In fact most of the successful ones I know all design and brand their own unique products. We ourselves design everything in-house and own multiple design and utility patents on ALL of our products, you won't find these products on Alibaba. Yes, we manufacture in China, but it is really cost prohibitive and uncompetitive to do so almost anywhere else.
- Yes, Amazon's policies hurt us and is completely unethical. The biggest one being losing the "buy box" (ability for customer to buy from your brand) when a lower priced product from your brand is found on a competing website such as Target, Walmart, Shopify, etc. They essentially force you to have the best price possible on Amazon at all times or get severely punished. Why this is terrible... let me explain, let's say Walmart stores offer your product as a holiday sale item in their stores, or let's say a particular color variation of your product isn't doing well so they offer it as a clearance item. Now someone can buy that product at a discount, sell it back on a Target or Walmart online marketplace at a slightly lower price and guess what, your Amazon listing is now practically worthless. You lose the "buy box" and all your sales because another site has it listed for cheaper. This happens ALL THE TIME. And sometimes, there's almost nothing you can do about it.
- They practically force you to use Prime fulfillment. Technically you don't HAVE to use it, all you have to do is again, be uncompetitive with products that do offer Prime and lose half your sales. Same with Marketing, PPC, adwords, etc. They've created an ecosystem where all of these options aren't really options because there's no way to compete otherwise.
- Amazon basics and Amazon using private sales data to find out which products sell the best and compete with those brands directly. It's just really evil. They have all the info, all the data, and they know exactly which products to target to offer a cheaper version at a discounted price and steal all the sales...
I'll be the first to say that I owe Amazon a lot for allowing small businesses the opportunity to be making millions. But at the same time, some of the criticisms are valid, and with a few changes, the platform could be truly great for small business owners.
I agree but I also don't want to punish legit businesses that are also impacted just because this guy sounds like a pointless middleman and I don't feel bad for him specifically. Seems like a real problem and he's just a bad spokesperson
Human labor has little value in the age of chatgpt and onlyfans. Did you know there are teenage girls selling bottles of their dirty bathwater for more money than the average blue collar worker makes in a month. As time goes on, its starting to look like this whole free market thing isnt such a good idea anymore.
Exactly! In whichever market that you can sell dirty bathwater, I think they may have an advantage over my sales of "Smelly Old Nerd dirty bath water".
I'll either find a better channel, price point or give up on my dream of dirty bath water money. Point being the actual value is the packaging and selling of said bathwater.
> They farm out manufacturing to China and logistics/warehousing to Amazon
You miss the key distinction. The former part of that equation is competitive, the latter part isn't. A guy who sells firepits can't be expected to create a competitor to Amazon. Amazon has complete monopolistic pricing power. Whenever a company is in that position, they will abuse it.
No telhey can distribute in Walmart Home Depot or Lowe's or equivalent. Amazon is just a more convenient way to distribute and will probably charge you less than the others :-)
Say what you will about their means of getting it, but this person did 100% of the leg work of getting that sale. That sale doesn't exists without them.
And Amazon gets the MAJORITY of the revenue cut for that?
I sympathize with the idea that China should get more of that, but make no mistake: Amazon's logistics and warehousing were not an option here. They were the cost of doing business. And Amazon took more for that service than this person who actually made that market happen.
>The sale wouldn't exist without anyone in the pipeline (Amazon, manufacturer in China, shipping merchant, etc.)
I think it's actually worse than that. The merchant is the only party that is not needed.
In fact, calling a lot of these folks "merchants" at this point is probably a little too generous. Amazon is the merchant. Many of these other guys are sourcing and marketing "partners" for Amazon and the manufacturers.
By this logic, a car salesperson should get the majority of the proceeds from selling you a car. So from a $30k car, $15k goes to the salesperson, $5k to the dealership, $9k to the manufacturer, and $1k to the shipper. You really think this makes any sense?
I ran a small FBA business for a year nowhere near any scale and it was an interesting lesson. People who weigh in on these tech topics should actually try these things out to understand them better.
It's nothing like listing on eBay where there's some haircut off the top and that's that.
There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget. Depending on the fee it is - fixed, % of $, weight based, volume based, or some combination.
The fees change constantly with not much notice. So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go?
Like Uber drivers, I imagine some % of FBA sellers don't know they are losing money in real time. You need to do some decent accounting to track as all these different fees hit at different times. It's not like Amazon gives you the data & tools to track your all-in costs per sale.
> So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go?
You've skirted around the obvious question: Why did you pick FBA to begin with? Amazon sellers existed long before FBA. They did their own shipping, so almost none of those fees apply. Many sellers continue to do well on the Amazon platform while not being part of FBA.
If you can't succeed without participating in FBA, then all that's happened is Amazon created an environment for previously unviable businesses to succeed, and has merely tightened it.
Edit: Amusing that this comment is being downvoted, whereas my other comment saying pretty much the same thing is being upvoted.
AWS works this way too but I’ll get dogpiled by Amazon sycophants and other people who have built their careers around getting witless companies sucked into the Amazon machine.
Steve gave examples for the different kind of fees and that it's hard to track them and why. I wanted to ask you for examples for AWS. Would be good to know concrete pitfalls and traps.
egress fees, inter-DC transfer fees, IP fees, ebs storage fees, transactional fees on things that are transactional. If you don't carefully engineer everything you'll get left with a $15,000 AWS bill. This doesn't cost Amazon anywhere near $15k to provide, so they just "waive" the fees if you promise to be a good little user.
Don't disagree with this, but this is the same in almost all cloud providers. Want to get started with Digital Ocean's app platform? You're paying for Container Engine to store your containers, then App Platform Business just to support scale-outs, then multiply this for the number of services you're deploying and make sure you don't have egress overages etc etc.
At least AWS gives me an invoice each month with a break down of fees. GCP just sends an invoice for the total amount. No detail, no breakdown. And I have never gotten any of GCP's many different pages under their billing system to spit out any numbers that make sense. Pick your poison?
If I remember correctly, they charge for the BigQuery table you use for the detailed export. In other words: there's a charge for seeing detailed charges!
All other clouds provide a detailed cost breakdown report for free.
> There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget.
Have you ever run a business where you have to manage your own inventory? What you listed and likely the 5 things you omitted constitute real work. Perhaps amazon's fees are capricious but they're doing all the work for you. You can manage your own inventory and shipping logistics and still sell on Amazon
Those fullfillment fees are nothing new. I worked for a publisher thirty years ago and they had a similar network of fees.
The only difference was they were predictable in that the fee schedule changed only at time of contract renewal.
Whats different is that the fulfillment centers then couldn't see our books and weren't looking over our shoulder seeing our accounting figures, so as to grab the profits the moment it crossed the threshold of feasiblility.
Uber was easy and profitable in the beginning and clearly a superior value to car services and cabs. Many drivers took on debt to buy bigger better cars, never imagining the goalposts were adjustable by design so as to centralize all the profits.
It is obscene, like Ducth East Indian trading corporation, or Rockerfeller.
People will walk away, there's no choice and MegaCorps know this, so they will subtly lock down movement.
Medium sized businesses are the buttery smooth, slippery slope to hell these days.
Attention management and product discovery has to be done by permenantly white organizations, monasteries, regulated-to-inaction government arms, independent offshoots of a benevolent billionaire's philanthropy...
The panopticon doesn't just effecy day-to-day life... it also strangles the power and wealth of businesses to death.
I have been saying it for years, and people just dismiss it, why would a billion dollar company prey on a million dollar company, they have bigger opportunities...
The nature of Uber being easy and profitable in the beginning was a heinous dishonest trap engineered by venture capitalist subsidizers.
It should be illegal to convince people economically that a certain lifestyle is worth switching to when you are keeping secret your plan to slowly boil the ocean tweaking it so that you can get your exit.
Correct. My point is that people only casually familiar don't realize how vertically integrated the FBA model is.
FBA is like eBay, PayPal, FedEx, Google Ads and a warehouse all wrapped into one.
But they charge you varying types of fees based on different measures, at different times, for each of those parts of the stack. And you cannot cross shop, mixing and matching other vendors in to keep them honest on pricing.
It's easy to use, but you are locked in to their stack.
Why shouldn't they? You've arranged to have product you didn't create shipped to a warehouse you don't operate to be stored by a system you don't maintain to be sold on a storefront under a brand you made up and that you didn't create to be fulfilled by a shipping apparatus instead of you going to the UPS Store. What exactly are YOU doing here that merits a payday? Mediating a relationship between Amazon and a Chinese manufacturing firm? They already have tons of those.
The entitlement these entrepreneur types exhibit is the economic equivalent of wind-drag. If buying stuff from random AliExpress sellers and charging 300% markup to sell it to people who don't know better on Amazon isn't working out for you, maybe you should find a way to contribute to the economy instead of just inserting yourself between existing profitable businesses and demanding money for sending some emails.
If it's legal they should do it because it's evidently profitable. If it's not legal then they shouldn't do it because it's illegal. Which is really the question at hand.
You're criticism seems to be grounded in a distaste for the kind of business being done (and I think it's quite fair to be critical of the business model based on cheap Chinese labor). But that's not really relevant to the question of did Amazon utilize anti-competitive behavior that violates the laws that govern how businesses are allowed to behave.
> If it's legal they should do it because it's evidently profitable.
Is it? The moaning from higher in the comment tree seems to disagree with that assertion.
Maybe it was once profitable, but it seems as Amazon's reputation for hosting tons of cheap resold goods gets worse, it's becoming significantly less so. I personally have known for years that it's possible to oftentimes find the gadgets sold for $15-20 on Amazon on AliExpress for a few bucks. This isn't exactly arcane information anymore.
> You're criticism seems to be grounded in a distaste for the kind of business being done (and I think it's quite fair to be critical of the business model based on cheap Chinese labor).
My criticism is that the same people who cry from the rooftops about how free commerce is essential and how they have a right to sell marked up goods under any name they like to people who can't trace their supply chain have zero basis to complain when consumers get wise to their shenanigains and go elsewhere. It's literally this kind of "business owner"'s fault that Amazon is becoming near unusable now. I'm not shocked one bit that Amazon is cracking the whip; their reputation is on the line and has been trending steadily down for years.
"Buyer beware" they chant. Until the buyers start bewaring, and then they start whining about unfair competition and high fees for their store that is entirely operated by a third party and literally cannot exist without it.
Amazon is no angel here either of course. They have monopolized the absolute shit out of online retail, one of the ways they did was offering reseller services and getting businesses on their platform in the first place. Neither "side" of this is right, per se. Both of them would send me as a customer up the proverbial river to make a single dollar. As far as I'm concerned, them fighting in court is strictly entertainment, apart from whatever precedents get set that might affect other businesses I actually give a shit about down the line.
But like, the businesses I give a shit about are like, local ones. Ones run by people, to serve people. Not ones pulling tag clouds from trending social media topics or buying ad space on instagram to sell an egg beater shaped like a cat for $35 that they got from a Chinese manufacturer for $5.50/10,000 and dropshipped to people. This is just that, with an extra step. And the entity that's the extra step is realizing how raw of a deal it is, and they want a heftier cut to put up with these middle men. And on that particular point I don't blame them one bit.
It's always a signal that you're on to something when you get a bunch of pedantic rebuttals like this. Attacking the central argument isn't possible, so they nitpick.
You literally just said that they did the hard part, which is apparently identifying a product that consumers want and cannot buy. The commenter then says: why don't they just do all the apparently easy shit, which is making it, holding the inventory, shipping it, and handling returns/customer service.
Maybe your point just sucks because finding some cheap garbage on AliExpress that you can sell with instagram ads isn't actually all that hard, or that much work, which is probably why this exact business model was sold to people who, as stated by people selling it, had low skills and no interest in acquiring them, so they can generate passive income by operating an automated storefront on Amazon.
They did the unscalable part. That better? Are you happy now? Can you go find something else to nitpick?
> finding some cheap garbage on AliExpress that you can sell with instagram ads isn't actually all that hard
It's very hard. What you're missing are all of the thousands of people who try it and fail. And you see one person succeeding and say that's easy, they're just buying shit from China. No, they combined skill and a lot of luck to find a product in China people want. That's not just ordering shit from China. If it were, Amazon would do it themselves and cut out all of these middleman. Which they can't, because it's not scalable. Which was my original point.
Unscalable is not synonymous with hard for the vast majority of people. If you communicate confusingly, you'll be asked for clarifications. That's not nitpicking and you can avoid it by using words for what they're for.
> What you're missing are all of the thousands of people who try it and fail.
It's not easy or hard. It's lucky. It's getting your ad seen in the right place with the right audience and taking off with enough sharing to build virality. Then your store will do a brief burst of good business before you fall back into irrelevance and continue.
It's highly analogous to gold rushes. And then as now, the people who get reliably rich off gold rushes aren't mining gold, they're selling shovels and pickaxes, namely: hustle influencers, shopify, and indeed, Amazon.
> That's not just ordering shit from China. If it were, Amazon would do it themselves
Buy some Amazon Basics stuff and check where it's made, then get back to me.
> and cut out all of these middleman
Which is what they seem to be doing.
Like again, for emphasis: Amazon is not a good guy here. They are neutral, at best. But I have very low sympathy for people who build their entire way of life on one single platform that could at any moment tell them to kick rocks. It's bad when YouTubers do it, it's bad when instagram influencers do it, and it's bad here too. And all of these usually end in similar ways. You're only as good as your last post, your last sale, your last quarter of profits and if your and the platform's interests diverge enough, you'll be dropped like a flaming bag of dogshit.
> Unscalable is not synonymous with hard for the vast majority of people.
> It's not easy or hard. It's lucky.
Great, thank you for teaching me about the English language. None of this addresses a single thing about my point, it's just nitpicking my choice of words.
Use whateeeeeeeever words will make it through your compiler, insert those in place of mine - and that's what I meant.
> Buy some Amazon Basics stuff and check where it's made, then get back to me.
> Which is what they seem to be doing.
Nitpick 2, Electric Boogaloo. Now you have a problem with the way I've used some other words or the absence of some qualifiers.
> Use whateeeeeeeever words will make it through your compiler, insert those in place of mine - and that's what I meant.
Until I do it incorrectly, and then I'm deliberately misconstruing your point into something you didn't say. Or if I do it in a way you feel makes you or your argument look stupid, at which point I'm arguing in bad faith.
No thanks. If you'd like to discuss things I'm happy to do that, that's why I'm here as Obi Wan says. But I'm not responsible for steel-manning your point for you because you lack vocabulary.
> Nitpick 2, Electric Boogaloo. Now you have a problem with the way I've used some other words or the absence of some qualifiers.
This is still not nitpicking. You have repeatedly put the notion of product acquisition on a pedestal, including the fact that pulling goods from China is this difficult, laborious task (which, it does take labor, that is true). But Amazon knows how to do that, it's basically how it became the retail juggernaut it is.
And that includes Amazon Basics products, which without even looking at one, I'd be willing to bet non-insubstantial amounts of money are manufactured mostly in China. That doesn't make them inherently bad: Chinese firms will make your products as good or as bad as you're willing to pay for.
No one is nitpicking. They just don't buy your argument."nitpick" implies a person is addressing a minor detail and not addressing the central point. This person, and the comment above (by me) is directly addressing the central point you made, and saying it's weak.
Building all the infrastructure required for FBA is much more difficult than choosing products. The proof is in how many people have done one v the other. Amazon does a decent job on both sides - building the infrastructure, and figuring which products to sell, at scale (they do 100's of billions of non 3rd party sales every year).
And it's still wrong. Amazon does 100s of billions of 1st party sales. As does Costco, Walmart, Target, and probably a dozen other stores I'm not aware of. It scales, big time. Choosing products to sell when you have a giant distribution engine is one of the most scaleable things in business.
If you want to trot out the principle of charity, it goes both ways. You assumed people were nitpicking. It was wrong. Every way you want to spin it by changing words, wrong.
> Amazon does 100s of billions of 1st party sales.
And the remainder is not scalable. All of that done by their sellers. As evidenced by the fact that they are not doing it themselves.
I'm beginning to think this thread is being astroturphed. All of you are employing an identical strategy of latching onto minor issues with how things are phrased. A standard PR tactic. And Amazon has a long documented history of astroturphing.
You are human? You must be amazon's first gen astroturfing infra, mechanical turk style. I'm part of amazon's skunkworks Astroturf-LLM service. Automated, at scale astroturfing. I believe we will make it public facing via AWS soon.
normally they'd need to pay for storage, stock, liquidation of stock they didn't sell, returns etc
and instead now you pay for all of that for them
and what do you get in return?
- a listing on page 17 of their ever increasingly shitty website behind legions of MINFARTO, PATRONICS and GIBRANKER aliexpress garbage
- customer service staff with an inability to understand simple english or basic problems
- your genuine stock mixed with counterfeits, that then they penalise you for
- paying to give your sales information to them as a potential competitor, as if you do well they'll ripoff your product
and they take essentially absolutely no risk whatsoever
Has anyone created software or a web site to generate hilarious Amazon brand names automatically?
Edit: Looks like there are lots of AI-fueled Amazon/business name generators. Most of the names weren't as funny as your examples, though I got some good ones (electrofakes.com, etc.) from prompts like "low quality tech products" and "cheap knockoff technology products."
Another site gave me the more Amazon-appropriate LAMOFY, HOROLY, YORBAX, etc. (all with .com domains and premade logos.)
As the NYT noted, "Amazon is to fake products as Facebook is to fake news."
HiLetgo is legit, they've been around for quite some time and make decent ESP32 boards among other things. You can tell the FBA placeholders from Alibaba drop shippers because they're almost universally six letters and all uppercase like MOREPI; because this is enough for them to get a trademark to participate in the Amazon Brand Registry and get reduced seller fees.
And the vast majority of the products are just rebrands from Alibaba. As a matter of fact, there's an entire economy centered around finding products on Alibaba to resell on Amazon.
It's a super interesting segment there are like millions details for the system to work even if the basic product is the same you can have your own barcode and serial number label attached, you can personalize the packaging, you will have to translate the manual, the are entire microverticals that exist just between the no brand manufacturer and the guy flipping the product on a marketplace even before shipping takes it out of the factory you're already paying like four or more services provider, plus coordinators to make all that happen.
Not to be confused (as I was) with FOB, free on board, a term in commercial sales law, especially wrt international shipping: https://en.wikipedia.org/wiki/FOB_(shipping) I wouldn't be surprised if the similarity in acronyms isn't coincidental as in the abstract there's some conceptual, if not legal, overlap, and Amazon may have been aiming for something that read like authoritative legalese--the legal department must "always be selling" no less than the sales department. But neither would I be surprised if it was coincidental.
A neighbor of mine who makes high end silver jewelry was doing fine with the gallery he used (in Santa Fe). The gallery collected about 30% of his sales price in fees.
Another gallery approached him, asked to represent him instead. They took 50% in fees. He switched anyway.
His income went up (and stayed up). Presumably the new gallery provides some combination of better environs, more and/or different customers, better salespeople.
It still seems wrong that fees could be this high, for a jewelry gallery or for amzn. But it shouldn't be assumed that the high fees necessarily mean reduced income for the original seller.
"But it shouldn't be assumed that the high fees necessarily mean reduced income for the original seller."
I agree. It just gets passed down to the customers. Most of my shock was directed at the 50% increase in fee in just a few short years. You can't do that without having a lot of leverage.
As a business owner pricing a product or service, if your costs increase you can either take the marginal cost out of your net income or increase the price.
Taking it out of your net income is simple: You keep prices the same, revenue remains the same, and profit drops a bit.
Increasing the price is more complex; you are changing one component in a system of dynamic feedback: When you raise the price, fewer people buy your product, so the outcome may be less revenue and less profit. The impact of price changes on purchasing is called elasticity: Some products - e.g., fancy restaurant meals - are easily forgone and are thus price sensitive. Others, like necessary healthcare, can be priced extortionately and people will still buy it.
