If you want an easy to read modern political argument you can read Break Em' Up by Zephyr Teachout. If you want a more academic approach I would look up the syllabus of an antitrust course and read some court cases, but different syllabi will probably give you wildly different conclusions. Supreme Court cases from a couple decades apart will give you different conclusions. As I said earlier, there is no right answer, it's about balancing inherently conflicting rights and deciding where to draw the line.
Sure it is, if there is a good convincing case, you can in the space of a single comment at least get me to seriously question and re-evaluate my priors, check out your book recommendations, and I would do the rest from there whether I ended up agreeing or disagreeing in the end.
Let’s start with what is the impetus for action? Inaction is easy, it’s the default, but if my Representative (presently Pelosi) or US Senators or their eventual opponents and/or replacements trotted that line about how a company shouldn’t be able to get this big, out without an attempt at a good explanation as why we should cap the size of a corporation’s growth, I would throw them from the average politician column into the crazy column. Not just because they are taking that position, reasonable people can disagree, but because they would be seeking power on that position and they would be seeking an expansion of Federal power and action with that position without justification, without a limiting principle, frankly it looks arbitrary and capricious like an imaginary line that exists only in their mind that no company’s market valuation must ever cross without consequence.
The political will to power that led to the anti-trust legislation, prosecution and conviction wasn’t that the defendants were merely too big for their britches; it was their abuse of a market dominant position that it was argued harmed the public. Even today reasonable people can disagree on whether this was a justifiable course of action on the part of the government, but I am not here to re-litigate historical events.
Is the present position of Amazon and its close peers and the other >$100B companies as measured by their market valuations, not market share, not cash and other assets, but present market valuations, equivalent or like to the situations in the past where the government was willing and able to successfully pull the trigger of the antitrust gun? To reiterate, what is the impetus that we must act given the facts that we have about these contemporary corporations with such immensely high valuations?
1. Documented examples of Amazon knowingly using predatory pricing to put a competitor out of business, most famously with Diapers.com. Amazon saw them as a "#1 short term competitor", lowered their prices and took a loss so Diapers.com couldn't compete, and then raised prices again once they were able to acquire their competitor. https://twitter.com/HouseJudiciary/status/128855628101652070..., https://www.bloomberg.com/news/articles/2020-07-29/amazon-em..., https://www.ftc.gov/tips-advice/competition-guidance/guide-a..., https://academic.oup.com/antitrust/article-abstract/7/2/203/...
2. National "competition" that convinced hundreds of city and state governments to offer billions of dollars in subsidies that most economists agree are harmful to the places that offer them. You can blame this on incompetent governments if you want, but the incentive must have been pretty strong if so many of them fell for it. Maybe too strong?
3. Amazon controls its market and is also a participant, so it can promote its own products above competitors'. It can give its own stuff a bump in the search results, or give it a nice looking "Amazon's Choice" badge, or advertise it next to competition, whatever. Even the potential of abusing this power is a problem.
4. If Amazon were to ever abuse its position to harm a seller or employee, they cannot be sued: https://prospect.org/labor/biggest-abuser-forced-arbitration...
5. Amazon has enormous market share of online retail, but sees third party sellers as competition and often works against them. Many sellers simply do not have a realistic alternative, even if they don't like Amazon's terms. This is a news article with a lot of allegations that you may not immediately believe, but I think it can at least be considered an impetus for investigation: https://www.washingtonpost.com/technology/2019/10/01/amazon-...
6. Amazon Alexa has a nearly 70% market share in the US, an absurdly high number. Alexa is not a standalone product, it is deeply integrated into the Amazon ecosystem and is used to promote other business lines.
You can also search for Amazon in here for some better researched claims: https://judiciary.house.gov/uploadedfiles/competition_in_dig...
From the PR statement, you can see their growth hack:
> 1800Diapers also recently added a large selection of very popular diaper bags, also at low prices with free shipping. The Company actually guarantees the prices for its diaper bags are the cheapest on the Internet or it refunds the difference.
