At the back end of 2020, the US Government released a report outlining the findings from the antitrust investigation into BigTech (Amazon, Facebook, Apple and Google). For this blog, we’ll focus on Amazon. Around this time, Jeff Bezos was also listed at the richest man in the world.
The goal of antitrust is to prevent large monopolies from gaining too much power in the marketplace, so to promote fair competition.
The antitrust report found that “Amazon’s pattern of exploiting sellers, enabled by its market dominance, raises serious competition concerns”.
– Uses third-party seller data to then decide on what products to launch themselves
– Uses information from their investments in start-ups anticompetitively
– Convinces sellers to utilise their fulfilment services
– Utilises unfair algorithms designed to put their own products in preferential positions
Whilst Amazon denies most of what was stated in the report, it is still quite clear to see that Amazon yields significant market power, and they’re not afraid to use it.
In the US, Amazon is a crucial marketplace for most small and medium sized businesses – necessary for survival, with an estimated 1.7 million stores operating through Amazon. But, when the marketplace you need to sell your products and services is undercutting your own sales data for personal gain, and effectively requires sellers to use Amazon’s services (forcing them to rely on their competitor for survival) then we have a problem.
Amazon has created their own service in almost every part of the logistics process.
How did we get here?
The U.S.A is very capitalistic, favouring a free market system with minimal government intervention. Which is why Amazon has been able to grow to this size; the government doesn’t like to regulate business.
However, when a company is indulging in anti-competitive behaviour, we have market failure. That’s when government intervention becomes crucial to restoring the balance to the marketplace.
The solution isn’t to destroy Amazon. They have created millions of jobs and invested billions into the US economy. The solution is to change/confine the way Amazon operated, to allow for small and medium sized businesses to grow and remain competitive in the market.
Antitrust laws need to be broadened to allow companies like Amazon to be contained, and for direct competitors against Amazon to stand a chance.
How often do you use Amazon? Does knowing any of this change your perception?