Arguably, if you are the mythical optimal manager, you've already priced your product to maximize revenue and therefore any change will decrease it. In that case, price increases will only worsen your profit.
The reason for your price increase is orthogonal to the customer's purchase decision - you raise the price, they buy less. They usually don't know and don't care why - do it for greed, to cover additional cost (and maintain your beloved profit margin), because your finger slipped on the price-your-goods app, whatever.
Back in the 80's, my company sold compilers through third party mail order houses. They all demanded providing the product to them at 50% of their selling price.
It's what having somebody else advertise, collect orders, process payments, ship, and deal with returns is always going to cost you.
If it's unacceptable to your business, sell directly. My company did both.
I neglected to mention that the mail order resellers demanded we provide them with product at 50% of the price we retailed it. So, if we lowered the retail price, we'd also have to lower the wholesale price.
Nobody was being stupid here. Or maybe I should say that one learns the ropes fast or goes bust.
I am pointing out that your example includes risk transference. Unless they also charged you for shipping, storage, and returns.
There is a difference between "let me buy from you and I need room to make a profit" and "you can sell through me but you bear all costs but I still want my profit".
Yup, it makes me wonder what % of consumer goods for sale via FBA are from retail theft rings. 52% fees on stuff that cost you $0 ain't bad. Otherwise, it's very very bad.
> Would be curious to see numbers on the bigger items. Have you used FBA?
Yeah, I've done enough FBA to rank somewhere between a serious hobbyist and an actual lifestyle business.
There is a sweet spot. If you're selling lightweight crap items, even the small shipping and fulfillment costs still tend to dominate. If you sell huge stuff, the shipping will bite, but not as bad as you'd expect -- Amazon has very good rates. The big problem for bulky items tends to be warehouse fees, and also the logistics of getting it to the FBA warehouse in the first place.
I'd say around 1 cubic foot is exactly where you want to be (with the dimensions carefully chosen to keep you in a favorable category, of course). I believe 18"x14"x8" is the biggest legal standard package.
Somewhat counter-intuitively, if you miss that standard cutoff, you might as well go big (3+ cubic feet) since you're paying the same oversize rate either way, the only drawback is warehouse costs. There's sort of a no-man's-land in between toaster-size and microwave-size.
Anyway, here's the actual fulfillment fees, if you're curious (notice how reasonable the rates are in the "Large Standard" range):
Depending on what services they provide that might not be terrible, its basically high end art gallery margins, but for consumer products with low margins that seems unsustainable. I'm curious how much AliExpress takes.
>A lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.
It's interesting, Amazon also put a lot of mom and pop businesses out of business during this time period as well. The overhead that used to go to local commercial property owners, independent trucking and warehousing companies and such now all goes to Amazon. It's a total monopoly in the old school robber barron sense. Not only do they own the railroad they also own the steel plant and the coal mine.
Amazon's "potential competition" in this case is driven by ads via Meta (or maybe Google). I'm all for Apple preventing Meta from spying on me, even if it makes it hard for small companies to advertise to me.
> Our second option used to be the Facebook/Instagram/TikTok to Shopify connection but with that being dead in the water most of us have had to commit 100% to FBA to be able to stay afloat.
Meta/TikTok do less spying on customers, so it is harder to target ads to customers on iOS. This is the desired behavior. It means people who want to use targeted ads (called "the FB/IG/TikTok to Shopify connection" by the GP) are not able to.
By "mom and pop businesses" do you mean people selling cheap crap from China that is the same as the crap sold by a dozen other "mom and pop businesses"? Hard to feel sorry for businesses that are contributing to the rapid decline in the quality of all product categories.
> lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.
> The impact of Amazon’s monopoly power is felt big time by us as we’re being squeezed with no place left to go online especially post-iOS change.
you either wouldn’t have a business at all without FBA, or you’d have higher margins with the same net earnings.
if you don’t like FBA try advertising on facebook. it’s very expensive because it’s very effective. the cost of the ad is so great that socks have to cost $20 and t shirts made in china have to cost $30.
i used to buy from marketplace on amazon. but dealing direct with sellers is worse than the ebay gamble. so i only buy FBA. i prefer direct sale from amazon if possible. the price is always higher but i have guaranteed no hassle.
otherwise i shop local.
i don’t know about dirty tricks but from my POV amazon earned their market by having consistent and reliable customer service. if you want to increase your sales it’s worth it to ride on _their_ brand. $250k to $5m for a mom and pop drop shipper sounds absolutely fantastic to me.
I can't help but think that Amazon should be replaced with a non-profit or regulated public utility that provides a single unified online marketplace, part of internet infrastructure like ICANN. Sellers would select among competing fulfillment services (warehouse+shipping). Platform referral fees would go toward customer remediation, anti-counterfeiting, and review integrity.
I don't merely say this as a "fuck Amazon" reflex or a "fuck capitalism" reflex. I say it because it obviously would allow so much of the dying segment of mom and pop small business to become viable again. Just from a policy perspective it's a home run because it's a way to juice GDP, improve consumer purchasing power, AND reduce income inequality.
As a matter of fact I would suggest that Amazon as it exists is anti-capitalist. It is feudal. Capitalism is the deployment of capital and assumption of risk in pursuit of new value creating activity. Amazon is not marshalling new capital to innovate or improve its digital marketplace. Rather, Amazon simply owns digital real estate and extracts rent, like some kind of futuristic dystopian corpo-baron.
The best part of all this is that Amazon doesn't have to be forcibly nationalized or broken up or anything like that. The government just needs to support and endorse a good alternative, because Amazon seriously sucks.
Don't you think if we turned USPS into this it would be a another billions of dollars a year waste for taxpayers? Do we really need to be subsidizing drop shippers?
> Amazon is not marshalling new capital to innovate or improve its digital marketplace. Rather, Amazon simply owns digital real estate and extracts rent, like some kind of futuristic dystopian corpo-baron.
Amazon owns one of the most sophisticated logistics networks in the world. They own warehouses and robots and trucks and planes. All of that adds up to a meaningful, valuable contribution to the world.
I buy tons of stuff on Amazon. I buy from them rather than from eBay or an independent online retailer because I know it'll actually get delivered to my house on time. For me, the marketplace is basically irrelevant - it's the promise of fulfilment by Amazon that I care about.
I sometimes reluctantly buy from an eBay seller or a random e-commerce site when the item I want isn't available on Amazon. Those retailers tend to offer "FREE DELIVERY", but they also tend to be very evasive about how long it'll take and which company will do the delivering. Sometimes they'll advertise next-day delivery, but take two or three days to actually dispatch the package. Sometimes they'll use an ultra-cheap delivery service that takes 3-5 days, with no prior warning of which day they'll actually try to deliver on. Sometimes their terrible delivery service will decide that they just can't be bothered to deliver to my house, so they'll lie about having tried to deliver it and tell me to collect it from a warehouse. Sometimes they deliver to somewhere random in the vague vicinity of my house (a neighbour, underneath a parked car, behind a bush) and I get to play a fun scavenger hunt where the prize is something I already paid for. These bad outcomes literally never happen to me when I buy from Amazon.
In the event that something did go wrong with a delivery, I'm confident that I could just contact Amazon and they'd make it right; when something goes wrong with $OnlineRetailer, I often find myself refereeing a dispute between the retailer and the logistics company, both of whom deny responsibility.
There are plenty of alternatives to Amazon, but from a customer's perspective they just suck.
All of what you're saying has to do with Amazon fulfillment (FBA), not Amazon.com the Internet marketplace.
They're two entirely different things (you can actually use Amazon fulfillment for items sold on other websites, although it's typically too expensive). If Amazon fulfillment continues to dominate on an independent platform, that's great, they earned it, but at least they won't have absolute pricing power because sellers will have alternatives, and at least other companies will have a chance to impress you, too.
I'd figure that the marketplace would show the fulfillment company in addition to the way that the courier is typically indicated, so that customers could express their preferences. If the item does a lot of volume, perhaps a seller would even have inventory with multiple fulfillment companies, and buyers could pay a surcharge to get their preferred fulfillment, same as shipping.
> Don't you think if we turned USPS into this it would be a another billions of dollars a year waste for taxpayers? Do we really need to be subsidizing drop shippers?
You've missed the idea entirely. No shipping services are envisioned whatsoever by the "public utility". It would just be the actual marketplace connecting buyers, sellers, and fulfillment.
Amazon can continue to do order fulfillment if they like, it's just that any company with a warehouse can actually begin to compete with them. Sellers would be able to freely associate with whatever fulfillment company best suits their needs, rather than being captive to FBA.
> What on earth are you on about? They own a url.
Right, from which they extract enormous rents. It is not a product in which they continually invest. If you have used it with any frequency over the past decade, you've almost certainly noticed how shitty it's become. That's not an accident; their "sellers" (tenants) are locked in, and are paying something more like obligate rent rather than indicating with their dollars that Amazon's product is the best.
It would be the same story with privately owned power lines or privately owned roads. You're not using them because they're the best, but because you don't have a choice. We screwed up with the actual internet cables, but we still have time to get it right with internet marketplaces.
> I can't help but think that Amazon should be replaced with a non-profit or regulated public utility that provides a single unified online marketplace, part of internet infrastructure like ICANN.
if the market was working correctly Amazon's profits would be driven down to zero and you'd effectively have this
> As a matter of fact I would suggest that Amazon as it exists is anti-capitalist. It is feudal.
> if the market was working correctly Amazon's profits would be driven down to zero and you'd effectively have this
Are you sure? Consumer behavior seems to be to simply go to their default marketplace rather than to search the whole internet (which is slow, painful, and low-trust), so it ends up being a winner-take-all system where alternative marketplaces like eBay are almost irrelevant and Amazon charges whatever they like and basically ignores counterfeiting and review fraud.
There are "natural monopolies", like with roads and power distribution networks, and I would argue that online marketplaces have turned out to be another one, and we should modify our public policy to reflect that.
FBA SKU pooling has completely killed Amazon for me. I used to purchase on Amazon regularly but I just can't trust them shipping me a genuine product anymore. I've gone back to select local eShops, even if the quoted Amazon price is often cheaper.
Thanks for sharing your experience. Do you think Amazon dropped the planned fee they were going to charge for those sellers who don’t use prime, in anticipation of this suit? Would that have impacted you?
Amazon is a marketplace and provides exposure - in other words, they bring you traffic besides providing ecommerce functionality. Possibly a lot of traffic if there's not much competition already in your space.
With Shopify you have primarily an online store solution. It's up to you to do your own marketing somewhere to drive traffic. Shopify does have what they call "Shop" now, which works like a marketplace, but in my experience that's still a relatively small channel for Shopify sellers.
> Shopify does have what they call "Shop" now, which works like a marketplace, but in my experience that's still a relatively small channel for Shopify sellers.
It's getting pushed harder due to things like Shop Pay being a thing. I've actually been trying to use it more, given I do purchase an increasing number of things from Shopify-powered retailers - but their search and targeting still needs a lot of work for it to behave like a proper marketplace.
Shopify requires you to build out performance marketing strategy and with the IOS changes, targeting has lost efficiency. It’s more expensive to acquire customers.
Once I figured eBay out, it's about 90% eBay, 5% Amazon, 5% other.
Amazon does a great job of making it appear that they are the best option to shop at. But they really aren't. Even with Prime Free Shipping, if you search eBay correctly - the prices are likely better there.
I know what some are probably thinking, eBay is full of scammers and knockoffs etc. That's not really accurate. Especially when you figure out how to use it correctly.
eBay policies are designed to protect the buyer. If the item doesn't arrive, you're getting a refund. Every. Single. Time. If you're unhappy with the item: tell the seller. Most will make it right for fear of negative feedback, and knowing they'll lose the INAD. INAD? If the seller wont fix it, file an Item Not As Described claim. You will win and they'll be forced to either refund you or accept a return.
ATT, where apple hobbled other ad networks running on iOS. It used to be that DTC companies could use the fine-grained targeting offered by FB and Google to reach consumers without needing to go through a major distributor. Since the targeting is much less effective it's more expensive (potentially uneconomically so) to reach people. As a result, sellers are forced back to Amazon.
I work with DTC Shopify brands and I personally haven't found the ATT hurting ads performance in both Meta and Google. I'm sure YMMV but I've not seen it since it started. Maybe I work with very broad targeting compared to others.
I've been saying for years—and it's been received un-popularly here on HN—that ATT has been a bad thing for the industry overall, and this thread is a primary case in point.
Are its unintended consequences in propping up monopoly also good for ‘society’, then? Hate to break it to you, but the topic is a bit more nuanced than ‘privacy good’ ‘ads bad’.
Businesses got along just fine before all that intense user tracking was even possible. If your business absolutely needs it to survive, then your business doesn't deserve to survive.
"boo hoo, I can't invade my users privacy anymore! Waaaaah! It's unfair"
A lot of the old machinery for small businesses to find their customers - e.g. news, hobbyist magazines, etc - is no longer around, and so there's nothing for those businesses to return to. The Internet, and specifically advertising companies, killed them off. What's unfair is not that they can't violate privacy, but that Amazon still can.
Apple limited data from being transferred between apps. So you can’t measure whether your ad being clicked in one app resulted in a purchase in another app (aka. a “conversion”). That throws a big wrench into ad pricing, because the sellers want to pay-per-conversion. It hurt companies like Snap, Shopify. Since Amazon owns both the search/discovery and checkout in the same app, this doesn’t affect them.
Also, Apple didn’t limit their own advertisers from measuring conversions. So if you click an ad in Apple News and then buy an app from the App Store they will measure and charge the advertiser for that conversion without ever popping up a scary message saying Apple wants to track you. Go figure.
The companies have worked around these issues by doing stuff like statistical modeling to guess the conversion rate, but this has obvious downsides and makes everything harder, which puts them at a competitive disadvantage vs. vertically-integrated players like Apple and Amazon.
For one thing, the privacy rules only cover sharing data with third parties. They don’t cover Amazon using its own data for product recommendations.
But also, Amazon doesn’t rely on product recommendations in the first place. When I want to purchase something, I usually go to amazon.com and type in exactly what I’m looking for. No need for Amazon to guess. Amazon does make recommendations, but at least in my case they represent a tiny fraction of purchases.
In that way I’m voluntarily contributing to Amazon’s monopoly. I feel bad about that. But I use Amazon anyway because there are no alternatives that offer even a remotely comparable buyer experience.
By virtue of everything sold on Amazon being in the Amazon app the rule in question is kind of moot. The ATT privacy rules don't matter to them because they've already got everything they need to know about you from your habits in their app.
The key was that people self-selected into those outlets. If you were selling, say, game controller skins; you'd be making a pretty sure bet buying ads in GameInformer or on Joystiq. The problem with going back to that kind of business model is that these dedicated websites with specific niche audiences are dead or dying because the ad dollars moved elsewhere.
You say that, but what this rule has done is made it so this kind of tracking is available only to large apps like Amazon. The little guy gets snuffed out before they can even gain traction.
was there also any change related to Apple wanting a cut of anything sold through an app, and how the Amazon shopping app works on iOS, and could that also affect 3rd parties?
No, physical goods have always been excluded from Apple’s commission
In fact they explicitly prohibit using in-app purchases for physical goods, presumably because they don’t want to deal with the headache that comes with providing customer support for those transactions.
They were using the Amazon platform for what it was intended for, and Amazon made more millions off of them. It was supposed to be a mutually beneficial relationship.
And I am saying what Amazon is doing is not anticompetitive at all. These “companies” that sell on Amazon are basically glorified trade companies that arbitrage low cost Chinese manufacturing. I don’t feel bad for them at all. If they are hurting so bad, go sell the goods on Shopify store or Walmart/Target. Oh, what’s that? They charge more than Amazon? Interesting…
You're over generalizing. There are plenty of sellers that took the time to develop their own products and sell them, only to be copied and undercut by Amazon.
How is that different from Walmart selling their Great Value store brand? They see what products sell well then formulate their own cheaper alternative, maybe even giving their product better shelf placement.
Every national grocer does this. It seems to be a pretty close analog yet nobody bats an eye at the practice.
In general there are many different grocery stores, even Walmart the massive company it is only represents something like 10% of grocery sales in the US.
Amazon represents something like 40% of all online sales. Typically having a large plurality in a market raises the likelihood of actions against you.
>It seems to be a pretty close analog yet nobody bats an eye at the practice.
Or, more likely, tech people pay attention to Amazon and not the myriad of suits occuring in the retail and grocery world.
The local Kroger supermarket has Kroger branded items on the shelf right next to the national brand. The latter is always more expensive, I usually buy the Kroger brand.
The supermarket wouldn't stock the national brands at all if customers weren't buying them.
> How is that different from Walmart selling their Great Value store brand?
Well for one it’s different in that store brands are often made by the same manufacturing/processing plant as the regular brand.
So not only is consent implicitly build in because the producer agreed to make the store brand variety, it’s another income stream.
And secondly the store brands typically go out of their way to differentiate themselves from the main brand to such a degree that if you hold the two boxes next to each other you wouldn’t mistake one for the other.
Thirdly they significantly undercut the other brands and sellers.
They can do so because they don’t have to pay themselves a commission and all the other fees, which in turn forces the other brands and sellers to match or eek out a small price difference in which they’re cheaper in the hopes to get some sales, cutting into the already thin margins that are left after paying Amazon’s fees.
Amazon is also in a better position because of the vertical integration, they have a direct relationship with the manufacturer which cuts out the margins of the middle men (the sellers and distributors), regular sellers on Amazon have the distributor’s margins to deal with and then their own margins and as opposed to Amazon they can’t sell their items as a loss leader.
As for Walmart and similar retail, it’s a whole different situation.
The manufacturer sets the price and within it, their margin. The retailer then purchases it at that price and tacks on their margin, but if it’s on the shelves then the manufacturer has been paid so there’s no risk for the manufacturer because the retailer carries the risk.
There are some nuances and exceptions, such as manufacturers sometimes being able to force a MSRP onto the retailer or a retailer being big enough to leverage a better price or a risk shifting agreement where the retailer doesn’t have to pay for delivery until the items are sold, nevertheless, in general the relationship is entirely different from the relationship Amazon has with its sellers.
And lastly, Walmart doesn’t hire people to walk beside you in the store to swiftly grab a Great Value variant and push it in your hand each time you so much as think of buying something.
The cereal factory that makes Kellogg’s cereal also making Great Value cereal is therefore not comparable to Amazon.
Amazon typically makes their Basics items look identical to the most popular brand and place it at the top of search results.
Now the original brand is forced to pay to get their item at the top of the list, and even then it’ll get second place, underneath the Amazon branded one (often barely above the fold).
Take this example of me searching for a padlock[0][1].
Not only is the Amazon branded lock identical to the one below it, it’s placed prominently at the top of the results in such a way that it’s the only product that can be seen in full.
The one immediately below it doesn’t get top spot despite being “sponsored” (i.e. paid to be prominently displayed) and if you look at the price they’re trying to be a little bit cheaper than Amazon in the hopes to generate sales but given how minor the price difference is with the Amazon branded lock, it comes across as a painful thing for them to do because it seems to me as a meaningless difference (but admittedly that’s me reading into things).
The issue is that when you’re the platform holder that sets the fees for sellers, controls what people see, have insider knowledge on sales and you use that to benefit your manufacturing and sales division, then you have too much control and are abusing your powers imho.
Brick and mortar retailers don’t have this much control over and information on their suppliers.
Reality is far more complex then the simple take you have here.
>by offer better quality stuff,
Amazon, for example, offering counterfeits of your product as your product is not under the definition of "better quality stuff"
>for a lower price
Again, offering a lower price consistently is one thing. Using pricing as a weapon, for example selling a product lower than cost in order to monopolize a market is not.
>If the price stays low and never goes to high monopoly prices then it is a good thing.
Not necessarily, but it goes a long way to balancing out the negative consequences. The problem, though, is they've never had prices stay low. Eventually, prices go up. So far, Amazon does this through loss-leaders; products that have low prices allowing them to capture a market and charge high prices for other products as a monopoly.