Price matching, which is not illegal.
So let’s take a look at the website from 2005:
https://web.archive.org/web/20050301022607/http://www.1800di...
The best unit price on that page is $0.16 for 8 to 15 lb babies, which after about 16 years of inflation, comes out to $0.21 today. Pampers Baby Dry. The exact same diapers are, at the time of this writing, have a unit price of $0.21 on Amazon. Getting a link from the Amazon app on my iPad where I’m typing this is amazingly unobvious, so here’s the item model # to search: 037000862215 <—————— posted this comment and I see my iPad thinks this is a phone number. I advise readers not to click on it should the option present itself.
The company, Quidsi, Inc. was eventually purchased by Amazon for $545M in 2010. It is not apparent that diaper buyers were harmed by this transaction. The price beats Walmart’s at least, yet Walmart continues to sell diapers, and you can find competitive prices at Costco, though you cannot find the same model. At worst, diapers are slightly more expensive today, and at best, this whole line of argument is a wash. Yes, Amazon took aggressive steps against a competitor, but was it an abuse of their market power? Mind this is when Amazon was far from the size they are today by any objective measure, and ultimately the shareholders of that competitor made out well for themselves. 1800Diapers was also measuring their prices against their competitors on the front page, March 2005, with an estimated 6% sales tax rate baked into the price of their competitors, and very prominently advertised the lack of sales tax. Amazon was their only major competitor for which such a tactic would not work so 1800Diapers price matched.
#2: The people I most hold responsible for cronyism are the government officials which participated and bent over backwards so that Amazon could try to get a discount on some New York and Northern Virginia real estate. Not to absolve Amazon, they hold responsibility for initiating it, but cronyism falls squarely on the soldiers of the officials willing to sellout their own tax base, and is arguably an abuse of their power.
#3: Correct. As does Safeway, Whole Foods prior (and after) to the Amazon acquisition, Lucky’s, Albertson’s (which owns Safeway, they might own Lucky’s too) and Costco. Amazon is a website you buy stuff, and some of that stuff is Amazon products, and some of that stuff is Amazon white-label products. There are other means of buying and selling on the internet, and we are starting to see the infrastructure for that develop now.
15 years ago Walmart was the 800 pound gorilla destroying retail. 30 years before that, Sears was untouchable. Clearly it is possible to have a competitive retail landscape even in the face of an enormously dominant competitor. The small businesses that can’t make it on Amazon are in a tough business, in 10 years many of them won’t be around, but other products and service providers will.
#4: There has been a lot of FUD around private arbitration; I have yet to see solid investigative reporting on it. The enabling law, not surprisingly from the 1920s when a lot of crap law was written, is the Federal Arbitration Act of 1926. The specific entity that Amazon uses is the American Arbitration Association, and only for claims that would not qualify for small claims court if their agreement is to be believed.
#5: The WaPo article is less scandalous than I thought it would be. 30-35% of dollars earned by 3rd parties goes back to Amazon, but a lot of it in additional spend on ads, which is basically priority placement like what you would see in any supermarket, and additional services. So it can be as high as 30-35%, but not every third-party seller is paying that much.
They also have additional options to sell in.
Retail is a tough life. You can pursue your own path and start a small business, but you’re not entitled to succeed in doing so. It sounds like for many small businesses, Amazon is an enabling technology that makes much of what they do possible, and maybe even profitable enough to continue doing so.
#6: 70% of the voice assistant market? I can believe that. I am not a fan of this entire product category, but Amazon moved early, it offered a compelling product and it is kicking ass in name ID, the quality of the assistant and price. They offered a compelling package, and people bought it. Other than being overly aggressive in invading the privacy of their customers who seem to both know and not care, is there a specific harm in Alexa dominating voice assistants in a world where a decent number of people are walking around with devices in their pockets that can respond to either Siri or Google Assistant?
