As an aside it does not surprise me at all when I learn that a law is not worded in a way that's congruent with the popular conception of the law.
It would be argued that Amazon's specific point of abuse and power is related to its ecommerce market share. If a monopoly argument is going to be made against Amazon in retail, it will be about their online store (as opposed to eg in-store Wholefoods).
I think it's a fair point of separation. Amazon can simultaneously have an abusive monopoly online and a weak position in physical stores. Walmart could cultivate a monopoly in physical store retailing (hypothetically), and have a weak position online.
Other grocery stores don't attract anti-trust attention, typically, because they have no overwhelmingly dominant position.
If Kroger had 40% or 60% of the US grocery store business, they'd be a target of anti-trust focus persistently (as it is, Kroger is the #2 grocer and only has 10% of the grocery business; it's a very fragmented market, Costco is #3 with a mere 5% share). If Amazon.com only had 10% of the US online retail business, there wouldn't be so much concern about their potential monopoly positioning.
Anti-trust law only applies to businesses which have market dominance. Grocery stores generally aren't in this position except for Wal-Mart which has similar concerns.
Because a grocery store selling white-label products isn't an unfair use of market position to force competitors out of the market.
How many times has a grocery white-label cereal bankrupted a Cherrios or forced them out of the market? Alternatively, how many stores do you hear about vendors that launched a successful product (even a #1 selling product) only to have to close after Amazon launched a copycat product.
>Don't all businesses want to force their competitors out of the market?
No, complimentary and substitute products are healthy for the market place. Again go back to the grocery store, they don't want General Mills/Post going out of business, they want to fill their shelves with those products.
>As an aside it does not surprise me at all when I learn that a law is not worded in a way that's congruent with the popular conception of the law.
This is true especially with 1st amendment and 2nd amendment law...I am not sure what the popular conception of Anti-trust law may be, but when it comes to Amazon I always see the white-label grocery store product analogy. What is great about the law is legal opinions often include factual analogies and distinctions like this, what would shock most people is how logically sound and exhaustive the courts are.
I don't think the grocery store and the cereal company are competitors in that case.
Can you truly argue just because a firm is large they are no longer allowed to offer the same product for cheaper simply because they have a strong foothold in distribution?
The other complaint seems to be "fairness." If you operate a platform, people expect it to be fair. But what is "fair" probably has more to do with historical cultural norms than actual abstract fairness, again it is the change the causes the issue. If Walmart started putting "see our generic option for cheaper over here" on end-caps that manufacture were paying top billing to place, they'd complain. But Walgreens has already been doing this in their OTC sections for years, just not with paid-to-place products.
As a consumer, I personally like the Amazon brands, because I can at least trust them to be real products with a reasonable quality expectation, not a switchout from some crappy seller or comingled inventory with fakes.
What irony. Amazon's co-mingling is actually benefitting them in ways other than lowering costs — It's actively driving people to their house brand(s).
Amazon is pure (evil?) genius.
I suspect Amazon just overreached. And not because of an intentional decision going sideways, but because of having many independent teams, with smart people, each optimizing for their own area. Frankly, it is actually amazing how much cohesiveness in action and strategy actually exists, as opposed to the mistakes we see (I'm looking at you AWS console).
Do note that this is all speculative anyway... There's been no ruling. Just some people pointing out problematic behaviour.
The anti-trust concerns would also apply to Walmart's own ecommerce. They're effectively leveraging their brick and mortar presence to establish their ecommerce business (which is presently the 2nd largest in the US). The 3rd largest is eBay, which leaves one to wonder how much of the hole left by Amazon would be absorbed by Walmart.
This isn't an economy of scale.
The component that has scale is distribution. A third-party seller selling through Amazon gets those advantages the same as Amazon. What's different is the sourcing and manufacturing of the product.
Amazon has an edge. But it's not one of economies of scale.
Amazon has much better visibility on sales, margins, user behaviour than their market sellers. Where risk is high they allow sellers to take the risk, where it is low they enter directly and take more margin.