>If a company becomes a "monopoly" by being cheap, and staying cheap, thats just competition by definition.
If that was all they were doing it would be legal.
The competitive market has multiple goals - lower prices for consumers is only one of them.
Big companies compete in the market by offering the same quality for a lower price. That's good, no problem with them doing that.
The problem is when the big companies crush nascent competitors by using their advantages in the market and not by being better quality or more consistent. That's bad; it stifles innovation and creates market concentration, resulting in monopolies and allowing large companies to charge supracompetitive prices.
So you can have pro-competitive behavior (lower price) that balances out anti-competitive behavior (crushing nascent competitors through market manipulation or cartels); That doesn't mean everything you do is above board. It means that while the lower prices are there, a certain amount of anti-competitive behavior has been acceptable because the net outcome to consumers is theoretically positive.
[edit] Think about this - if you can win with lower prices, why do the other anti-competitive behaviors? Why not just have lower prices and let others try to compete with higher quality or lower prices than you? Wouldn't that be better?
The reality of this is, though, that the monopoly you form affects far more than the consumer product price. What the FTC is saying here is that they are moving back to structural restriction rather than simply allowing anti-competitive behavior so long as the price is good, a la the Chicago School.
>We are seeing low prices and then competitors that suck complaining about the fact that they suck in comparison to the more competitive company.
That's not what we're seeing, though.
What we are seeing is artificially high prices. One of the allegations is that if a seller prices below Amazon, Amazon removes their access to market.
>> So you can have pro-competitive behavior (lower price) that balances out anti-competitive behavior
>Defeating competitors with lower prices is pro competitive, not anti competitive.
I already acknowledged that lower prices is a positive, not sure why you repeated that. If that's your only point, then yes - you are right, lower prices is a positive for consumers. It's a balance, though; lower prices don't mean there is no anti-competitive behavior happening.
Undercutting competitors and copying them is often fine, though the process by which a competitor is undercut can be anti-competitive itself and have structural consequences that are anti-competitive, and copying competitors is obviously restricted by patent and copyright. It's not a blanket 'this is the whole purpose of competition' thing.
>Notice how I made no comment on anything to do with vague "other behavior"
It's not vague - it's laid out in the indictment. I get that you don't want to respond to it and only want to prove that lower prices is good, but that conversation ended, we all agree that lower prices for consumers is good. The question is how good. Good enough to balance the bad behavior? The FTC clearly thinks otherwise.
> and only want to prove that lower prices is good, but that conversation ended
When you respond to me and bring something up, it comes off as if you are trying to refute something that I am saying.
If you are now that that I was correct completely, and that you were just bringing up a separate point that is irrelevant and does not refute anything that I said, well then OK?
> Lower prices for consumers is not the whole point of a competitive market.
You are 40 years behind on the modern day interpretations of the anti-trust laws by the courts then.
An analysis of how much consumers benefit or are harmed by certain behavior is what the courts use for most anti-trust laws.
And lower prices are almost the court decided definition of a consumer benefit.
So yes, the point stands.
Someone else was complaining about competitors being undercut, and I responded by saying that actually lower prices are good and this is what our anti-trust laws are trying to promote, not stop.
>You are 40 years behind on the modern day interpretations of the anti-trust laws by the courts then . . . lower prices are almost the court decided definition of a consumer benefit.
That's not the policy of Lina Khan and the current FTC. She was literally put into the position she holds because she was critical of that framework for antitrust.
Yes, since the 70's Bork and the Chicago school has held sway in courts, but that's changing. So no, I'm not behind - this is why the FTC is bringing this case in the first place.
> Yes, since the 70's Bork and the Chicago school has held sway in courts
Oh OK, so then I am correct under the overwhelming majority position/framework which is the only interpretation that matters for enforcement, which is the interpretation held by the court system.
I am more than happy to accept that concession and only be "wrong" under the minority position that hasn't been relevant for 40 years.
> That's not the policy of Lina Khan and the current FTC
They can make whatever bad arguments they want in court, and lose their lawsuits I guess.
They don't decide the outcome of these court cases.
If anything this strategy is actually harming then, as they make failing arguments that the courts won't listen to.
If you took the time to develop and market your products, you would not have solely relied on Amazon e-commerce. Most likely, the single greatest source of traffic was Facebook (Instagram) and Reddit. You would only sell on Amazon, if you’re from EU (or RoW) and that Amazon US made sense for you in terms of logistics. In other words, if you solely relied on Amazon to make money that means your business model was BUILT on fooling consumers on Amazon algorithm not your actual product.
The reason you see only low-quality Chinese knockoffs with computer-generated names could be because Amazon's anti-competitive behavior made selling real products unprofitable.
Amazon was originally the world's largest bookstore. What did authors sell then -- commodities manufactured in China? Your comments are painting with a very broad brush.
You don’t have to use them. That’s the point of my argument. No one’s stopping you from selling it using Shopify where you can set up an e-commerce store within a couple of hours.
And my point, as someone who’s worked in antitrust field for over a decade, is that Amazon is a company that does the least to exert monopoly power out of all the big tech companies. In fact, they do so little that I think they are being stupid.
Does anyone know more about Project Nessie? There's a portion of the complaint [0] that is heavily redacted from page 123 to 126. The only information that isn't redacted is this:
* Project Nessie is an algorithmic pricing system
* "Amazon's Project Nessie has already extracted over [redacted] from American households."
* "this scheme belies its public claim that it “seek[s] to be Earth’s most customer-centric company,”"
* It's related to Section VI.A.3 (Amazon maintains its monopolies by suppressing price competition with its first-party anti-discounting algorithm)
Amazon themselves identify Nessie as the system that monitors spikes or trends [1], so my hunch is this is some sort of surge pricing system. Does anyone here know more?
Amazon has implemented an algorithm for the express purpose of deterring other online stores from offering lower prices.
[redacted]
Rather than trying to compete, Amazon uses
[redacted]
Ultimately, this conduct is meant to deter rivals from attempting to compete on price altogether-competition that could bring lower prices to tens of millions of American households. As a result of this conduct, Amazon predicted, "prices will go up."
What especially rankles is how Amazon doesn’t give a fuck about counterfeits. So they’re allowing counterfeits (amplifying the mentioned effect) to discourage direct-sellers from attempting to compete on price.
Meanwhile, I have to order from direct sellers to be sure I will get a genuine, new product. So I don’t even get Amazon’s lower-but-still-higher-than-optimal price, but a yet higher one.
As far as I’m concerned the whole company’s a giant scam and I can’t believe it still hasn’t caught up with them. They benefit so very much from enabling bad actors, and have for so long clearly without any serious attempt to stop it, that I’ll do a happy dance the day they go under or get broken up. I just wish the eventual consequences could force Bezos to have to work for a living again, since he’s built his empire on fucking people weaker than him. Shouldn’t get to keep a penny of it.
Not just counterfeits but pages upon pages of shitty products from companies like WOWZAMGO and PARTUE that, now that they have sponsored rankings, will always come up first in search. They also all have endless fake reviews. This renders Amazon's search essentially useless.
WOWZAMGO makes quality products. I bought their portable usb battery and it only caught fire after the 20th charge cycle. PARTUE, on the other hand… don’t ask!
The truth about consumer buying patterns is most purchases are treated as lowest cost commodity, unless the buyer is aware or the price threshold is high enough[0]. When you don't have subliminal[1] and limited selection pressure (both of which exist in brick and mortar stores), coupled with a UI that makes it pretty easy to discover other brands, and coalesced signals (reviews placement etc), lowest price wins.
[0]: Put another way, if its expensive, it gets more scrutiny by the average consumer (whatever their definition for expensive is). The other circumstance is if they care about the category or are in the slice of shoppers who do quality research, which is less common than you might think, until the cost factor kicks in, usually.
[1]: This is brand awareness, and other related verticals. Effectively, this is what brand and mass marketing is about.
> The truth about consumer buying patterns is most purchases are treated as lowest cost commodity, unless the buyer is aware or the price threshold is high enough[0]
Well said. Also, let's not forget time. I've spent countless hours researching many things I intended to buy only to give up partway down the road. It's in part because of the endless results on Amazon (referenced here) but also elsewhere.
Let's say, for example, I'm trying to find the best saute pan. Amazon gives me thousands of results, but so does Google. My search results are littered with tons of X-best SEO-optimizing websites that don't help narrow down choices. So, in that situation, it's less about the price and more about the time: I'll just buy whatever seems reasonably rated and not outrageously expensive and move on.
I really enjoyed the earlier days of the Wirecutter - tell me the thing to buy in my search category even if it's not the cheapest or most commoditized.
There’s a pretty strong “market for lemons” effect going on almost economy-wide in which every manufacturer out there seems to be sprinting to make the lowest quality shit they can sneak past the regulatory bodies, so it’s not surprising consumers are selecting solely based on price because there’s functionally no other differentiator at this point.
The UPPERCASENONSENSENAMES are so obvious it makes me wonder if this is a target-selection technique in the same vein as the 419 scammers use -- make it so only the most clueless people would ever buy your garbage product, so you get a lower percentage of people who are going to report you.
I believe it might [0] have to do with Amazon offering preferential treatment, under a program called Brand Registry, to Chinese exporters if they register a name--any name--with the USPTO.
The thing is, it's 2023, we all "know" that every company's product get made in the same factory and there's just a fork at the end of the conveyor where they get different branding slapped on.
So the gamble is that UCNN is sourced out of the exact same factory as the product/brand you actually want. It's the the evolution of the Warby Parker model.
Just bought a wood bed frame online. 5 vendors with nearly the exact same frame, all priced within $50 of each other. How does one choose? Does it matter?
It’s a great signal that you are buying from the wrong middleman. Seek out the source for a 50% discount. Usually that source is on AliExpress/Alibaba.
It's more like they flood the results so you literally can't find the quality product unless you know the brand name to search for. I can't be an expert in every vertical, so either I go to some sort of trusted review platform like Wirecutter, or I give up and buy whatever I can find on Amazon return decent reviews and hope for the best.
I don't really have a problem with this stuff. It's memeable (some great photoshop artists there; always good when the company has no photo of their actual product) and not that cheap, but I think of Amazon as an overpriced Shenzhen market and this stuff is essential to maintaining that vibe.
You might still be getting products from the same inventory pool in an Amazon warehouse when ordering directly if the company uses Amazon's Multi-Channel Fulfillment offering. They sell on their site, tell Amazon about the sale, then Amazon ships it to the customer. They even offer the option to ship it in unbranded boxes so that customers don't know the order is being fulfilled by Amazon.
Ew, gross. I’m pretty sure the couple companies I order from regularly that also have an Amazon presence don’t do that, since they have direct-order products not listed on Amazon and often include little touches like a bonus sample or handwritten note that you don’t get if you order their stuff on Amazon, but good to know to watch out for that.
Counterfeits: In August 2014, I purchased from Amazon, shipped from Amazon (just checked my order history to verify), an Apple MagSafe Power Adapter. It was clearly counterfeit.
I contacted Amazon and told them it was fake, without hesitation they told me to throw it away and they were sending me a replacement.
It would be hard for me to believe that they didn't know exactly which company shipped them that product.
It would be easy for me to believe that they didn't notify every other customer that received that product from the same shipment.
How does Amazon avoid liability for selling scam products? Do they claim to be "just the middleman" and pass responsibility onto ghost-in-the-night companies selling the scam products? Or do they just abuse the legal system and make justice too expensive to be worth it?
I don't know the law very well, but I would hope there's a legal doctrine that responsibility has to effectively land somewhere. If a company is passing responsibility en masse to some other entity that cannot be effectively sued, then the responsibility should actually lie with the first company.
I have no idea, but companies routinely do shit that I assume would at least get me a fine in a hurry if I tried it. I don’t know how it works either. Like I’d have assumed deliberately dumping e-waste all over city sidewalks would get you a steep fine and an order to come pick them up or face an even steeper one within a matter of days—plus an absolute liability nightmare if, god forbid, anyone tripped over them and got hurt—but e-scooter companies have done it for years and have faced almost no consequences. I doubt I could get away with it. I dunno how they do.
In the beginning it was a free-for-all but now cities require permits and have limits and require the companies to implment restricted zones where the scooter won't run.
FBA seller here, too. I make and sell my own patented device which nobody else makes or sells. I have competitors in the same category but my product is novel, more functional, and more expensive to make.
I was doing FBM (fulfillment by merchant) because I like shipping my product directly from my place of business but I had to switch to FBA to get my sales to go up. They were already getting half but now Amazon is getting more than half of my revenue.
I also have my own site where I can sell for the same price and keep much more of the revenue, but most shoppers won’t buy if they didn’t find it on Amazon. If I leave Amazon or raise my Amazon price to recoup the costs or stop paying for FBA and Amazon ads, I lose almost all of my sales. This is all because Amazon is doing anticompetitive things with its monopoly power. Enforcement is needed. I don’t know what the injunctions will propose to do but I’m eager to find out.
What really kills me is knowing how my customers would feel if I told them how much of their purchase price is being kept by Amazon. They value my product enough to buy it for that price. The few who really understand Amazon always offer to buy it directly from me so I get to keep more of the money. If only everyone understood that.
I have to spend some more time and money optimizing my Amazon listings and then I will turn my focus onto my site and spend all my effort building my business to survive in spite of Amazon.
>I also have my own site where I can sell for the same price and keep much more of the revenue, but most shoppers won’t buy if they didn’t find it on Amazon. If I leave Amazon or raise my Amazon price to recoup the costs or stop paying for FBA and Amazon ads, I lose almost all of my sales. This is all because Amazon is doing anticompetitive things with its monopoly power.
Can you expand on what you think Amazon is doing wrong here?
When I buy products online, I almost exclusively buy them from Amazon because I've had too many bad experiences with other sites. That strikes me as a case of consumer choice, not anti-competitive practices.
I once purchased a Japanese candy pack from a supposedly-reputable website that was supposed to be a Christmas gift, but they didn't give me a tracking number and wouldn't refund it after a month of no delivery until I filed a chargeback.
By contrast, I've never had any trouble getting Amazon to honor their refund policy for "Prime" products, which is why I've stuck with them.
Amazon charges exorbitant fees to Marketplace sellers and adds to the cost of everything sold on Amazon. Are you aware of who is the seller every time you buy something? When the seller is not Amazon, do you know how much of the price is going directly to Amazon? Is it worth it for what Amazon provides you?
In my category Amazon takes 15% of every sale. That’s even true for FBM where Amazon never lays eyes or hands on the merchandise. Also still true even though I have always taken perfect care of every customer. Good luck selling anything on Amazon without paying even more for Amazon advertising, a closed system with high prices. And then there’s the Prime badge and FBA, more expenses that you can hardly afford not to pay. Buyers are trained to demand them and Amazon reaps the profits.
If you buy from my website I pay a small transaction fee, shipping, and advertising. I can afford to sell for much less, making my customers just as happy or better since I can personalize the service in ways Amazon just does not allow.
But I can’t lower my prices anywhere off Amazon because they will retaliate by burying my product where nobody will find it.
Amazon customers (I admit I am one, too) are paying higher prices for almost everything they buy. But they/we are also supporting a marketplace regime that forces prices up everywhere. Everyone, not just Amazon customers, gets to pay the higher Amazon price.
My website customers are essentially subsidizing the profits that Amazon is making from my sales on their platform.
You might think you want someone big and strong like Amazon protecting you from scammy sellers. If they wanted to do that they would get rid of them and keep the good ones. Instead they keep the bad ones around so you get to experience their protection racket. You’re sticking up for the bully and paying for the privilege.
remember that time that amazon was bleeding like 5 million a day just to make sure they can destroy diapers.com? by selling diapers at a loss, which was numbers that diapers.com couldn't compete with given that they didn't have another business to rely on, then forced diapers.com to sell to amazon because they had no other option?
And this came out last time they were doing monopolistic inquiries against amazon. Yet...
So I'd love to see something positive come out of it, but I have my doubts.
The current FTC chair wrote the ~~book~~ essay on Amazon's monopolistic business practices (1) and has spoken so much about it that the only reason we'd see the government take their foot off the gas here is if Amazon's lawyers can claim that her previous advocacy biases the case against them.
Advocating for a position and then using the strength of your arguments to be placed in a position of public authority through a democratic process is anything but fundamentally legitimate in a way no business will ever be.
Amusing trying to see people claiming the opposite.
Well there is actually an interesting political side to this, where the Biden administration set up the strongest anti-trust FTC in two generations by pulling a bait and switch on the Senate. They essentially made zero indication she would be tapped to chair the commission until after she was confirmed, which is when the tech lobby and their allies in Congress started making noise that she couldn't be impartial.
It was a galaxy brain political move early in the administration and a direct reason why we're seeing these antitrust cases prosecuted.
Apparently there are calls for her recusal on the grounds that she held a critical stance before her current appointment. Which is an odd thing to ask for in my opinion, but I guess it's worth trying if you're on the losing end of this.
It's like the GOP currently trying to impeach a newly-elected judge in Wisconsin because she previously described the state's maps as gerrymandered, ergo she will not be able to rule fairly on the matter when it comes before the court. Obviously both examples are cynical and disingenuous, since the implication is that the only person qualified to do a job "fairly" is someone who has never thought about the relevant subject matter at any point in time.
They want to muddy the waters by arguing the FTC is impartial towards Amazon. But the problem with that argument is that it's not the job of the FTC to be impartial. Their mandate is to protect competition and consumers, which is naturally impartial to individual companies.
I’d encourage everyone to read at least the abstract of this link and then consider the case the FTC is trying to bring to see if they notice anything odd! HINT: there is something very odd about the two taken together.
I read both - I don't see anything odd here. Seems like like the thesis of the FTC's case includes the natural continuation of some of Lina Khan's ideas, plus additional focus on the Amazon Seller economiy.
I read it more that an actor can lower prices in one market or at one time and raise them in others or at another time, and that regulators should police predatory pricing because of the harm to competition and consumers, even if in some markets or at some times prices are lower. That's consistent with what the FTC is doing here.
Further, the essay was written six years ago, and to an audience of legal scholars. This case is about Amazon today and the audience are courts. The facts and arguments derived from them are naturally different.
I would suggest reading the entire thing, especially the excellent summary on the history of legal and economic theory applied to anti-trust to understand the deeper meaning behind the abstract itself. It's hard to boil down a nuanced and complex argument into a single paragraph. There's a lot of meat there.
That's such a weak argument. Suppose Amazon does both, at different times (which they do); do you think they should cancel out and therefore not get in trouble?
I see how that would appear to be a contradiction. However, your takeaway from the Yale Law Journal link is incomplete.
The Yale article argues that Amazon has avoided anti-trust scrutiny because most anti-trust regulators are laser-focused on price and output (is Amazon fixing artificially high prices? Is Amazon artificially limiting output?), and this approach misses the ways in which Amazon limits competition (mainly predatory under-pricing and vertical integration). The article goes on to suggest that by ignoring these, antitrust regulators are "overlooking the structural weakening of competition until it becomes difficult to address effectively, an approach that undermines consumer welfare."
You're right that the article does talk about practices that aren't mentioned in the complaint, like predatory under-pricing.
However, it also discusses the ways in which Amazon uses vertical integration to create barriers and reduce competition. Here I quote from the article:
>Amazon is positioned to use its dominance across online retail and delivery in ways that involve tying, are exclusionary, and create entry barriers. That is, Amazon’s distortion of the delivery sector in turn creates anticompetitive challenges in the retail sector. For example, sellers who use FBA have a better chance of being listed higher in Amazon search results than those who do not, which means Amazon is tying the outcomes it generates for sellers using its retail platform to whether they also use its delivery business. Amazon is also positioned to use its logistics infrastructure to deliver its own retail goods faster than those of independent sellers that use its platform and fulfillment service—a form of discrimination that exemplifies traditional concerns about vertical integration.