I do appreciate the effort on your part, but I want you to see where I am coming from: it is easy to make bold claims based off nothing more than emotions and bad PR. Amazon has had a lot of PR, I won’t buy anything I can put in my body from them and I do the bulk of my shopping elsewhere for various reasons.
However it is a difficult proposition to simply look at big numbers, bad PR and come to the conclusion that this company is simply too big! How could it get this big?! How could we as a society allow this?
Turns out, it is mostly just that Amazon.com and many of their products and services actually are compelling. I remember when the iTunes Music Store was the only compelling game in town in its category, until the Amazon MP3 Store came in and easily took 20% of the market simply by being good and compelling on its own terms, and with a clear value proposition to potential customers. Now it is all about Spotify, Pandora, my beloved Rdio was gobbled up by Pandora and killed, Google has their own music service, Amazon has a subscription, and most people don’t seem to be buying music anymore. C’est la vie.
If you’re going to make the bold claims of this or that entity in a world where no one person or group of people seems to have all that much freestanding power anymore, put the legwork in, make a real case. Power is relative, and not always applicable, as in literally applicable in every circumstance depending on the type of power it is you are holding.
I will review the final link you sent at my leisure. For me, the hour is late. Good night, if you respond by morning, I will see it, but will likely be busy until evening. For what it is worth to you, I’ll even revisit my priors, but it’s going to be a tougher sell because your position used to be mine several years ago, but not so far long ago that I don’t remember.
That WaPo article is a good example of how I see things differently than you now. If you see a bunch of horrible claims levied against Amazon, I see a bunch of small business owners who have problems, some of them legitimate maybe, some of them not, but are a small fraction of the 2.5M 3rd party sellers the WaPo says are on Amazon making a living somehow. That’s a decent number of people doing what they do to really not have any other choice for making a living, and I’m sure I can round up a thousand of them to complain about Amazon shafting them if I tried. For reference, there’s about 2 million farms in America.
Basically, Amazon's "right to grow" or whatever is not important at all to me, and I don't see what harm is done by breaking them up. I guess a few executives and large shareholders might lose some money, but everybody keeps their jobs, their products will continue, it just feels as obvious to me as your position feels to you. Corporations don't have rights and are not innocent until proven guilty, there's no need to convict them of a crime. It's like city planning: if the community would be better served by removing a highway and putting in some dedicated bus lanes, you just take a vote and then do it, you don't have to wait until there's a 20 car pileup on the highway to take action.
First you argue against great concentrations of capital also being great concentrations of power, in this "yes, but no" sentence:
>Money is a form of power, it is not equivalent to power.
This sentence seems to mean absolutely nothing. "not equivalent to power" is some sort of vague semantic argument about what power "is", that is not interesting to the discussion.
Wealth _is_ power in the sense that you can use money to affect change in the world. Wealth is the simplest and most flexible form of power, because it can be directed at anyone or any organization, and transformed into other forms of power. And it even grows by itself!
You then talk about the market cap of Amazon. Why? The market cap, while also representing a sum of money, is not really relevant to the discussion. You even seem to realize this yourself, but you do not really explain the reason for bringing it up.
Are you trying to say that competition exists and therefore everything is good?
That would be fine if it weren't for the fact that the companies you mentioned do not compete in the same markets. They share some markets, e.g. AWS vs GCP, but you offer no evidence that this market is healthy.
Competition is key if you want a healthy market, as is aligning corporate goals with societal ones. You could even argue that competition for customer business is the main mechanism for achieving alignment.
If you allow any one business to get too much power, competition will weaken. Excessive power can come in the form of excessive capital concentration. It can also come in the form of other bargaining chips that come with excessive capital concentration, such as: control over resources used by direct competitors in a market, e.g. the marketplace itself; the ability to create jobs, politicians love jobs; the ability to invade a new market by subsidizing a new department with capital from elsewhere in the organization; or even an information asymmetry created by a huge data collection operation.