It's a great business model, like a hedge fund running an exchange with no separation of information. It would be illegal the financial sector.
Maybe I'm misunderstanding, but wasn't Glass–Steagall repealed?
A lot of people don't realize, but hedge funds are the small fry. I mean sure a few hundred million or even a billion or two dollars sounds like a lot of money, but once you realize how much the Fed is pumping through the primary dealers it's literally pocket change. It's outfits like Goldman or BlackRock that are playing heads I win tails you lose.
Glass-Steagall banned federally-insured banks from competing with investment banks. Information walls, which have to do with insider trading, are a separate beast.
In each of these components Amazon Basics has an advantage over third parties whom are often mom and pop and are undercapitailized.
The points of contention are
1) If amazon competes fairly in Ad bidding so Basics products shows up first on the paid search results, is this anti-competitive?
I don't think so. They just have more capital. Any other well capitalized firm can do the same.
2) Is it fair for amazon to display their products more prominently?
I don't think so. How is this any different than Walmart refusing to carry a product? Or putting their private labels more prominently?
Totally agree. But this isn’t an economy of scale advantage.
SoftBank-backed companies had a capital advantage over their competitors. That isn’t per se an economy of scale. Amazon’s products have a distribution advantage over smaller competitors. Again, not an economy of scale.
1. I am not arguing anything, I did not develop Anti-trust law nor did I argue for or against it.
2. I never mentioned the the size of the Firm, because that isn't the legal standard. As I said what matters is unfairly forcing competition out of the market.
What Amazon does is has other businesses develop products and markets for those products on the Amazon marketplace. Then Amazon uses its data to determine which products are selling and what Amazon shoppers are looking for, then Amazon copies the product and uses all kinds unfair practices to force out the market incumbents...and in many case once the Amazon has forced out the market incumbent (again to the detriment of consumers), then Amazon has a history of raising their product price (again to detriment of consumers).
But we get it, to you Amazon hasn't done anything wrong and the consumers are better off and should be thanking Amazon. I'm not argue otherwise, just simply saying that is inconsistent under Anti-Trust laws.
In other words, if other well capitalized players had the same data, same ability to manufacture at the same scale, advertise etc... and Amazon's sole advantage is product placement, is it still problematic?
Potentially, but stop focusing on the act and focus on the result.
You brought up retailers and their shelf space. First no grocery store puts "Grocery Store O's" in a better placement than Cherrios...but fine lets assume they did. Does putting "Grocery Store O's" force Cherrios out of the market? No. However, seems to be no shortage of examples of a successful vendor on Amazon being forced out of the market altogether after Amazon copies their successful product.
One is much better capitalized than the other and enjoy many cost advantages. On product and price alone, many consumers would choose Amazon, all else being equal, including product placement. In short, since we haven't seen Amazon crushing equally well capitalized and competent white-label players like Anker, Amazon is only out competing inefficient firms.
Similarly, Walmart's "Grocery Store O's" are competing against P&G, which is a equally well capitalized firm. That is, the Cereal market is efficient and competitive, and winners win through distribution and market positioning. This is why P&G O's aren't getting destroyed.
The results you are witnessing - smaller firms getting taken out, is just a phenomenon of competition. I suspect as consolidation takes place, many large firms like Anker will be able to offer competitive product at competitive prices vs. Amazon Basics.
>You could argue that Amazon is unique in that it is large and potentially has a monopoly over eCommerce, but it is hard to say that in the end, consumers are on the loosing end.
It is not about a "monopoly", under Anti-trust you can't unfairly leverage your market position to force others out of competition. That is clearly being done, and the entire body of Anti-trust law would disagree with you and say Amazon unfairly using its market position to kill competition (even if Amazon has a lower cost) is a detriment to consumers. In the eyes of Anti-trust law unfairly forcing competitors out of the market limits consumer choice which is always a detriment to consumers.