>The clearest example of how the company leverages its power across online businesses is Amazon Marketplace, where third-party retailers sell their wares. Since Amazon commands a large share of e-commerce traffic, many smaller merchants find it necessary to use its site to draw buyers.These sellers list their goods on Amazon’s platform and the company collects fees ranging from 6% to 50% of their sales from them.
These quotes map pretty cleanly onto two of the complaint's allegations:
>Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service, which has made it substantially more expensive for sellers on Amazon to also offer their products on other platforms. This unlawful coercion has in turn limited competitors’ ability to effectively compete against Amazon.
>Charging costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business. These fees range from a monthly fee sellers must pay for each item sold, to advertising fees that have become virtually necessary for sellers to do business. Combined, all of these fees force many sellers to pay close to 50% of their total revenues to Amazon. These fees harm not only sellers but also shoppers, who pay increased prices for thousands of products sold on or off Amazon.
At the end of the day, Amazon is a very big company that does a lot of different things at the same time. It could be under-pricing ebooks and overcharging FBA sellers at the same time.
The point of the Yale Law School article is that anti-trust law ignores anti-competitive practices until they significantly distort prices across the company's largest market, but that these practices have a chilling effect on competition far before that point. Khan argues that anti-trust regulators should go after companies using these practices before they cement market leadership and fully edge out competitors.
>On the Chicago School’s [(the pre-existing paradigm's)] account, Amazon’s vertical integration would only be harmful if and when it chooses to use its dominance in delivery and retail to hike fees to consumers. Amazon has already raised Prime prices. But antitrust enforcers should be equally concerned about the fact that Amazon increasingly controls the infrastructure of online commerce—and the ways in which it is harnessing this dominance to expand and advantage its new business ventures.
There are 17 state AGs joining the FTC in the suit so I doubt Amazon will have any headway even if they got the Chair to be removed. Hoping the best for the lawsuit, though.
Product dumping is not illegal if you have a national newspaper that can be used to target any politician and if you make sure to contribute millions and make sure your employees do the same for the political party in power.
If Bezos were using this Washington Post for this purpose a member of the newsroom would immediately leak it. It would be a career defining story for that journalist.
The fact that we’ve heard nothing strongly suggests it isn’t happening.
I've heard this "if it were happening someone would leak it" argument throughout my life, even though I've lost count of all the counterexamples that disprove this mentality.
Before Snowden PRISM was considered impossible (even though previous people had leaked it but never got picked up by the media cycle), before Epstein it was impossible that billionaires were trafficking children for sex, before 2008 it was impossible that wall street was colluding to rig the market - the consistent thread in all of these is that the "impossible" was happening for several years before it was ever exposed.
I understand the incentive to leak it exists, but that doesn't mean there isn't a stronger incentive to keep it a secret.
The difference in all the examples you’ve given here is that none of the people involved are journalists.
If you work on PRISM leaking its existence does nothing for your career. Quite the opposite in fact. But if you work for a newspaper and leak a massive story it’ll be very beneficial for your career.
The journalist most famous for leaking the Panama Papers died under mysterious circumstances. And almost nobody is aware of her name or even what's inside the Panama Papers.
How many famous journalists can you name? I'm not saying there aren't journalists that want to do good work and become famous as a result. But despite their efforts they're mostly fighting a losing battle.
I’m not sure how that’s relevant. Ask a dozen people on the street who John Carmack is I’m sure you’d get a lot of blank faces. But if he walked into a dev shop looking for a job I think he’d probably get one.
Of course breaking a massive story is going to lead to you being well known. Perhaps only within journalistic circles but in the context of your career that’s the only thing that matters anyway.
(and to answer anecdote with anecdote: Woodward and Bernstein. Both have lived to ripe old ages, too, for what it’s worth)
You know how there is a principle during debate where you should treat your opponent's argument charitably, by taking their meaning in the best possible way?
Did you say career ending moment? I think I misread that. Who wants a former employee and their lawyers targeting your reputation. Do you know anything about what whistleblowers have to go through?
> Do you know anything about what whistleblowers have to go through?
We’re talking about professional journalists here. I’m quite sure they’re aware of it all. If the story is newsworthy and backed by evidence you’d be able to take it to any competing newspaper. I imagine the Wall Street Journal’s legal team would be happy to bear the brunt of any fallout, it’s their job.
That's what these discussions are for: to discover solutions and obstacles.
Have you ever heard of the monkeys and ladder metaphor?
Things need to change. It's great to be skeptical, but not if you're not also optimistic at the same time.
Monopolies are bad for many reasons, not just because arbitrary "rules" or whatever you think is easily dismissed, but because of the opportunity costs that even the owner of the profits incurs. We're not talking about money or status or power, but actual meaningful change of the total composition of their culture & society and the world. They are literally preventing themselves from experiencing a world that gives them everything they can't have now and clamor and hurt themselves chasing after. It's the ultimate irony.
So yes, you should have hope. There is NOT a "good" reason for being a greedy parasite. People have just forgotten and/or been manipulated into believing in fake power. This false faith (fear) is literally what enables these fake leaders like Jeff Bozos the clown to succeed.
Please next time contribute more to the conversation than just whine.
Similar to the three-tier distribution system for beer in most states (a brewer cannot be a wholesaler or a retailer). This makes it easier for smaller players can compete with the big ones on quality at least, if not price or recognition.
The three-tier system is absolutely awful in a lot of states for smaller breweries. It has been used to severely reduce their ability to sell on-site for off-site consumption, which is key for smaller breweries. Many states set the revenue/volume cap too low before you have to cut off on-site sales of off-site consumption for you to not take a significant hit to your profit swapping to a distributor.
It also makes it very easy for the bigger groups like AB Inbev to play games with distributors around pushing enough volume of their products if they want to get allocations of more in-demand bottles like Goose Island's Bourbon County Brand Stout.
I did not think I would ever see someone seriously arguing that the three-tier system for beer is a good thing for smaller players.
The thing with the three-tier system is that it only partially disaggregates the system. Market consolidation has a certain gravity to it: once one market is consolidated, they start stripping the margins off their suppliers and increasing prices for their customers. The only defense against this is to consolidate yourself to maximize your negotiating leverage. If wholesalers and retailers were horizontally disintegrated then it'd be a better system.
This is also why businesses are furiously and unanimously anti-union. Labor is their biggest cost and they get ahead if they can keep labor fragmented while they consolidate.
> Similar to the three-tier distribution system for beer in most states (a brewer cannot be a wholesaler or a retailer). This makes it easier for smaller players can compete with the big ones on quality at least, if not price or recognition.
This seems like a bad example given how its arguably led to massive consolidation in beer
I'm pretty sure the beer laws hurt small breweries and consumers. Back in the 1980s when these laws were at their most numerous and strictest, the market was dominated by a few macrobreweries. Even today, the states that restrict brewery self-distribution have half as many breweries per capita as states that allow it.
Reminds me of the weird law in a lot of states where breweries and distilleries can't use the same equipment or physical location - which pushes out smaller more varied players since you need capital in order to operate multiple locations.
Amazon has been cognizant of this[antitrust risk] for a while now I believe. The internal systems are all set up to run independently, most systems are modular and already run as separate entities with permissioned access.
Proof: worked as an SDE for AWS and Amazon for 7 yrs.
Isn't that done because independent modular systems make it a lot easier to build stuff inside of such a large company? Bezos said as much in 2002 when he issued his API mandate.[1][2]
> independent modular systems make it a lot easier to build stuff inside of such a large company
Yep this is definitely true. I sort of saw it as a two birds kind of situation. I wasn't privy to the reasons for c suite decisions but imo they are definitely cognizant of regulatory concerns.
I wonder if there's a model where carriers cooperate on last-mile delivery. Maybe form company they all invest in that goes from regional hubs to homes. It can't be efficient to have 4+ carriers delivering to the same neighborhood.
As someone living in germany:
We don't have a three tier system. But we have literally thousands of breweries selling better beer at waaay lower prices than in the US.
So your three tier systems sucks...
> we have literally thousands of breweries selling better beer
This may have been true a decade ago, but today there is an entire microbrewery scene in the US where there are hundreds of them inside individual states. Better is subjective, sure, but any kind of beer you get in Germany you will find a few dozen US microbreweries making the same.
If you like expensive, over-hopped IPA made with mediocre ingredients and specially bred hops that are so potent they (kinda) overpower the taste of beet sugar and inferior malts, then America is a great place to pay more money for beer.
There some genuinely good beers around, but they are few and far between and WAAY more expensive than great beer in Germany. And from elsewhere in the thread, it sounds like our 3-teired system does indeed majorly suck for microbreweries. It may be a big part of why they have to cheap out on ingredients and try to cover it up with palette-dominating hops in order to turn a profit and stay afloat.
Europe has plenty of mediocre "craft" beer. I've had tons of beer in Europe that tasted like homebrew - one dimensional.
American craft brewers lean heavily into hoppy IPAs because that's what craft beer buyers like. IPAs are almost always the best selling beer that a craft brand makes. If you talk to them, they will say they'd love to make more varieties of other styles of beers, but IPAs keep the lights on, thus 40% of their product portfolio ends up being IPAs.
I hate IPAs and the style of hops American brewers use, so I tend to drink imported German/Czech lagers and pils a lot.
This is a meme. Most breweries make other types of beer, I go for Pilsner or Kolschs myself, and the beer is not more expensive than larger breweries. You’re regurgitating a stereotype about American millennials.
The USA used to have a system like that, we have a long history of brewing, but then we had to go fight the Nazis, so everything was rationed and industrialized. That's why our most popular beers suck.
I question the assumption that simply letting more small players compete is going to improve outcomes for anyone who doesn’t happen to own one of these smaller businesses.
This view is not held by economists because it’s really inefficient and is bad for both the business and the consumers. It adds pointless friction all over.
There are always so many blindly pro-business comments on stories like this, like when the Theranos stuff was happening, people were saying "come on, she was just pitching big returns and innovations like any start-up does," ignoring the difference between pitching and straight-up lying or deliberately misleading investors about current facts. Similarly, it seems like many commenters are defending Amazon not based on the facts or legalities of the situation, but just from a place of being more emotionally sympathetic to a giant corporation trying to make a lot of money through various business tactics.
We don't have a surplus of regulation in the US (contrary to what Republicans who want to get rid of the EPA, FDA, etc would say). When we actually have laws that say things like, you can't union-bust, you can't defraud investors, you can't behave monopolistically--and there may be subtleties to those laws that most people don't understand--and companies go so far as to violate those laws, it's a very good thing when they face consequences.
Maybe not a "blind" slant, but there is a slant nonetheless. I frequent programming communities on twitter, reddit, etc. and HN is consistently the place with the most sympathy for corporations.
(In my experience it's also the community that has the most anti-intellectualism/distrust of science as well, but that's a discussion for another time)
I wish they would add ebook DRM to the list. Amazon has essentially locked the Kindle so that it can only purchase from Amazon and Amazon ebooks can only be used on the Kindle. On top of that, they offer no way of transferring ebooks and, AFAIK, offer no way to remove DRM after a work enters the public domain.
For that one, it's mandated by publishers. There's nothing that can be done for e-readers from vendors that don't support third-party applications.
Amazon e-books are accessible on Android and other platforms in addition to Kindle devices.
Kindle is also not locked to only ebooks from Amazon, but third-party DRM schemes are not supported. Calibre for example comes with good tooling for that use case.
I believe the publishers want DRM. I'm not sure they want DRM that effectively locks in their readers to the Amazon ecosystem. I don't believe publishers would be upset if I could directly purchase books from Apple, Google, Kobo, or any other similar vendor directly on the Kindle.
Is the audiobook market different? I know Cory Doctorow for one would like to sell his audio books through Audible but they require DRM. Care to defend that?
Nothing prevents you from buying from a different seller and reading the materials on your Kindle, other than the fact those other sellers have their own DRM locking you into their ecosystem instead.
That's because publishers practice anti-competitive behavior, too.
We need to quit getting lost in the word, "monopoly". No part of this problem is from a single actor dominating the entire market. The problems are anti-competitive behavior and vertical integration.
DRM is literally intended to support copyright monopoly. The entire purpose and function of DRM is to prevent competition in the form of "copyright infringement".
Some cursory web searches reinforce an assumption I had: Amazon absolutely dominate the eBook sales market, with figures from 65-80% of all sales being indicated.
So how can you make the case that Amazon doesn't have "leverage" to negotiate DRM-free publishing?
> together with CDs not having DRM
I don't recall printed books ever having any form of "DRM".
In fact, Amazon does allow eBooks to be sold through the Kindle store without DRM, and many are sold that way. It's completely up to the discretion of the publisher.
Whereas I have many eBooks purchased years ago from Apple's store that I can only read on Apple devices, not on my Kindle.
Exactly. The publishers need Amazon, and Amazon doesn't need the publishers. They have more than enough power to be able to dictate terms.
Apple realized this and was able to bully their way to a deal that worked for Apple, and the labels had no real ability to counter Apple. Amazon has yet to do so.
Arguably, Amazon has substantially more market power now than Apple did back in the Jobs days when they were building out iTunes and negotiating with the major labels.
Because Amazon allows publishers to choose to sell eBooks without DRM. If an eBook sold in the Kindle store has DRM, the publisher chose to have it that way.
I don't know, as I never had access to that data, but I would be shocked to find that is not demanded by their agreements with the publishers. Akin to why there is no library that will give you non-DRM items. Is almost certainly part of a strategy by the publishers to bolster other marketplaces they find more favorable.
The ones folks are buying? Not really. :D Publishers still do a good job signing on authors. Audio books, I think, are very different. Audible was far more active in building up a market and voice talent than the competition for a long time.
That said, I am not aware of any actual anti-competitive practices that they do there. The examples that some high profile folks have used feel very weak. Prices are lower for customers than they have ever been, and profits for the talent are almost certainly up due to increased sales volume. Their percentage profit per sale is down, but the history could also be that keeping that percentage high would not have grown the market? Such that, they could not have gotten the larger pie without the smaller slice. But, now that the pie is big, they want the bigger slice.
Feels like a non-sequitur? What are you trying to say? My specific point is that I would wager money that Amazon being required to have DRM on their devices is required by publishers for them to be able to have that publisher's offerings. If Amazon drops the DRM, they lose the ability to offer that content.
I'm not as confident that they have the agreement include that they will not offer authors a way to have DRM free content on the platform, but I would not be surprised by it.
If Amazon refused to enter that agreement, would the publisher simply refuse to sell ebooks on Amazon? I sincerely doubt that.
If Amazon was actually motivated to refuse DRM, then we would be in an entirely different situation. The reality is that the opposite is true, and that Amazon itself is one of the publishers requiring DRM!
You do know there was an antitrust against the publishers and Apple where they did collude and force changes to the agreement onto Amazon, right? This isn't even hypothetical. Literally happened. Amazon absolutely cannot live without publishers right now.
My point is that that question was never asked: practically all of the publishers that sell on Amazon's marketplace - including Amazon Publishing - agree that they want DRM incorporated into Amazon's digital marketplace platform.
Almost certainly they would be fine, given some time. Is why they were willing to strong arm Amazon into changing terms on how they sell ebooks.
And you seem to be dodging my point? My assertion/wager/whatever is that the publishers actively want it so that Amazon has to have DRM on their devices and sales. Just as they want it on libraries lending. Do I /know/ this? No. That is why I worded it as something that would shock me.
I agree that my willingness to wager on this would go down as I extend it to my larger guess, that they also have terms covering things that Amazon publishes. That said, it lowers my willingness, but it does not seem beyond the pale.
As someone that was into DVDs from other regions, this comment is laughably wrong.
Edit: Heck, just playing movies on my computer DVD drives was less than straight forward. For the longest time you basically had to feel like a hacker to get it working on a linux machine.
It wasn’t perfect, but it was better than the current situation with ebooks. You could go into an electronics retailer and choose one of a dozen DVD players then drive across town to video store and buy or rent any DVD and the chances that the two things would work together was very high.
No real disagreement from me, on that general point. Things were certainly more convenient in some older formats.
I'm not clear on the relevance to this particular story. For one, ebook practices are literally not part of this case. For two, the assertion in this branch is that that exists at the demands of publishers.
You can easily use ebooks from anywhere on the Kindle. However, agreed on the DRM. Blindsided me when I tried to open some comics I had purchased on my computer (to read them in color). Luckily others have already made tools to remove that DRM...
Is this new? I specifically went for Kobo years ago because my research told me that Kindle didn't have that capability, and Kobo did. Perhaps I didn't look hard enough.
No, even the very first model could be mounted as a USB drive and you could add files that way. It doesn’t natively support epubs — that might be what you’re thinking of — but converting them into mobi or azw format is pretty trivial anyway.
I assume you are talking about the DeDRM tools? If so, the answer to your question is that it doesn’t work as well as it used to. The era of easily strippable DRM is ending.
Amazon’s latest file format KFX hasn’t been entirely cracked and it’s possible it won’t ever be entirely cracked. The best anybody can do so far is to buy an older Kindle and download it to that in order to get a crackable version. The problem with that is you lose all of the typography improvements only available in KFX.
Sony almost certainly has more marketshare of the console market than Amazon does of anything. The numbers that came out for sales of XBox were... sobering for how badly Microsoft is throwing cash to stay in the game.
Note that I don't mean one to be a defense of the other. It can be argued well that both markets are unhealthy. :D
To your numbers, though, I'm not sure I see the argument? I'd be very surprised if that 25 is evenly split between Nintendo and Microsoft. And where is Valve in that?
Playing into your argument, is Walmart really only 6%? Of all sales that happen period, how is the online/offline split? From my perspective, folks love to hate tech companies. You'll see silly headlines about 1 in 169 people work for Amazon. You don't often see similar headlines for Walmart, which has twice the associates, if I recall...
And even in consoles, you have the option of never buying one: you can play videogames on PC, on a tablet or on a mobile phone. And now you even have the cloud option with NVIDIA or MS' Game Pass Ultimate.
With Amazon however, it's more complicated since they control so many businesses. Visiting a website? Very probably it's hosted on AWS, or on a platform that runs on AWS. Visiting a friend with a smart doorbell thingy? Quite probably an Amazon Ring. Want to buy an e-book to read? Sell your soul to either Apple, Google or Amazon, or other smaller platforms (or pirate the book or buy it physically).
No, but it still is part of Amazon. In fact, as others have commented, AWS helps subsidise parts of the Amazon store that would otherwise result in losses.
But how is it at all relevant to this story? And if it is a vital point, why not get mentioned by the FTC?
I don't think there is nothing at all there. However, most of the criticisms you will see in the wild about how AWS pays for retail are almost certainly from ignorance of how retail had to literally seed AWS.
And don't take my criticism of that point as some sort of promotion of Amazon. I can be critical of the complaints without having to worship them.
But Amazon is mentioned and Amazon owns AWS and many of the abuses described with respect to the e-commerce marketplace are also relevant to the AWS marketplace. I hear you on how they are not directly and literally mentioned in the text explicitly however one can understand why there's a thematic overlap and certainly I can imagine if I were AWS I would be sweating right now
My kids have been confused on why I have to buy separate copies of many indie games for both Steam and Playstation and/or Switch. And... it actually is rather obnoxious.
Without engaging the merits of this particular case, I do think there is an interesting takeaway about which companies wield even more power than Amazon (and Big Tech more generally, since Google and Meta are also discussed as likely targets of similar suits).
Notably: health insurers. They're an oligopoly whose revenues total something like 4% of US GDP. They engage in anticompetitive practices, and the end result is far more consumer harm than Amazon can do. (Because people generally spend a lot more on health insurance premiums than they do on Amazon in a year.)
Similar could be written about e.g. airlines.
Lobbying works. Tech will eventually figure this out.
> Lobbying works. Tech will eventually figure this out.
Tech is well aware of this, and is spending accordingly[1]. However I think politics are a bigger motivating factor, and taking "tech" to task is viewed as a good way to score points (probably helps that legacy media views tech as direct competitors, and covers them accordingly).