Amazon exhibits all these forms of power and more. Some of the other companies you mentioned exhibit these as well. It would be in the interest of society to break up monopolies and other concentrations of power that are actively impeding competition in the way that Amazon is.
These ideas aren't new, developed nations typically create institutions to maintain healthy competition. In the US, the federal trade comission and the DOJ are tasked with keeping competition healthy by enforcing antitrust law. They used to be a lot more active than they are now, e.g. when they broke up Bell. I wonder what has made them slip...
> You then talk about the market cap of Amazon. Why? The market cap, while also representing a sum of money, is not really relevant to the discussion. You even seem to realize this yourself, but you do not really explain the reason for bringing it up.
You’ve lost the thread. Let me help:
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>>> I still remember when Amazon was only selling Books. People laughed, Media Laughed, and I guess most of us laughed.
>>>Amazon is now a ~$1.6 Trillion Dollar Company. What an era.
>> For comparison, using national total wealth, that makes Amazon worth more than Saudia Arabia, Denmark, Portugal, or New Zealand.
>> It's $280.5 billion in revenue in 2019 put it above the GDP of Romania, Peru, Ukraine, etc.
>> Corporations should never be allowed to get this large.
> Make your case instead of dropping your groupthink everywhere. Why? And: What is the maximum size a corporation should be allowed to grow? Who gives that permission now?
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> Amazon exhibits all these forms of power and more. Some of the other companies you mentioned exhibit these as well. It would be in the interest of society to break up monopolies and other concentrations of power that are actively impeding competition in the way that Amazon is.
Sure, they exhibit power, they use their power, but is it actually too much power? We can use any measure you like that isn’t market cap, now that we’ve re-established the thread and where that came in. Pick your measurements, and demonstrate how they show that Amazon is too powerful, not merely powerful.
> These ideas aren't new, developed nations typically create institutions to maintain healthy competition.
As a general rule, although not a hard rule, I don’t have nice things to say about the laws of other nations. Your task is much easier leaving them out of it.
Money is a form of power, it is not equivalent to power.
Amazon is valued at $1.6T and this is a calculation that directly correlates to how much individual shares of Amazon. Shares can be sold for money, but this decreases the share of power the shareholder has by the exact amount of shares they sold to the buyer, which increases their shares and power over the company. The act of buying and selling shares affects the stock price which can increase or decrease the market valuation of Amazon.
If Amazon were a lone behemoth sitting on top of the stock market and second place wasn’t even close, I think you would have a stronger case.
Checking literally thirty seconds ago, Amazon isn’t sitting up there all by its lonesome, it is the bronze medal with Apple and Microsoft sitting above it, Apple up above the $2T barrier, and Google lagging pretty closely behind at 1.3T.
Now these market valuations will be a bit different tomorrow, or next week, or next month, but none of this is literal money in the bank. Money in the bank comes from the products and services these companies sell.
They are also both cooperators and competitors with each other and companies like Facebook ($761B), Walmart ($395B I think it was) and Adobe ($232B).
The power they can leverage from these assets is immense, but it is in competition with other motivated actors who are throwing more actual cash around.
If we do nothing, it is likely there will be more trillion dollar companies this decade than the ones we are discussing now, some of those will be in different market sectors altogether, and some of those will be competitors, and some of those will be semi-competitors.
Companies with far less cash than this already lobby for their interests in places like the Capitol, and the amount of money they’re using to successfully (and unsuccessfully) lobby is measured in the low millions, not the billions, and certainly not the trillions.
So what exactly is the problem that reducing the size of these companies valuation and theoretical power supposed to solve? How does this benefit society? Is society being harmed by Amazon at $1.7T or Apple at $2.2B? Is the problem their size or their practices?
Break this down. It’s easy to say “no company should be this size”, it’s a lot harder to say why, and I am not convinced yet. There’s plenty of people in the PRC with billions, and that hasn’t stopped the PRC from soliciting them for “voluntary” contributions, so maybe lots of money < lots of guns and a big Army in the overall economy of power.