They kind of get it, but are not at the magnitude yet where it would be effective enough to squash these types of interventions. By comparison, healthcare lobbying spends more every quarter what Big Tech did in all of 2022.
There was one lasting lesson I learned from AOC's first election and the subsequent attempts to challenge many seats at all levels of government. That incumbents have organizations that will spend as much money as they can to stop a challenger. In the case of the Queens DA race(which is the first time AOC endorsed somebody), I seem to recall that the local democratic council had to blow their entire budget to try and stop Caban(AOC's endorsed candidate). They did manage to defeat her by 60 votes but the lesson I learned is that we should be running candidates in every single seat in every single race in every single election. Some groups like Brand New Congress have attempted this but it is tough to challenge all 435 members of the house. Unfortunately all these groups are on retreat since Biden got elected. It took a candidate like Trump to make people realize that they had hit a new low and to start doing something. Biden and the party is using the fear of Trump coming back to now suppress any dissent.
Yes the overwhelming majority will lose but it makes continuing business as usual as expensive as humanly possible. There is no way all these companies can recover every last penny if this is continually done every election. (There are small time elections happening every year so there really needs to be challengers at all levels)
Much as I might see health insurers and private medical companies in general as often bad actors, I don't think "more competition" is at all a reasonable suggestion for any part of the health sector. Health insurance companies naturally need to be regulated - just one reason among many is that anyone could take people's money, pay claims for a bit and then vanish with money paid to shareholders who aren't liable for the scam. And once you have an industry, health care, that must have detailed state regulation, the only solution is nationalizing the industry, as medicine is nationalized in most civilized industrial nations.
They may need to be regulated, but that doesn’t change the fact that something is seriously broken and real competition would help. Regulation is surely part of the problem but maybe not all of it. The entire idea of “networks” seems designed to allow them as little competition as possible.
Even if this action turns out to be toothless, it should still go a long way to shape public perception. I cancelled Prime 3 years ago and really haven’t looked back. I simply shop elsewhere, and between Target and eBay I don’t miss a thing. The Echos got unplugged, the AWS certs didn’t get renewed, their music service got canceled. I am all out and I hope others will do the same. For me this was driven by their anticompetitive behavior as well as terrible treatment of staff from warehouse workers to web developers. This FTC suit brings a new level of attention and gravity to their insidious practices.
Obviously a firm that massive can’t be all bad. As a consumer, the only thing I have is choice in how I spend my time and resources based on the information I have.
I don't know, your easy access to alternatives that've let you not "look back" kind of undermines the argument that they wield monopolist power, doesn't it? And should FTC suits really be vehicles for shaping public perception, even if, as you suggest, the claims are either not defensible or don't constitute violations?
The fact that competition exists does not mean that AMZN isn’t engaging in anticompetitive behaviors. FTC should be consistently enforcing law in their domain i.e. The Sherman act of 1890 and others.
“Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.”
Public perception isn’t their motive, I’m just cheering for it. Moreover I’m glad that antitrust enforcement has ramped up of late. I wish it had started sooner, I believe we would have a healthier internet ecosystem if that was the case.
Decouple Amazon Warehouse division from Amazon Web Services (AWS largely subsidizes losses incurred by warehouse division), then we will see change.
Right now FTC going after low hanging fruit. But we all know Amazon will challenge it in court, appeal, appeal, appeal, pay the reduced fine, slow roll any changes, and business will continue as usual.
Break up the tech giants and each individual unit cannot survive as-is.
Yep. I'd say Amazon should be split at least four ways: AWS, their delivery/fulfillment operation, the web shopping platform, and the "Amazon Basics" and other product brands.
Edit: just saw that ihaveajob posted the same idea in another reply.
Just breaking off AWS would be enough to see change. I see people saying they should spin off their house brands but that wouldn’t fly when other big retailers also sell their own brands along side third parties.
It sends a chill down my spine to see that one of the perks of being a Prime member is unlimited photo storage.
It’s sickening to realize there’s a bunch of Gullible Guses and Ginas that are holding off cancelling their Prime subscription because their pictures are held hostage by Amazon.
I bet dollars-to-donuts that half of those folks don’t know how to articulate the sentimental attachment to their Prime subscription either.
Funny because alot of sellers are complaining about high fba fees eating into their profits. If you remove the subsidy (assuming there is one which I doubt) those fees would rise to hurt sellers more.
>The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging
>Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
I feel like ultimately they are accused of violations because they are big. I don't think that's the worst thing. But as others have pointed out - their tactics are very similar to deals grocery stores and retailers make with suppliers all the time. The only difference seems to be that Amazon is big enough that suppliers can't legitimately threaten to take their business to another store - because there isn't one.
Their complaints that Amazon makes prices higher for products across the internet is clearly only true because they are so big.
Maybe they are only so big because their anti-competitive behaviors have kept alternatives from taking their users. I'd love to be able to stop giving amazon as much money as I do, and I know a lot of people who feel this way.
I don't disagree with that but nonetheless it seems like the behavior they are in trouble for (telling suppliers they can only sell on Amazon if they don't offer cheaper prices elsewhere) is something that tons of other retailers do.
I really don't mind their being a different set of rules if someone has the ability to dictate most of the market, but exclusive deals are routine for smaller players.
Alternatives in terms of sellers on Amazon.com, maybe, but people use amazon because of how good of a product Prime is (or at least, for the past few years, appears to be despite it being obvious product prices go up to offset subsidized shipping prices) and because it tends to have everything available is a fast and secure way. With e.g. a search engine showing you products, you might be sent off to one of 100k stores that all need your cc info and who don't already have your shipping address.
This is partially solved by Shopify for Shopify sites, and Apple Pay/Google Pay/PayPal for third parties, but it's still often more friction to go to a 3p store.
I signed up as a Seller on Amazon a while back, with one primary goal: sell extra copies of my book, published by Pantheon Books in 2017. The publisher offered me boxes of them at dirt-cheap prices and I took them up on their offer. So I started selling on Amazon, and I set my price as the lowest possible for "New" condition hardcover.
For a while my price got listed on the main book product page. Only briefly though. Then it disappeared, and another seller got the glory of the link for a "New" 3rd party seller, and their price was HIGHER than mine.
Amazon does not want to advertise your price if you are too low for their liking...
Suddenly, in July, my mom dies. I have to travel to the east coast for the funeral, etc., so I put a hold on the one and only item in my inventory -- my book. Effectively this takes me offline temporarily as an Amazon Seller which was fine.
BUT . . . when i get back home, I try to re-activate the account and find I cannot. INSTEAD, I get this notice from Amazon that my account is suspended, and that it's mandatory I go watch all these training videos about COUNTERFEIT products, how to spot them, why not to sell them, why it's illegal, etc, and that I do not have permission to sell counterfeit "Pantheon products." And I'm like, WTF? I'm selling the real deal, from Pantheon, and I AM THE EFFING AUTHOR AND THESE ARE MY OWN BOOKS.
I try to communicate with Amazon Seller Program and get nowhere (I think they deliberately hire only people who don't understand English). They refuse to explain anything about this absurd counterfeit stuff.
So I contact Pantheon. They just laugh. They had nothing to do with it, but weren't surprised -- they kind of hate Amazon.
THEN I get a new notice from Amazon that my account is disabled permanently due to lack of use.
WTF!?
So: here is my theory. They were pissed I had a super-low price, and when they saw me temporarily disable my inventory as I'd be away for a week for a funeral, they swept in and shut me down, with some kind of made-up lie about COUNTERFEIT (I mean, can you believe these guys!?). And nothing is resolved, and we're on the verge of October.
You haven't even begun to enter the world of unscrupulous activity, and Amazon is mostly 'hands off' because they don't care - but other 3rd party sellers DO and they know all the tricks about how to pump alternative sellers off the page, etc.
The whole thing is a worthless Alibaba ripoff now.
Do you think some other seller falsely "reported" me, claiming my copies my be counterfeit, for surely there was no way I could offer them so cheaply to beat out the next cheapest seller by, what, 50 cents?
Your case is interesting because your publisher was fine with it. So yeah, it probably was done by a third party seller. Or you triggered some automated system and will never find out why. There are cases where third party sellers bribed Amazon employees to penalize their competitors:
> "(b) using their inside access to Amazon’s network to suspend competitors’ 3P accounts; and (c) providing consultants with information about Amazon’s internal algorithms, which allowed the consultants to flood competitors’ product listings with fictitious negative product reviews."
There's another thing where well known brands will hire a company like https://amazzia.com/brand-protection-2022/ for "brand integrity." In reality, what this means is that they monitor Amazon for listings of the brand's products that violate the brand's Minimum Advertised Price policy and then report them a bunch of times as counterfeits or contact some Amazon employee they have a (potentially corrupt) relationship with.
Or maybe some machine learning deduced you were "counterfeit". Who knows. The common denominator is - Amazon doesn't care, it's just a machine, even more so than corporations by nature are.
My nextdoor neighbor is a shoe salesman (in the US). He traditionally dealt with a region of retailers on behalf of his employer, a multi-brand company like VF, Clarks, Born, etc. In his previous role, he was asked to try to figure out how to add Amazon as a B2C channel. He did, and it essentially became his full time job. A couple of years ago he was laid off, and when his new employer (differently shoe company) learned he knew how to "use Amazon" he was immediately reassigned from field sales to full time online. According to him, there are so many quirky and esoteric things about selling through Amazon it's nearly impossible to figure out how to get started, much less understand nuances of pricing, taxes, shipping and returns, and -- as you said -- Amazon support is conflicting and inconsistent at best.
Nowadays, I'm fine buying consumables from Amazon if I need them asap, but for any name brand stuff I specifically want, I prefer purchasing elsewhere. If reviews were trustworthy, it'd be one thing, but with Amazon having turned into AliExpress, it's impossible to know whether any of the Chinese brands are actually trustworthy and of high quality.
>it's impossible to know whether any of the Chinese brands are actually trustworthy and of high quality.
IMO people buy cheap generic Chinese brands for the same reason they buy cheap dollar store products. They're gambling they can pay 30% the price for 90% of the function. Amazon reseller premium = they're paying slightly more for returns in case things break. They can save more buying from Ali resellers. Even more while temu subsidizing orders. The only people looking for quality are people who order from resalers of established PRC brands, i.e. Xiaomi. In the days before Amazon cracked down, you had brands like MPOW decide better marketting strategy was to give people gift cards for reviews and give no question asked replacements well outside of warranty period. Pretty win-win for consumers.
I guess we figured out their algorithm. `if random() < 0.01: make_user_watch_training_video_about_counterfeits`. Even if they actually fixed the problem by having an alarmingly high false positive rate, I don't see how I would ever trust them. For example, some places don't do business with them, so if you see like an Apple cable on there, it wasn't shipped from Apple to their warehouse. Maybe it's real or maybe it's counterfeit, but why gamble?
What's great about Amazon is that they kicked their competitors into gear and there are a lot of reputable vendors that offer cheap overnight shipping now. (B&H is my go to for electronics.)
It is funny, that small and even sometimes medium business owners go to jail over things like fraud, failure to pay taxes, even labor violations. I remember local instances being reported on in the our (thankfully still around) local paper.
Yet, if you are big enough, the government can barely muster the strength to issue a fine. Rarely to executives at big firms go to jail unless there was something Enron sized egregious happening
Afaik, small claims courts are for specific monetary damages only. I feel like it would be hard to prove specific cash amount lost due to Amazon actions. It is also very likely one or more of documents one have to accept in order to open seller Central account requires signing away the right of settling dispute in courts, and instead use arbitration process.
Your story is a true tragedy and hearing such stories makes me feel sad.
I believe it’s, mostly, these unfair, monopolistic practices that made those companies giants because they can, technically, crush anyone willing to swim in their red ocean.
Normally, you could easily file a lawsuit against them and got them pay you 10x the damage they caused.
Amazon became a giant because they were genuinely good before they became what they are now. For a long time, they offered a superior online shopping experience. The prices were good, the processing time was faster than anyone else, the shipping was fast and reliable, the site was easy to use, etc. Then all the third party sellers, whack-a-mole Chinese brands, and counterfeits took over the site. I thought Amazon was great when they were the retailer instead of a marketplace.
never attribute to malice what can be explained by stupidity, EXCEPT when money is involved. if money is involved, and it can be explained by malice, then it is malice, every time.
the other seller likely reported you as counterfeit, and Amazon believed them.
Grueling rounds of leetcode interviews and system architecture questions doesn’t exactly select for either common sense or detailed knowledge of either human nature or even retail.
Merits of this specific case aside, I find it really interesting that the FTC is going after Amazon now. They have pretty limited resources (especially relative to a massive tech co which can pour money into litigation) and have to pick and choose their battles carefully... I have to admit I'm a little frustrated that they're choosing to go after Amazon, which yes, imo the case definitely has merits and they do shady stuff like with dark patterns for trying to cancel accounts and the like, but there are so many other things more important to my life that seem broken that I wish the FTC would prioritize. How about more of a focus on insurers who refuse claims, drug companies flouting the law, PE firms jacking up the cost of housing or contractors gouging the government (and therefore all of us)?
I know, and I applaud the one they recently filed against Anesthesia Partners which is directly at the intersection of PE and healthcare, but they do have limited resources and have to make tough choices about cases they bring and ones they don't, and I wish they would focus on ones that are more impactful for my life (e.g., healthcare, education, housing) than marginal ones like Amazon or the one against Meta acquiring a VR company. I understand their rationale and am generally supportive, I just disagree with the prioritization.
> How about more of a focus on insurers who refuse claims, drug companies flouting the law, PE firms jacking up the cost of housing or contractors gouging the government (and therefore all of us)?
Those aren't FTC issues regardless of merits, so they don't factor into FTC priorities. The first is mostly state insurance regulators, the second doesn't seem to be a violation of existing law (though it might be a legislative issue, mostly at the state or local level like most land use issues), the third is for the inspector-general or similar authority of the agency employing the contractor.
I'm not sure I agree but IANAL. Doesn't the fact that the FTC recently filed a case against a PE firm buying up anesthesia clinics and using that to jack up prices run counter to the example of the cost of housing? Or for contractors gouging the gov, my understanding is that PE firms have rolled up small defense contractors and then used monopoly power to gouge the government. That seems pretty firmly in their jurisdiction.
> Doesn’t the fact that the FTC recently filed a case against a PE firm buying up anesthesia clinics and using that to jack up prices run counter to the example of the cost of housing?
If you can find a single private equity firm doing that to a functionally bounded market to secure a monopoly on, say, rental housing, sure.
But that isn’t the complaint I’ve heard about PE effects on housing markets.
I'm not sure I track. Sure there's only one Amazon, but there are a few major e-commerce providers (Shopify has been mentioned often, but also Walmart and other major) and more traditional retailers that compete with them.
> after REAL monopolies that actually hurt consumers, such as Apple and their closed App Store
I find this a funny comparison because Amazon and Apple are so similar in the business practices people complain about. Are you sure you're not just on the supplier side of Apple and the consumer side of Amazon?
Out of all the natural tech monopolies, Amazon is the ONLY one that did the opposite of exercising market power. They actually brought fast shipping to the market. A decade ago, you had to pay a crap ton of money to ship things even two days. They forced the incumbents such as Walmart to change. They’re constantly improving e-commerce. Heck they even opened up aws and created an entire industry. Amazon did more to reshape commerce in the US than anyone in the past two decades.
Less market concentration. Lina Khan, the current head of the FTC, argued before she got the job that market concentration and not consumer harm was a better target for antitrust enforcement.
Amazon does exercise a fair amount of their market power. FBA policies are generous to the consumer and to amazon, taking it out of the third party sellers. The other classic example was IIRC diapers.com which was a sharp competitor until Amazon bought it and raised diaper prices. It's possible this was all a ZIRP fad, and diapers.com was burning through investor cash, but still a pretty clear-cut case of consolidating market power (at the time the FTC did not consider it illegal).
They did all those things unsustainably so they could gain market share and raise prices when people were locked in. Similar to Uber and AirBnB etc. All those things are good but not feasible and subsidized by the capital/venture markets. The game is market share and ecosystem lock-in both from suppliers and customers.
A truly competitive marketplace allows any supplier to easily match with any customer. Suppliers gain market share by being the ‘best’, not by being the only option.
How did they actually raise prices? They are still competing on prices on everything. They have the best return policy even besting Costco. FTC and Lina Khan can pound sand. They should go after Walmart for destroying American towns and small businesses before they go after Amazon. I cannot think of a single company that produced more utility for consumers than Amazon.
They straight up copied products in their store an then listed theirs higher in search results. There was a famous instance of a bag. You can't be more monopolistic than that.
They also got insight into every states future plans (which are secret for some reason ) when they offered to build new HQs but then decided not too. This gives them a huge advantage over anyone else who wants to setup a nation wide logistics service.
> They straight up copied products in their store an then listed theirs higher in search results. There was a famous instance of a bag. You can't be more monopolistic than that.
Almost every major grocery store and convenience store chain does this. These are the store’s generic brands, they are specifically designed to be copies of the name brand, and they are positioned more favorably on the shelves. (They often say “compare to [name brand]”.) In general, this is highly beneficial to competition and the consumer.
If you want to make an argument that Amazon’s high market share makes this strategy damaging when it would otherwise be good, then sure go ahead and do that. But the argument needs to be specific and quantitative.
Along with this, I don't understand how the part of the lawsuit that says "Conditioning sellers’ ability to obtain 'Prime' eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service"
is solely an anti-competitive tactic, because how else would Amazon guarantee the fast shipping, etc. if they aren't in control of the fulfilment? I thought prime is only possible through amazon distributing third party products to their warehouses all over so that the shipping can be so fast.
It sounded like their audiobook division was acting in anti-competitive ways to push authors into single platform exclusivity. I wonder what else they're up to.
This rings a little hollow to me because as a consumer, wouldn't I have noticed a lack of non-amazon options?
My family buys on Amazon a lot but I am well aware that I can buy any of that stuff, including at times for a lower price, elsewhere - from company website to Costco to Walmart market, via Google shopping, etc.
Doesn't the existence of these infinity choices make claims of monopoly a bit farfetched? I am sure it's more complicated than this, but... is it?
> Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service
I'm no fan of Amazon, but that kind of makes sense - if they use another fulfillment service, Amazon wouldn't be able to guarantee next-day delivery for their products?
Amazon does currently have a "seller fulfilled" Prime service. They disabled for awhile, and recently brought it back
Consumers pay for Prime, and with it the 2 day shipping on eligible items, and so they prefer buying items with Prime eligibility. I must disagree with the "costly" description, as cost incurred shipping with Amazon and drastically lower than shipping with other services.
Having worked with dozens of businesses on establishing their Amazon account, there are very few that can move the volume needed to achieve the economies of scale necessary to match the costs of using FBA services.
People say Temu is garbage, but every time Im about to buy an 80 cent flashlight on Temu, or motorcycle googles, or 100 amp 12v circuit breaker for $6... I go to Amazon and find the EXACT same part for 300-800% more money with THOUSANDS of reviews.
Amazon still has decent things obviously. But if you're going to buy junk, atleast buy it straight from the source for pennies on the dollar.
Yeah I’m kinda on the fence about this. On one hand, I see the case that this diminishes the open market. On the other hand, Amazon is doing this all within their own ecosystem. So it’s a bit disingenuous for the FTC to say that this has nothing to do with their size. The problem the FTC keeps skirting around on anticompetitive is the fact that the internet favors power differentials, so we’d have to ding any company that has massive market distribution and tweaks their platform to favor participants exclusively on their network
Network effects have not been accounted for in antitrust. That’s the core of the problem. Not the fact that Amazon is tweaking algos. Every major player is doing that.
I like Jerry Chen’s piece on “The New Moats” (ahead of its time published in 2017) that calls out the progression of tech going from systems of engagement -> systems of record -> systems of intelligence. It feels like this is one (of many) consequences of that progression:
I'd argue that anti-trust is a fundamentally flawed concept - it's a matter of time frames, but no company without significant government intervention has had a 'monopoly' for more than a few years. Hell, Standard Oil was only 64% market share when it was broken up.
I was an Amazon seller 10 years ago. I noticed that as soon as I started getting some traction, Amazon would start selling alternatives and undercut me. At some point they started asking for proof of sales. This was then further used to compete against me.
At some point, I had a complaint, refunded the customer completely, and they outright banned my account and held my money for 90 days (I got all of my money back after the 90 days). It completely wiped my business out and I never looked back.
I was banned to the point where if another seller was associated why my account at all, they were also banned. All of my calls went nowhere and I was pushed to automated responses.
12+ years later and I have my seller account back. Not like I'm ever going to sell anything on Amazon again.
> “We’re bringing this case because Amazon’s illegal conduct has stifled competition across a huge swath of the online economy. Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers,” said John Newman, Deputy Director of the FTC’s Bureau of Competition. “Seldom in the history of U.S. antitrust law has one case had the potential to do so much good for so many people.”
Really, really hope this isn't another woke crusade by Lina "0-2" Khan that promises to delivery a random victory to "the common person" and then ultimately fail to do anything meaningful.
Loving this action by FTC. Amazon is the worst kind of predatory market provider - they are literally aliexpress + "steal good ideas from real companies" kind of grift.
I don't like it, but I kind of don't blame them because it's, frankly, a rational act.
Everyone vies for control/power. Once you have control, you can exert pressure to get more from less (this is essentially what "bullying" is). There's nothing (but any laws set up to counteract this) stopping you, so you do it, because relative to you, there's only upside. Can you really blame these entities for taking advantage?
Literally, the thing we all want more of (success and control), will turn us into bullies. Veeeeery few people, or companies, get to that point and then continue to "play fair", at least completely. So we set up the system with rules we think will limit this, but it's not perfect, so rules get exploited.
In games (which are systems and sets of rules), one of the most fun things is to discover an "exploit". Sometimes this comes from a developer oversight, sometimes this comes from rule complexity leading to unexpected states, sometimes from bugs. I remember figuring out how to get an extra enchant on a weapon in Neverwinter Nights (I somehow got 1 past the supposed limit) and how fun that felt. But there was no cost to other people in doing this. (At worst, if I found too many exploits, the game would stop being fun due to not being challenging, and I would just "cheese" through it.)
Amazon is a bully that is cheesing its way through the rules, at some unknown but probably large success cost to many other people vying for the same control. Perhaps it's time to dismantle the bully dominating the schoolyard lunches.
Good. Amazon lies to customers too. They will tell me things like go down to UPS and buy a box and we will refund the cost, then when you chat back they waste hours and request screenshots and then still refuse to issue the refund. They started treating customers like dirt and refusing to honor their own policies within the last year or so. Additionally they will do things like end the chat abruptly or transfer you around 15x repeating the same questions over and over. In another case they promised a full refund and only after I returned the item told me I wouldn’t get a refund due to “restocking fees”. Its too egregious to not be intentional. I will specifically spend more money just to avoid them because the wasted time and frustration isn’t worth any marginal savings.
At the root, the problem with big tech is the monopolization of people's attention. There is essentially no way to gain any meaningful exposure to users without going through big tech platforms and they limit the exposure. Even if you buy ads from them, you never know if your product is being put in front of real users or bots. They seem to favor big, established companies.
I also blame modern journalism for being heavily centered around corporate interests. They won't cover any product or tech which isn't backed by big corporations. That is a major source of anti-competitive dynamics. It feels like every journalist has been bribed to the eyeballs to only cover products from certain companies.
On the other hand, they (DOJ) should use the maximum might of the criminal law to prosecute using fraud statutes for sellers (and Amazon itself) when ratings have been manipulated, resulting in decades in prison.
Finally. This is the kind of thing that needs to happen to all of these giant corporations and utilities fighting for monopolies.
Incidentally I heard today how many laws against anti-competitive behavior were stripped with Carter and Reagan onward, and it's become a trend in our hyper-corporatist world now that's hurting workers and income classes below the highest.
Watch "DEF CON 31 - An Audacious Plan to Halt the Internet's Ensh*ttification - Cory Doctorow" on YouTube
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For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
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This means if Amazon sees a lower price elsewhere they effectively make the product unavailable on their site? Or is it more complicated than that.
On the face of it, while I am open to the stance this is monopolistic, I can naively understand why Amazon wouldn’t want to offer a product at a price that isn’t competitive.
Amazon has a “buy box” where users can see the default seller for an item and quickly add it to their cart or buy it now. This is prime real estate as most customers won’t think twice about adding the default, pre selected option.
I believe the way it works is as a seller you’re no longer eligible for the buy box if your item is found to be sold cheaper elsewhere.
Made a purchase that was cancelled with shop with points. The points won't return and are "stuck in limbo". Cancelled Order doesn't show in order history either. I've contacted support with at least 50 support agents over several months and the standard you won't be charged if it's cancelled templated response is all they can muster to reply with. There's no way to contact anyone besides the templated responses. Essentially 900 dollars are gone and no support possible.
These lawsuits are simply performances designed to rid the next administration’s power to do a real lawsuit. It will give Amazon a slap on the wrist and keep the company in monopoly.
I used to be an FBA seller and made an exit via sale to private equity (i.e. an aggregator). The FTC will likely fail on all or most fronts imo. Amazon's price fixing helps consumers because they simply don't show you the product if it's not the best price on the web. FBA fees are not "profits" taken by Amazon because logistics is not a profit-center for their business. Copying successful third party sellers' products, as annoying as it is (it happened to me more than once), doesn't appear to break any laws. Advertising costs keep rising yes, but again, how is that illegal? At some point, there may be an opportunity for some young entrepreneurial minded person to create their own marketplace open to third party sellers and undercut Amazon's commission (currently 15pct in most categories) and have cheaper advertising costs due to lower competition. The reason why currently this is likely not viable is that FBA is still faster and cheaper than any other existing fulfillment service last I checked. The margin difference between lower commission+cheaper advertising vs more expensive (and slower) fulfillment is still - I believe - in Amazon's favor. FBA, by the way, is open to use even if you sell on your own website. The service is called Amazon MCF (multi channel fulfillment), but the cost and speed is not as good as real FBA. I often wondered what Amazon gains by offering MCF and can't help but think it has something to do with making the appearance of not being anti-competitive.
Amazon should just change their business model. Instead of requiring sellers sell their products for a competitive price on Amazon they should do the same thing Apple does and just charge sellers a large margin on sells on their platform. Obviously this would mean higher prices for consumers but if the problem here is that Amazon is forcing sellers to price products lower than they'd like then that would fix the issue.
Well yeah but that's the whole point. They don't want to do that because they would make less money because you could always go to the seller directly to get the product for less.
You can always go and use Alibaba to buy more directly, although still not direct. Small scale producers in China learned the value of an e-commerce platform a long time ago, you can't usually find them direct anymore.
Long overdue. Amazon charges unfair seller fee for listing, closing and referral. We end up paying 27-32% for each apparel sold. We've been advertising on their website since 2021, every day and lately the results are just poor. Amazon should be held accountable for their business practices. It has become a platform that doesn't favour the seller one single bit.
Nice to finally see this, so many years after online retailers (read: Amazon) were given total exemptions from sales tax in order to not “stifle innovation”. We subsidized the destruction of brick and mortar retail, and by extension, many of the retail spaces that served as community anchors. It will take decades to recover, if it’s even possible at this point.
> One set of tactics stifles the ability of rivals to attract shoppers by offering lower prices. Amazon deploys a sophisticated surveillance network of web crawlers that constantly monitor the internet, searching for discounts that might threaten Amazon’s empire. When Amazon detects elsewhere online a product that is cheaper than a seller’s offer for the same product on Amazon, Amazon punishes that seller. It does so to prevent rivals from gaining business by offering shoppers or sellers lower prices
Price competition conflated as punishment. The FTC's mandate is to promote competition. Here, they attack Amazon for competing effectively.
Also, advocating for other online superstores is playing the world's smallest violin. Walmart has decimated mom and pop stores. They're unable to beat Amazon at the online game. Truly remarkable achievement, really.
Why are redactions even permitted in a lawsuit involving a government agency and a corporation? Don't mention Project Nessie at all if you can't tell the public what you're arguing about. "Trust us, they were monopolists" isn't the same as laying out the facts for all to see.
In my opinion, as an ex-employee, Amazon is intentionally abusive to its sellers, content creators, customers, and employees. I'll never buy or sell anything on Amazon again (or patron their related businesses, like Zappos, Abe Books, etc.), but I hope this lawsuit changes things for those who do.
This is a classic antitrust case. Like the film studios in Hollywood controlled talent, finance, production and distribution, Amazon controls too many parts of the process giving them undue market power with which they abuse their so called partners. They should absolutely be broken up.
The fact that Amazon owns the market and fulfillment and even last-mile delivery is the most obvious case of vertical integration I have ever heard of, and I personally interact with it in some way at least once every week!
When Microsoft was accused of monopolistic behavior for integrating IE into the OS IIRC it was the DOJ who went after them. In this case, it's the FTC, seems like it should be the DOJ to go after Amazon based on Microsoft's case.
Hm. From an American law standpoint, this suit is thin on the ground for consumer harm. I can see the competitor harm, but IIUC US antitrust is generally grounded in consumer harm.
I'll have to see the argument they actually make in court.
I hope this works. There hasn't been a big monopoly break up since the 1982 break up of AT&T. And with this conservative supreme court, I'm not holding my breath that this will actually go through.
Are there any useful alternatives? I tried Walmart+, but they make you feel guilty to tip the drivers and their search function is mediocre. Also, comparing to Amazon, the prices seem higher or equal.
The current state of Amazon is the result of a very slow trajectory taking 20 years. It happened in plain sight and still we allow it to grow until it's a monster where most of commerce has to submit to.
We allow Google to become the leading search engine, advertiser, browser maker, mobile operating system maker. Effectively owning the internet. These should be 4 companies, not one. And even the 4 companies should not be of the current size.
Stop allowing companies to grow into platforms, gatekeepers, monopolists that squeeze everybody dry.
The current state is anti-market and anti-capitalistic. There no longer is any market when you allow these monstrosities.
It's not a coincidence that Bezos ran for the hills exactly like the Google founders did, with the anti-trust writing on the walls. Bill Gates did the same thing as well (although he stuck it out a bit longer), exiting with the anti-trust heat.
They're all terrified of the invasive investigations and what could be revealed, the scrutiny they'd be persistently under, and the time demands involved (it's no doubt miserable battling the government in a major anti-truist suit).
The FTC is an independent, bipartisan agency. It’s not something a future president should be using to “go after” anybody to further his or her party’s agenda.
They force sellers to use their payment processor. If you don't, they charge an extra 0.5% markup on top, which basically means that no 3rd party payment processor can be competitive on price.
I think you can also measure their power in the same way as Amazon - The % of fees that they capture as a percent of sales volume goes up every year. Slow squeeze.
But then by that logic any action by any platform is never illegal. It's their platform, they can do whatever they want. If you don't like, don't use their platform, right? Is that what you're saying? I'm not totally unsympathetic to that POV, but in practice I guess it doesn't seem to be working out so well...
Then you are in the minority unfortunately. Just look at music - you can buy DRM-free music online without problems, but people still prefer to pay for Spotify...
Streaming is a different matter. I agree that you don't own anything if you stream.
I also don't think lack of popularity for "buying" is a reason not to have a reasonable rule about the definition of "buying".
huh. i didn’t know the FTC did this. i thought anti trust was federal territory with DOJ. is TFA just borrowing the word monopoly and this isn’t an anti trust case?
I know some folks who really genuinely believe that Amazon is a force for good, the criticism is exaggerated, will talk about how lucky they are to work for the World's Best Employer, and will get a bit sulky if you say anything negative about the company.
Generally though, I think it's understood that "most customer centric company" doesn't mean "we will put the customer before ourselves because we are such good people", but instead "strategically keeping the customer happy is better for the shareholders in the long run".
It's the same with most of the LPs. They're packaged in a way that makes Amazon sound like this amazing company that really cares, but they boil down to "16 ways YOU can enrich Amazon's shareholders (you won't believe number 15!)".
I've never met anyone that thought the LPs were meant to imply Amazon "really cares". I like Amazon because it seems more straightforward than other companies. It's a business and it wants to make money. The only way I've ever interpreted "customer obsession" is that it's mutually beneficial to do what's best for the customer.
That's exactly it though: it's often (perhaps even usually) not beneficial for Amazon to do what's best for the customer.
What's the point of "Customer Obsession" if it's secondary to "Amazon Obsession"? Doing what's best for the customer unless it isn't also what's best for Amazon is just doing what's best for Amazon.
There does seem to be some antitrust exposure there:
=========
Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service, which has made it substantially more expensive for sellers on Amazon to also offer their products on other platforms. This unlawful coercion has in turn limited competitors’ ability to effectively compete against Amazon.
Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service
Isn't Prime a fulfillment service in this context? How would a seller be Prime eligible without using Amazon fulfillment?
Publicly traded law firms aren't currently a thing in the US, because non-lawyer ownership (or in this case, partial ownership) of law firms has been against legal ethics codes for a long time: https://www.reuters.com/legal/legalindustry/practice-innovat...
I'm honestly not sure how you could make the case that they aren't maintaining and abusing monopoly power. I mean they literally blatantly copy the designs of other companies who sell on amazon, then put their own results for their own products higher in search results than what they copied off of. It's incredibly blatantly anti-competitive.
I ate a lot of popcorn during the Microsoft trials - plural - and the received wisdom from previous generations that was already being forgotten at the time is this bit of torch-passing, which I now impart to you.
Anti-trust cases usually only succeed once the court of public opinion has turned against the monopolist. If the public is still in favor or ambivalent, then you will not find the political will to successfully prosecute your case.
But once the company has abused their power enough to turn the public against them (arrogance in addition to greed), then the charges tend to stick.
My read is that there is no amount of lobbying that can be successful once the pitchforks have come out. But it could also be how many whistleblowers you can hunt up. Once your brother is giving you shit for working for the Evil Empire, it's a lot easier to get up the courage to be a witness.
The trouble with this argument (which gets made a lot) is that this is basically every large retailer. Walmart has great value, Safeway has safeway select, Target has good and gather. In all of these cases large retailers take well-performing products (i.e. look at their sales data to see what is selling well) and creates mimics.
They put the generics right next to the original products, and then charge the original seller for better shelf placement (as well as for various other things -- getting a product in a retail store requires a fair amount of payola in some form or another).
All of this adds up to basically the same thing: amazon copies a product and ranks it highly unless you pay for better placement.
You can say that this is bad, which sure, but it seems hard to make the argument that this is specifically illegal for amazon when it's widely practiced in the industry.
> The trouble with this argument (which gets made a lot) is that this is basically every large retailer.
Alternatively: there's no trouble at all, Walmart/Safeway/etc are all clearly engaging in this anti-competitive practice and must be reigned in. Marketplaces need to be regulated as neutral grounds for sellers, the marketplace cannot double-dip and compete against sellers or engage in practices that reduce competition between marketplace businesses.
Generics and knock-offs are fine, it just needs to be done by independent sellers.
Practices like down-ranking sellers for offering better prices elsewhere is just blatantly violating any sense of neutrality, reducing competition among marketplaces and increasing prices for customers.
Aren't most of these generics all white-label anyway? I'm less worried about store-brand generics that are often outsourced, and more worried about behavior that drives any of the original manufacturers out of the business entirely because of monopoly over the entire sales chain.
How is it clearly anti-competitive if they are providing a better value for the consumer?
When a name brand has market power and charges a premium for a basic product, then another company entering the market and undercutting them is great for the consumer. We can make regulations to ensure that a distributor, advertiser, retailer and the product owner engage in arms length transactions but there’s nothing inherently wrong with a store brand offering products comparable to name brand at significantly reduced prices.
When considering "better value for the customer", remember that sellers are a customer of the marketplace too (arguably the primary customer!).
imo the problem is specifically generics branded and marketed by the marketplace. That's where a conflict of interest between the marketplace and sellers arises, which ultimately harms end-customers.
Amazon Private Brands (APB) typically buys from the same companies that make the random generics like "XOFUNBO" no-name brands. The issue is Amazon can use it's insider data to buy, brand, and market generics in-house, without paying the fees charged to sellers - achieving costs that 3p sellers fundamentally cannot compete with. Amazon's own corporate training highlights that sharing sales data with 3p sellers is illegal and anti-competitive, I don't know why APB should be seen as any different.
This is not even considering how sellers need to earn end-customer trust while Amazon can muscle coasting on their trust as the marketplace.
Marketplaces must be neutral ground for sellers, full stop. No seller can be given privileged access. Otherwise the market distorts to favor a seller and that ultimately harms the end-customers in the long-term by suppressing competition.
Too many economic opinions are still predicated on the idea that the free market is still working correctly, and that there are effective controls in place. The reality is that - at least in the US - the controls are broken, and have been for a decade or more.
I think those great value products are not in fact produced by Walmart. It's the same product from the same company, just lower priced to appeal to price conscious customers.
Thats exactly what those are. I worked for Reynolds Consumer a while back and the same aluminum foil goes into the brand box as well as the private label box.
The foil might be the same, but that doesn't mean everything is. I've had generic raisin bran cereal that was clearly Kellogg's in a different box, excpet that 1 out of 100 boxes had a slightly different flavor that wouldn't have passed Kellogg's quality controls but since still food safe (so I assume) the generic boxes got it. Of course when doing a private labor you can specify the higher quality controls, but that comes at a higher price. Most of the time Kellogg's is going to make the same cereal either way so nobody can tell the difference, but when something goes off in the process the cheaper generics get it.
My knowledge of foil suggests there isn't anything Reynolds could to that would reduce quality that would still be good enough to ship.
I dunno how it is these days, but the store brand cocoa pebbles used to not taste like chocolate at all, and would fail to turn the milk into chocolate milk like the real ones did. Other cereals had similar problems. A common issue was that the store brand was consistently, noticeably stale, while the name brand almost never was.
Clearly, it isn't illegal to do this kind of thing in general. What's illegal is doing it when you have enough market power to be deemed a monopoly. No physical retailer is anywhere near that. Businesses are allowed to be anticompetitive. That's more or less the entire reason they exist. They're not allowed to create monopolies by being anticompetitive.
There’s nothing wrong with genetics and nothing wrong with stores having their own brand.
We just need regulations to ensure that vertical companies are engaging in arms length transactions. If Walmart charges a company $10 per linear foot of shelf space on the third row, then they need to internally bill the generic brand division the same rate.
You do not need > 50% market share for the government to go after you for monopolistic practices. If Amazon made that case in court, they would be laughed out of the building.
It really depends on how you define it, but Amazon, Walmart and Shopify are all excellent mainstream choices. This gives you plenty of numbers for comparison:
Exactly. I prefer Amazon Basics to YAYWOWND brand every day.
It is one of the few brands on Amazon you can count on to not be Chinese crap. Even if it is made in China, the Amazon Basics products are generally good quality.
I think it's slightly better than <insert anonymous three day old Chinese company here> but just slightly. Amazon Basics within my company has earned a reputation for being extremely fragile crap that will break quickly and, occasionally, dramatically. I have had absolutely awful experiences with their surge protectors.
But yes - it's a step up from YAYWOWND which is a company that probably didn't exist last week and almost certainly won't exist in a month when their product spontaneously combusts and you try and chase down damages or at least a refund... Still, I'm actually finding myself buying more and more name brand crap because at least that way I know there's a company I can reach out to when it breaks down.
Bonus points for YAYWOWND that didn't exist last week, yet all it's products have thousands of 5 star reviews that amazon somehow doesn't think is fraudulent.
Many reputable brands are not on Amazon because then they people who buy from them are not getting a counterfeit. You have to be a certain size to pull this off though, small companies have trouble getting a market outside of amazon or ebay.
I don't know if they ever fixed this problem (they have changed suppliers before), but I try to avoid using products from Amazon or no-name Chinese companies that plug into the wall.
It might be, but Costco has a reputation for integrity, and it's not worth trading that for a few percent cost savings on generic items that aren't even a big portion of their bottom line.
And at what point is a company too powerful that doesn't meet the traditional, and frankly outdated, view of a monopoly? Amazon owns and controls entertainment, news, journalism, books, movies, products, furniture, space/satellite services, backend services, storefronts, medical care, pharmacies, food, etc. They literally control, own, and/or provide every aspect of life. Are they the only ones in each of those areas? No. But they are one of the few, if not the only one, in all of those areas at once.
Technology, and in particular software, has greatly outpaced the definition of monopolistic power. Amazon and all the other large tech companies wield so much power it is scary. And they can literally just buy into any market they please with hardly any push back.
Monopoly is a subset of anticompetitive behavior, and not easy to prove. Whatever behavior you see as monopoly, they could have a "reasonable" explanation for. A company violates the law only if it tries to maintain or acquire a monpoly through unreasonable methods. As usual, the law has loopholes big enough to drive an entire logistics chain through.
To "make the case that they" are or aren't violating antitrust law, you need to know and talk about antitrust law.
To not be sure how someone can make either case, without being familiar with antitrust law and framing the discussion in terms of it, is only to be expected.
I came to HN hoping to see some legal analysis, but I guess that's not what HN is for. You can get good technical discussion of technology, but when it comes to legal technical stuff it's just ideology and people talking about how they think things should be. What's HN for lawyers?
Grocery stores sell generic foods, but they put them on the same shelf as the name brand stuff.
They don't hide the original products in a darkened corner of the back room where no customer can see them. They don't shove their generic into your hand every time you reach for a name brand. Amazon can hide the real products from search, or push it to the bottom of results, while putting their own products at the top of search results even when you search for the brand by name.
Can't speak for your experience, but in mine generics have often replaced name brand products in shelf-space-limited urban locations of stores like Target, etc. I should make it loud and clear that I'm completely fine with this.
I have never once seen a store that removed the major name brands from the shelves and only offered their own generic brand.
You might argue that having generics on the shelves at all means that new small brands have to pay more for placement, but that's not the same thing as stealing product ideas and leaving no other option but the generic version of that thing on the shelves.
Originally, the generics (which had plain black and white packages) had their own dedicated isles. Now the generics are put on the shelves next to the originals and all those "generic only" shelves got filled with regular products.
I've still never seen a brand new product show up in the store and become popular only to be pulled off the selves and replaced with only a generic version of that product. When I see examples of that happening, I'll accept that grocery stores are guilty of doing what amazon does.
I think grocery stores are culpable for a lot of shady behavior.
The least of which is selling end cap space (most walking traffic) to the highest bidder, meaning a lot of junk food and impulsive-purchase products are put in the highest traffic places.
At least on Amazon it's marked as a sponsored result. Even if most people click the first result anyway.
Both Amazon and grocery stores can be in the wrong.
the difference is that grocery stores are easy to search completely - don't like the cereal options on the end-cap? just walk down the cereal aisle and see it all immediately.
Amazon on the other hand, actively makes it difficult to search for other products, by not only promoting their own brands at the top, but filling up the rest of the results with sponsored items.
It's more akin to an endcap with highest bidder items, but then every few feet you walk down the cereal aisle, the shelves separate and move farther away so another endcap can slide into view, pushing the cheaper alternatives farther and farther down the aisle the further you walk.
Not to mention the scale of the problem as well, grocery stores are finite, and amazon nearly infinite, at least in terms of how much time it takes to search through everything.
It's going to come out that Amazon calls the manufacturers for their basics goods, sends them the leading competing item and has them make it with slightly less expensive components to undercut the cost of the competitor.
It's so blatantly obvious if you've ever done a side by side in things like lamps, backpacks etc and other super simple designs.
My biggest issue with the way Wal-Mart (and most other retail) did it is that it was... scammy.
Want an HDMI cable? Here's an overpriced Monster cable. Oh, don't want to pay absurdly high prices? Save money by buying one that is only 300% more than it should be instead of 400%!
The nice thing about Amazon was that it broke this model. Suddenly you could buy Anker or (insert small third party here) at very reasonable prices.
Amazon destroying those competitors is doing some damage to this, though.
> It's going to come out that Amazon calls the manufacturers for their basics goods, sends them the leading competing item and has them make it with slightly less expensive components to undercut the cost of the competitor.
They won't need to even call. Most FBA product listing inventory can be received directly from the factory (so Amazon knows exactly where it's made) and they can just go to the factory and offer to do 10x the volume for the exact same item (at a much higher discount).
That seems far from a monopoly. Only 2 of those I have ever been to, and the common places I go: wegmans, costco, aldi, trader joes are all not on there.
That doesn't seem likely. According to this source, Frey Meyer (18.4%) + Safeway (17.3%) would be the clear market leader with over 35%, but there's still robust competition from Costco, Walmart, and others.
Note that Fred Meyer (18.4) and QFC (14.1) are already both owned by Kroger. So that would be 49.8% post-merger, per those figures.
These figures seem to be for the Seattle metro rather than the city itself. Costco might be a competitor in some sense but it doesn't serve the area I live -- the nearest one is a 45 minute drive away. WinCos are even further away -- they serve some of the suburbs, but not the city of Seattle. Ditto Walmart. I've never heard of or seen Campeon. Whole Foods / PCC exist, but are expensive. Trader Joe's is fine but not really a full grocery store.
It's very location-dependent. In my midwest metro I believe they'd be less than 5% of the market. I'm sure Albertsons and Kroger each have local monopolies in different regions.
I think they have a good point, though. I would like the laws to prevent a single corporation from being 90% of all groceries for an entire state even if they aren't anything close to a monopoly from a national perspective.
Neither is Amazon in e-commerce, they hold ~39% of the US market and their eCommerce growth lags behind total eCommerce with 9% and 10% respectively. Wal-Mart is at about 6.5% but had nearly 25% growth this year while capturing 36% of all eGrocery sales in the US.
The only place where Amazon is even near 50% is in consumer electronics and office supplies.
The eCommerce market as such has a very long tail and a lot of competitive players just behind Wal-Mart.
> Neither is Amazon in e-commerce, they hold ~39% of the US market and (...)
From the link:
> The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging.
I obviously read the press release, but haven't read the 173 page complaint yet. But the piece about pricing is DEAD wrong.
The complaint says:
> Amazon uses a set of anti-discounting tactics to prevent rivals from
24 growing by offering lower prices,
But Amazon's contracts with big sellers specifically state that it may only discount when competitors first lower prices, making it in effect a price follower.
It goes on to say:
> Amazon deploys a sophisticated surveillance network of web crawlers that constantly
monitor the internet, searching for discounts that might threaten Amazon’s empire. When
Amazon detects elsewhere online a product that is cheaper than a seller’s offer for the same
product on Amazon, Amazon punishes that seller
Which belies the fact that when you sell on Amazon you agree not to offer lower prices in other places. This is simply Amazon enforce one end of the two way part of the contract. Amazon agrees not to unilaterally slash your prices and you agree not to discount behind their backs. But you aren't as an eCommerce seller obligated to do business with Amazon, they don't have sufficient market share for that.
Furthermore, this statement is specifically false:
> By taming price cutters into price followers, Amazon freezes price competition
11 and deprives American shoppers of lower prices
Amazon is the price follower. If Wal-Mart offers a discount, so will Amazon. If B&H Photo discounts a camera, so will Amazon. The FTC is using sleight of hand here.
I just don't find their arguments here to be very compelling. I'm not against monopoly enforcement, but I just don't see how Amazon actually has the pricing power they're claiming.
I don't know about that. I think the FTC has a bit more insight than a random guy online who admits didn't even read the complaint, and the FCT went through the trouble of putting together a court case to sue Amazon.
I clearly read the relevant pricing piece of the claim, and have direct related work experience. So I actually think I know a lot more about Amazon's pricing behavior than some ghouls deep in the FTC who are following Lina Kahn's marching orders to find a case against Amazon.
I think it's sufficient that I'm able to tear apart the section of the complaint that has bearing on something I have direct knowledge about.
Maybe other sections have merit, but the pricing part does not.
Doesn't Amazon prevent you from selling on other stores for a lesser price? I always thought that was a galling scam and couldn't understand why it was even allowed at all.
I do not see the purpose of excluding Walmart from "grocery store" when it sells the most groceries in the nation. Costco and Target are also sell huge amounts of groceries.
The complaint [0] has 32 pages detailing Amazon's durable monopoly power in two relevant markets, so your claim that it lacks a monopoly might do with somewhat more of a counterargument than you've presented.
"Monopoly: the exclusive possession or control of the supply of or trade in a commodity or service."
Given that there are things such as Walmart.com, eBay, Shopify, and many hundreds of other online commerce stores, they are self-evidently not a monopoly. In fact, they don't even have a majority share of eCommerce in the US.
And they also don't have majority share in cloud services.
Nor do they have a monopoly in eBooks.
I did not say they don't have monopoly power, I said, they are not a monopoly.
(Other than obvious things such as "Amazon products"..., in which case every manufacturer or retailer is a monopoly in their own products.)
> Other than obvious things such as "Amazon products"..., in which case every manufacturer or retailer is a monopoly in their own products.
The way this argument is normally presented is somewhat intentionally obtuse. Obviously Nike has a monopoly on Nike shoes, but "Nike shoes" isn't any kind of sensible market definition because you go to a shoe store and there are a dozen brands of shoes that are all pretty fungible with each other.
But then you get into something like "GM-compatible brake pads" and that is a sensible market definition, because if you have a GM car and you need new brake pads, they need to be compatible with your car. But you'll also notice that this isn't the same thing as GM-brand brake pads. You could get GM-compatible brake pads from a variety of OEMs that are all compatible with your GM vehicle.
Or, it could be the case that only GM makes GM-compatible brake pads. In which case they would have a monopoly in that market. Not because it's a monopoly on their brand of brake pads, but because it's a monopoly on any brand of brake pads compatible with that brand of cars -- which is something else entirely.
Notice that they don't even have to be the same company. If you have a Studebaker, the Studebaker Corporation is no more, and you may have trouble finding parts. It may even be the case that some independent third party has a monopoly on some such parts, even though it's a monopoly on parts for one specific brand of car.
> Or, it could be the case that only GM makes GM-compatible brake pads. In which case they would have a monopoly in that market. Not because it’s a monopoly on their brand of brake pads, but because it’s a monopoly on any brand of brake pads compatible with that brand of cars – which is something else entirely.
> Notice that they don’t even have to be the same company.
As a specific example (and note, that you also don’t have to be the literal sole supplier to have a legal monopoly under US antitrust law), the market Microsoft was found to have monopolized in their big antitrust case was the market for operating systems for IBM-compatible personal computers.
Staples (peanut butter, canned fruit, etc.) tend to have store brands, but grocery stores doesn't have a store brand version of the vast majority of popular products.
Walmart has done that, for decades. They have tons of their own brand in their stores selling for cheaper next to the more brand name items. Equate, Mainstay, etc. In fact, everyone does it. Target, Costco, CVS, Walgreens, etc. It is basic price discrimination / segmentation strategy.
What individual grocery firm has a monopoly of the degree that the FTC has identified for Amazon in the two relevant markets for this case over any market, what is that market, and where is the evidence for the claimed monopoly?
Not really feeling like doing a bunch of research right now but walmart has 36% of the grocery market in this country and many local monopolies. I don't think Amazon is above 50% in any ecommerce sectors so seems pretty similar to me. Walmart also is known for the same stuff Amazon does where it bans the companies it buys from from charging less elsewhere.
I get the sentiment behind this reaction that most people have. I just have a hard time understanding how it is any different than brick and mortar companies using their sales data to determine which products they should have a store brand version of. Costco, Walmart, Target, etc. all do this, and have been doing it for decades.
At a Costco, they'll often stop selling the brand name product if they introduce a "Kirkland Signature" version. Amazon doesn't take down competing products when they launch Amazon Basics versions.
Not really intending to defend Amazon, because they are indefensible, but by big corporate standards, I don't see how they are anywhere near as bad as Walmart. And nobody is trying to break Walmart up.
> I just have a hard time understanding how it is any different than brick and mortar companies using their sales data to determine which products they should have a store brand version of. Costco, Walmart, Target, etc. all do this, and have been doing it for decades.
The legal difference underlying the lawsuit between this behavior by Amazon and the behavior you raise by those stores is not the behavior, but its context.
Amazon, the complaint alleges, has durable monopolies in two relevant markets which the behavior leverages and reinforces, making it a means of illegally maintaining a monopoly.
The other stores do not have monopolies, so the behavior is not part of a system of illegally maintaining a monopoly.
This is very similar to the kind of discussion that happened at the time of the Microsoft antitrusts suit about bundling software: one of the ways Microsoft illegally leveraged their Windows monopoly – in this case to monopolize other markets rather than to maintain the Windows monopoly, but same kind of issue – was bundling IE with Windows. People made all kinds of “well, how is this different than maker A bundling software X with software Y”, and mostly it wasn’t, except that maker A didn’t have and thus wasn’t leveraging a monopoly in the market of software X, so them bundling software Y with it wasn’t an issue.
> Amazon does not have a monopoly on online shopping that’s absurd.
“That's absurd” is an inadequate rebuttal to pp. 39-71 of the complaint detailing the basis for the claim Amazon has durable market power in two relevant markers.
> We need to move away from the term "monopoly" (which may not literally be a mono) and towards anti-competitive.
Anti-trust rules cover both, with a (often complex to apply, because of the kinds of facts that need to be analyzed, but relatively well-developed) concept of “monopoly” which ultimately boils down to whether or not substitution happens in practice rather than whether there is exactly one firm ina descriptive market. There's no need to “move away” from one to the other.
At a Costco, they'll often stop selling the brand name product if they introduce a "Kirkland Signature" version.
This is false. The Kirkland Signature versions are just the white-label version of one of the brands that are sold in Costco. For example, the Kirkland batteries are white-labeled Duracells; the Duracells are frequently sold right next to the Kirkland ones. The KS coconut water is just white-labeled Vita Coco and is sold right next to the VC coconut water. The point of the white-label product is to segment the market: the higher price of the branded version will make it seem like a more premium product while cost-conscious customers will purchase the white-label brand. Either way, the manufacturer gets paid.
How do you know that you're not missing out on an even better deal?
If amazon had real competition maybe they would not have raised seller fees so much, and would not have prevented sellers from allowing lower prices in other places. So a cases can be made that they are using their market share to drive up prices, not lower them. Costing the consumer more.
There's other issues besides cost, for example counterfeits. If they had real competition then maybe they'd have to do something about all the counterfeit products they sell, which hurts both buyers and sellers.
Just a couple examples. There are other ways that monopolies can impact markets.
I've had similar thoughts about facebook. We could have had much better social/messaging systems, but facebook bought the competition. We likely missed out on more variety and perhaps much better options. Consumers were harmed by these lost opportunities.
>I get good products for cheap delivered in two days or less.
You would be getting the same products for cheaper, that's the point. Their "two days or less" hasn't been true for several years. "Prime" to me basically has become "sometime in the next week" and there's a massive warehouse within 30 miles of my house.
I cancelled Prime, and I always still get free shipping. Yes it's longer than 2 days, but a lot of the time it arrives early anyways. I really feel like it is better without Prime. I get more "early arrivals" now and I used to just get 2 day shipments in 3-5 days anyways.
The purpose is to serve the public, full stop (including consumers, employees, shareholders, other citizens). The mechanism is the free market, not capitalism, and the free market requires free competition.
Capitalism is one tool in the free market toolbox, and it works very well in many ways. One way this tool doesn't work well is that it leads to monopolies, which stifle competition, which hurts the people listed above.
> I'm honestly not sure how you could make the case that they aren't maintaining and abusing monopoly power
Well, the obvious way would be "Amazon is not a monopoly." It's blatantly anti-competitive but hasn't produced a competitor yet. And heck, they didn't even have to buy off the competition from Jet.com, Wal-Mart somehow inexplicably did that for them.
Grocery stores do this all the time and undercut brand names. They even put up signs with "compare to <brand name>" by the generic. I'm really not sure how you could make the case that it isn't legal given that it is a long standing and accepted practice, and is clearly beneficial to the consumer.
I've found that many people will spend a lot of time and energy defending large companies (and often their CEOs) against perceived bullying. Amazon, Tesla, Elon, Meta, etc etc. I don't really understand it.
Perhaps they have a different opinion than you do on the issue?
I don't have a POV on this particular case but it seems reasonable to assume that there are other (reasonable) people that have different values and judgements than you do. Just because these companies and CEOs have a lot of resources should not automatically kick in the "David v Goliath" instinct that most people have
> Just because these companies and CEOs have a lot of resources should not automatically kick in the "David v Goliath" instinct that most people have
David vs. Goliath was a story about overcoming subjugation and oppression. A lot of people have been very much put-upon by the metaphorical Goliath here in a number of ways. There are piss bottles available as evidence.
I'm amazed at how much the idea of pissing into a bottle offended the sensibilities of journalists. Given a choice between pissing in bottles or having the time saved as a longer lunch break, I'd guess most would chose the lunch break. The never ending screw turning cost optimization is the problem, but using that example lands really flat.
> The never ending screw turning cost optimization is the problem, but using that example lands really flat.
I worked in logistics (elsewhere) for a decade, and quit when conditions shifted to incentivize smoking meth and pissing in jugs. It's abusive and just fucking gross.
I assume you aren't pissing in jugs to save time for longer lunch breaks. Why not?
Nobody pisses in jugs unless they're forced to. The example only falls flat because Bezos escaped the gravity well in his dick-rocket and it's really fucking hard to hurl bottles of piss into space with a sling.
See my comment below. I'm talking about delivery drivers. You might be talking about fulfillment centers.
I disagree that nobody would voluntarily choose to pee in a bottle in the context of driving a delivery vehicle. But I do agree that the behavior in the context of being in a building that has a bathroom is a sign that something is horribly wrong.
Why do people have to make choices of how to spend their time? Because there is a finite amount of time in any given period, and most activities are mutually exclusive.
No, why are they forced to make this specific choice? Why would they need to deduct time from their lunch break in order to use the bathroom? Using the bathroom and eating lunch are not normally mutually exclusive activities, unless there is a third party enforcing such an exclusion.
Sorry, we might be talking past one another. When I hear about peeing in bottles, I think of the delivery drivers. This is the obvious place bottles would get used, and in my recollection this was most of the reporting on the pee bottles. I believe there was also reporting on workers in the brick and mortar fulfillment center using bottles to meet their quotas, which is perhaps what you are talking about.
For delivery routes, there's no simple solution for bathroom access (unless you want to talk about installing some step up from a "bottle" in all the vans). Meaning a driver will inevitably have to choose to spend time not delivering packages to leave the van and use an indoor bathroom.
If you are talking about the workers at the fulfillment centers, I do agree that is indefensible. That human need should be entirely owned by the business. If it takes workers too long to walk to the bathroom, or if Amazon insists on using time with security lines and whatnot, that's entirely on Amazon.
(Also to each their own, but using the bathroom and eating lunch are definitely mutually exclusive activities for me)
HN is run by a VC firm, and the explicit goal of the companies they fund is to grow very big very quickly. While HN's audience extends beyond that the VCs do leave behind a huge imprint.
and others spend a lot of time attacking large companies simply because they are large. In this case, AMZN. AMZN is like the cheapest place to buy things online. But it's not the only place. So, why is FTC going after them?
> others spend a lot of time attacking large companies simply because they are large
This isn't the FTC's complaint but search "How Amazon treats their workers" and see why large companies get attacked. Typically the only way you're going to become this large is by abusing people in some sort of way. Amazon abuses their workers, their sellers, etc. Meta abuses their users. Google abuses their users. Uber abuses their drivers.
I would love to see 20 Amazons where half have a decent quality of life for workers compared to 1 Amazon where it's just awful for everyone except maybe consumers (debatable), executives, and tech workers.
Search for "How Starbucks treats their workers" and see why large companies get attacked too. If you search for your favorite local coffee shop, you won't see such complaints.
But go to /r/starbucks and you'll sometimes hear that a lot of small shops are worse, for various reasons.
Large companies attract certain classes of criticism not by being worse, but by being more visible. Unfortunately, this actively masks some of the wrongs that they actually do.
Yes they are forced to work. If you don't have a job you starve, that's how our economy works. That's a very soft form of force (specifically, a sin of omission), but it is still force.
Likewise, quitting your job is extremely disruptive and carries risk of bankruptcy if you can't get on to another employer in time. It's not simply a matter of "switch to the best offer available".
I was alive before Uber, AMZN existed and nobody starved, people just worked elsewhere, so this assertion is just not true. People have to work, but they don't have to work for AMZN, they didn't before it existed. Sure, quitting is disruptive, but people are not actually forced to work for any company, come on.
You don't think the large companies that existed before Amazon abused those workers? Wal-Mart never did anything wrong to their workers? It's a repeating playbook.
The argument always boils down to "well it's allowed / that's just how you do things" and when the companies get told "No, that's actually not allowed and not how you should do things" the argument switches to "the FTC has been weaponized by The Other Side, even if they're doing pro-consumer things we shouldn't trust them because Big Govt."
Meanwhile, we have over 100 years over antitrust history and precedent pointing the other way. Sometimes Big Govt does need to step in and set the market right, because raw unfettered capitalism lacking regulation will always destroy itself. (For the record, and to preempt some strawmen, I don't think raw, unfettered socialism is The Way either.)
I guess I do that to some degree. Amazon is doing some bad things, but I have a difficult time seeing that without also seeing the good impacts that they've had.
I remember online retail before Amazon dominance. Return policies and return shipping was a real mess. Amazon actually greatly improved the customer service experience. It also changed some markets in ways that were undoubtedly pro-consumer.
It also has had a lot of negative impacts, as their model (including the free shipping concept) has made it practically impossible for small independent stores to compete in online sales.
Put another way, very few things are all bad or all good. A lot of internet commentary wants to magically keep the good and vaporize the bad, but it just doesn't work that way.
> It is not if you cannot prove that the price that the customer pays is now higher.
That's according to a peculiar interpretation of anti-trust law.
“Due to a change in legal thinking and practice in the 1970s and 1980s, antitrust law now assesses competition largely with an eye to the short-term interests of consumers, not producers or the health of the market as a whole; antitrust doctrine views low consumer prices, alone, to be evidence of sound competition.”
It’s strange to call the most prominent view (and the one applied by courts currently) a “peculiar” interpretation. Lina Khan is the one with the “peculiar” view right now. The consumer interest test is preferred because, among other reasons, it is quantitative. Quantitative tests are seen as less able to be abused because some judge has a particular view/vibe. Additionally, the consumer harm test focuses on the consumer which is the ultimate class of people antitrust laws seek to protect. Antitrust laws don’t exist to protect markets, they exist to protect citizens.
I'm using peculiar in the sense of “Particular; individual; special; appropriate.” Distinctive. This may be somewhat archaic. Not in the sense of odd or curious.
Isn't the issue here short term vs long term consumer interest? It's all fine and dandy for consumers to pay lower prices because company A is eating losses to drive company B out of business but what happens after that.
How do you quantify long term consumer interest? We are talking about drastic actions when we are talking antitrust including the complete dismantling of companies in the extreme from the government perspective and a tripling of damages from a private enforcement perspective. How do you justify such drastic measures with a “what if they’re dumping?” approach rather than a rigorous quantitative assessment of impacts on the consumer.
If dumping actually occurs then the government or competitors can sue and win under the current antitrust laws by showing that consumers are now paying more due to the dumping scheme. Lina Khan’s view militates for prospective suits - suits where no consumer harm has yet occurred.
It is peculiar because it was legislated from the bench. Congress made it very clear at the time the legislation was drafted, multiple times, that they considered concentrated markets to be, in effect, a parallel state. Every captain of industry today would become a tyrant tomorrow, if given the power. Textualists and originalists should have smacked down consumer welfare the moment it was proposed.
> Additionally, the consumer harm test focuses on the consumer which is the ultimate class of people antitrust laws seek to protect. Antitrust laws don’t exist to protect markets, they exist to protect citizens.
Citizens stop being consumers when they exit the store. Then they go to work or run their business, whereupon Amazon harms them to the tune of thousands of dollars - all so they can save a penny when they put that "consumer" hat back on. This is ludicrous and self-defeating.
> Quantitative tests are seen as less able to be abused because some judge has a particular view/vibe
Of course, the choice of which quantitative test to use is totally objective too, right? /s
I wish we could make this more well-defined because this is every company ever entering a new market supported by their existing business. If you actually outlawed all of it it would kill every medium or larger business (which isn't to say I'm not opposed to outlawing it) because that's just the game. The business that has to take on funding and pay interest will struggle against the conglomerate with a war chest larger than your TAM.
Amazon has some shitty practices but I expect a lot of pushback in this lawsuit as a bunch of other companies see a target on their back for stuff they've been doing for longer than Amazon's been around.
it was well defined enough for the FTC to bring this suit with a pretty detailed complaint, I think we're good there
"other companies" don't have the same market power here, or indeed engage in the same anticompetitive
behavior, but again, that's all explained when you read the FTC complaint detailing the actual behaviors in question
Sadly, no it isn't. Them calling out that they are not going after Amazon because they are too big, but because they did thing X is very problematic for the clear definitions.
That is, as well defined as some concerns are, this complaint actually throws out a ton of that and makes it even less clear.
Don't confuse criticism of the FTC with praise for Amazon here. The FTC seems to be continuing weak cases, and at least some of us view that as very problematic.
If we are going to rebuild some of the surrounding rules such that these practices are illegal, I'm all for it. If it turns out that I'm wrong and they do manage to make the market healthier with a suit against Amazon, great.
This doesn't look strong in that direction, though. This reeks of populist appeal from folks that know it is a politically savvy move to bash Amazon.
This is not a strong case, is what a lot of us are asserting.
You can disagree there, but realize our disagreement here isn't that Amazon is a good company. It is on the strength of this case. It really feels like one that is being brought more for optics than otherwise.
I say this as someone that thought they should have had a strong case against Microsoft buying Activision. And yet, just look how that went. Maybe I'm wrong. Shouldn't take too long for us to find out, all told. I remember the stories of what Walmart did and still does in retail, though. It is obscene to see how that has played out in time.
I understand you are asserting that, and what a lot of us are asserting after reading all the allegations is that it is a strong case
You can disagree, and that's fine, I'm not saying your personal disagreement specifically is support for Amazon, it's just that's the optics of the individuals disagreeing with the case the FTC presented here, for a lot of us, seem to be corporate/capitalism worship and/or personal disagreement with the existing rules and laws against anticompetitive behavior that Amazon clearly violated here (as detailed in the complaint)
I'd love to see a longer take regarding what makes you think these claims are strong. Especially with the backdrop of losses the FTC has been having, though, these feel weak. It sucks that the only real commentary out right now is the expected appeals online.
Seems to me, the case is so strong, the complaint speaks for itself. It's convinced me.
I'd love to see a longer take, though, addressing the specific points in the complaint, and what makes you think each one is weak. It sucks that most of the opposition I've seen is along the lines of "if Amazon isn't allowed to engage in anticompetitive behavior, the FTC is coming for your mom and pop shop next"/"where's the line???" and similar FUD (with a fair measure of "they don't own 100% of the market so it's not a monopoly so it's not anticompetitive" thrown in, too)
You feel in bad faith here. But sure, lets start looking at the points:
Paragraph 1, almost literally: "the early days of the internet were great for competition..." I, uh, don't know what to tell you here. Isn't even really a point.
Paragraph 2: Amazon is big.
Paragraph 3: Amazon is a monopolist.
4: Amazon's fees can be upwards of half the costs of sellers.
This point, finally, could be something. The examples that have been made public, though, are for sellers that are basically drop ship sellers. I'd love to see better evidence here.
5: Amazon also sucks.
I mean, this is kinda the core of my main counter point. Amazon is losing on its own terms. And if it doesn't get its shit together, it will lose soon.
That said, I do think this point muddies my view by discussing the old "relevant, organic searches." All of search has gotten bad. And Amazon's was never good.
6: Amazon sucks, but is getting away with it.
Ok...
7: Amazon doesn't enter agreements where people can undercut them directly in costs... Or something?
Sadly, I've run out of steam rather quickly on this. The claim here seems to be that Amazon enters all of the same agreements that other retailers do. With similarly bad results happening. I'd be delighted to find that general ruleset changed. I fail to see how this is even pretending to move in that direction.
8: We want to be clear it isn't just that Amazon is big. It is the practices they use.
This is the real kicker in all of this. The main practices they keep calling out are not unique to anyone in retail. Please make them illegal, but don't pretend going after Big Tech isn't an optics thing.
Skimming the rest: I'm now officially out of steam. What paragraph do you feel is actually strong? There is some neat analysis of the buy box... but it isn't that neat, all told. Amazon was silly proud of their 1-click nonsense for a long time. And it is probably a safe wager that, sure, most people don't make it to page 2 of searches; but also most searches don't result in a sale.
I'd almost be willing to take the price harm to consumers as a strong point, but Amazon has NEVER been price competitive for basically anything. It has always been cheaper to buy something somewhere else. This hasn't been a secret for anyone for a long time. It just wasn't egregiously more expensive for Amazon, and their pro consumer return policies made for a loyal customer base.
Again, don't take my criticism of FTC here as praise for Amazon. I don't vilify them as much as many do, but I do think they have been doing some hilariously non-forced screwups lately. This is still a pretty shit case.
for someone who accused me of bad faith in their first breath, you sure don't seem to be trying hard to accurately represent the specific practices Amazon engaged in as described in the complaint, and lazily misrepresenting them isn't the same as proving that they foster competition rather than stifle it.
Then give me the points you feel are strong! :D Seriously, what are the strong points? I don't expect a full paragraph breakdown, as it is an expectedly boring document. Apologies if my misguided attempt is turning you off. I was honestly amused at how much of the document is naked assertions with no real evidence. (Edit: Specifically, I was amused with how much of the document is essentially "Amazon has gotten worse.")
I would have just gone on the allegations, but they are only done as assertions by design, and you would have to reference back to the paragraphs heavily. (I suppose the 17 allegations from the states could stand on the basis of the other allegations, but that is somewhat circular.)
The points regarding the search getting worse could be promising, maybe. However, I remember all the way back in 2014 that search at Amazon was already laughably bad. And search has been getting worse for everyone, not just Amazon.
The points regarding the buy box show a lack of any consideration to how retail generally works. There is a reason "top shelf" is a thing, and why the top shelf items are both more expensive, and likely sell more.
Preferred seller agreements and best pricing clauses are the norm in retail. By all means, lets get rid of them.
Claims that Amazon has declined in service while raising prices are interesting, but also kind of against the points in question. The services do seem to be declining. And competition outside of Amazon's own site have gotten better. The evidence that they are preventing newcomers feels weak when I consider that I do buy more from non-Amazon today than I bought at all online back in the early days of the internet.
Ironically, there would be a strong case here if only talking about books. But this seems to be specifically excluding books and digital.
Honestly, I'd like a meaningful rebuttal of the actual behaviors and why they foster competition vs. stifling it. I've already listed one (Amazon penalizing suppliers for listing lower prices elsewhere). Again, pretty clearly anticompetitive.
Your excuses of "so and so did it too" are meaningless, as are any slippery slope fallacies, as are your personal anecdotes and observations (the latter of which, no fault to you, simply can't be trusted anyways, as my own observations are the opposite). The only relevant questions are whether Amazon did it (they did) and whether it fosters competition vs. stifling it (seems like the latter).
So, again, go ahead and try to honestly list the behaviors like the one above, and explain how either Amazon didn't engage in that behavior, or how the behaviors fostered competition vs. stifling it. Otherwise, it seems like more of the "where's the line???" FUD I mentioned earlier.
My main rebuttal is largely that Amazon has been going to shit, oddly.
They claim that search is getting worse on Amazon. And that the old "organic search results" are worse now. I agree it is getting worse. I disagree that it was ever good. Largely the problem is one of volume there.
They have claims that some algorithms push sellers down. I actually am interested in seeing that explored more. My gut is that it is just poor execution from Amazon. Not from incompetence or malice, mind; but it is a stupid hard problem that nobody is executing on well.
My "excuse" of the favored vendor clauses existing is, I confess, largely sour grapes that that is allowed at all. It really screwed over a lot of small companies that tried to partner with Walmart back in the day. If that goes away, I'll be delighted.
But the entire study of the buy box is questionable. Amazon has long done everything they can to get it to "1-click" so that you buy. They famously had a patent on that nonsense. Yes, it makes a big difference on purchases and such. No, it probably is not being "weaponized" against some sellers. The entire dream of Amazon there is to get a sale from a web view. They have almost certainly tried all they can to take whatever step they can to increase that. As such, it is a very volatile place to be located and it will take effort to keep a vendor there. Pretty much period.
Can they show that losing a preferred location will lead to reduced sales for a vendor? I'd be shocked if they couldn't. The question there is why did Amazon do it? If they did it as retaliation to a vendor, that is BS and they deserve to get fined. If it was just them doing what they can to convert more sales? I'm less clear what to do there. If we want better rules around that sort of thing, I'm all for that.
I don't actually know that I can stay on this discussion much more. You haven't really offered anything other than "I disagree." And, that is perfectly fine. I am hoping to see some points that strengthen the case, though.
> I agree [search] is getting worse. I disagree that it was ever good
I disagree with this disagreement, and can see it getting worse, and given it seems the search was intentionally punishing sellers for anticompetitive reasons, I'd be interested in seeing if Amazon can present a convincing explanation otherwise.
> They have claims that some algorithms push sellers down. I actually am interested in seeing that explored more.
That does indeed seem like anticompetitive behavior, I'll wait to see if Amazon has a convincing explanation for it that fosters competition vs. stifling it.
> My "excuse" of the favored vendor clauses existing is, I confess, largely sour grapes that that is allowed at all.
Turns out, it isn't in this case (hence the suit). Makes sense, this also seems anticompetitive. I'd be interested in seeing if Amazon has a convincing explanation for how this fosters competition, vs stifling it.
> Can they show that losing a preferred location will lead to reduced sales for a vendor? I'd be shocked if they couldn't. The question there is why did Amazon do it?... If we want better rules around that sort of thing, I'm all for that.
The answer is explained in the complaint. I'd be interested to see if Amazon has a convincing explanation for how this fosters competition vs. stifling it. And as for the rules, turns out we don't need "better" ones, as the existing ones seem to be enough (hence the suit).
We'll see. I don't know how to agree with search ever being good. I remember back in 1999 (literally) getting the wrong book on searches. And back then, it was only searching on books. Today, there is more that you are searching through, such that it is almost expected that results will be worse. And it will only get worse.
And note that I am making no real defense of Amazon here. It is frustrating to me that searching "PS5 controller" is largely results that I would not at all feel comfortable buying, at this point. What searches do you remember, "back in the early days" that were good?
And, really any search will reveal the actual "difficulty" here is that there is just too many hits. But can you really call out any of those as bad as long as you allow outside vendors? I'm not convinced. I don't want to buy from UPPERCASE vendor anymore than many folks do, but I see my purchase history has a ton of them.
So, again, this is a criticism of the case. They do pick apart many things that seem to have gotten worse. They rest a lot of their case on observations that Amazon themselves were chasing. Largely that the buybox is a huge driver of purchases. What they leave off is all of the behind the scenes that goes into that buybox. Most of it, unsurprisingly, is going to be based on costs to Amazon. This case is looking for twirling mustache villains looking to rob small vendors. But it is against a backdrop of an unusually large number of vendors that are all continuing to make money. In a field where Amazon is trying to optimize shipping and warehousing costs. Is it getting harder for people to do so there? Almost certainly. Is Amazon specifically retaliating against sellers? Maybe, but my gut is not likely.
I do appreciate the counter view that this is, in fact, a strong case. I have not seen evidence that convinces me of that. You keep saying it is "in the case," but that is our disagreement. The case is largely discussing the difficulties of being an FBA seller. One that many successful FBA sellers would be more than happy to tell you about. They have basically no evidence of Amazon intentionally mistreating any particular seller.
They have a lot of redacted comments about Amazon's analysis of their platform. But no hints that Amazon intentionally pushes sellers down. They have tons of details that having enticing offers at the top and in the buybox would be good for Amazon. Nothing hinting that they are trying to make it harder for any particular seller.
Even the anecdotes you will find online is that managing FBA is a full time job. Try managing a booth at your local farmers market. Just managing the booth is itself a job that you should probably look into getting specialized help for. This is no different.
I'm sorry, I couldn't find anything in your post convincingly explaining how each of the behaviors I listed fostered competition, vs stifling it, or that the behaviors described in the suit were entirely fabricated by the FTC, and so I haven't seen any evidence that this is, in fact, a weak case.
I guess we will see if Amazon manages to put forth any convincing defense of their actions, like penalizing sellers for selling cheaper elsewhere. That just doesn't seem to me like it fosters competition. And the idea that this conveniently happens totally by accident to the sellers who do so, seems ridiculously unconvincing. If your "bad search" conveniently happens to have the same effects as an anticompetitive business practice, I don't see that pretext standing up in court.
Examples? Because, by most evidence that I am aware of, they aren't actually doing that well? Certainly not bad. But not clear to me that they have any real online advantage now that other stores have online payment that they can use between them. I've certainly been far more willing to buy direct from brands for the past few years.
The examples are listed in the article. The last point is pretty damning if they can prove it.
> Biasing Amazon’s search results to preference Amazon’s own products over ones that Amazon knows are of better quality.
> Degrading the customer experience by replacing relevant, organic search results with paid advertisements
> Charging costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business. [...]
> Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
First, disclaimer that I do not mean my post as a reason not to pursue antitrust concerns. By all means, look for them. If they are found, make rules about them.
That said, I have specific doubts. For one, search has always been crap on Amazon. I could believe they tried some of these tricks, but I confess I have my doubts they would execute on them well.
For second, some of this is standard BS that retail has just accepted. That is, bringing on "experts" from in the retail industry would almost certainly bias you in some of these directions. The standard contracts that retail stores have pushed for a long time are such that they absolutely should be curtailed. They can be good tools for small companies, but it is clear that as companies get larger, they amplify power imbalances.
> The verb monopolise or monopolize refers to the process by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge overly high prices, which is associated with a decrease in social surplus.
> Product substitutability: Product substitution is the phenomenon where customers can choose one over another. This is the main way to distinguish a monopolistic competition market from a perfect competition market.
Is it a meaningful volume for Amazon at all? I thought the majority of US/EU customers begin their search from Amazon and just skip Google when it comes to shopping.
Thanks. For others like me not in the SEO world, extracted below the links for what "core updates" [0] and "helpful content updates" [1] are, according to Google.
A lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.
The impact of Amazon’s monopoly power is felt big time by us as we’re being squeezed with no place left to go online especially post-iOS change.
Our second option used to be the Facebook/Instagram/TikTok to Shopify connection but with that being dead in the water most of us have had to commit 100% to FBA to be able to stay afloat.
With the increase in inflation and Amazon abusing its power to significantly raise its prices for FBA and force us to use its advertising services our revenues have been severely impacted.
This doesn’t include their unwillingness to meaningfully fight counterfeits
Or that they penalize you if you attempt to drive sales elsewhere with lower pricing on other sites
Bloomberg did a write up on this a few months back:
https://www.bloomberg.com/news/articles/2023-02-13/amazon-am...