"Everyone is a competitor"
November 23, 2017 1:10 PM Subscribe
There’s precedent for Amazon competing with so many companies. It doesn’t end well. (Michael J. Coren, Quartz)
(Lina Khan, Yale Law Journal)
[…] Amazon’s unprecedented logistics and delivery infrastructure, paired with access to personal data about Americans’ purchasing habits, means it is unique in the history of global commerce. No company has ever wielded this combination of consumer insight and infrastructure, say historians and legal analysts, which means the company grows stronger and less assailable with every purchase.
(Lina Khan, Yale Law Journal)
This Note argues that the current framework in antitrust—specifically its pegging competition to “consumer welfare,” defined as short-term price effects—is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon’s dominance if we measure competition primarily through price and output. Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons. First, the economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded. Under these conditions, predatory pricing becomes highly rational—even as existing doctrine treats it as irrational and therefore implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitors.Is Amazon getting too big? (Steven Pearlstein, WaPo)
It’s not just Amazon, however, that animates concerns about competition and market power, and Khan is not the only one who is worrying. The same issues lie behind the European Union’s recent $2.7 billion [≈ cost of B-2 bomber] fine against Google for favoring its own services in the search results it presents to its users. They are also at the heart of the long-running battle in the telecom industry over net neutrality and the ability of cable companies and Internet service providers to give favorable treatment to their own content. They are implicated in complaints that Facebook has aided the rise of “fake news” while draining readers and revenue from legitimate news media. They even emerge in debates over the corrupting role of corporate money in politics, the decline in entrepreneurship, the slowdown in corporate investment and the rise of income inequality.Amazon owns a whole collection of secret brands (Mike Murphy, Quartz)
After decades of selling products—and knowing exactly what people are buying, and when they are buying it—Amazon has started cutting out the middle-man by selling self-produced items. Through its AmazonBasics house brand, it sells all sorts of small items, from iPhone chargers, to batteries, power strips—even foam rollers, backpacks and washcloths. It’s the sort of stuff that you might not be too brand loyal over—who really minds whether it’s a Duracell or a Panasonic battery? Amazon sees that a product is selling well, and may decide to work with manufacturers to make the product itself—it’s a tactic that is already worrying vendors, and can’t bode well for partnerships in the long run. But those are the obvious instances. Now, Amazon is selling products across a wide array of categories, using a host of brands that do not exist outside the confines of amazon.com and do not make it clear that they are Amazon-made products.Amazon found an ingenious new way to undercut its competitors ahead of the holidays (Alison Griswold, Quartz)
Lots of stores have price-matching policies. Target promises to match prices on identical items found for less at Target.com, certain online competitors, or in local print ads for up to 14 days after a purchase. Best Buy matches prices against a handful of online retailers and local competitors. Walmart will price match one item per customer per day, if a customer finds a lower price from one of 30 online retailers.(Bryan Menegus, Gizmodo)
There’s also a common exception to those policies: Stores tend not to match prices on items sold through an online marketplace, or by third-party sellers.
That might sound like a technical distinction, but it’s critical to a new discounting technique Amazon is deploying ahead of Black Friday and the holiday season. “Discount provided by Amazon” lets the company subsidize goods sold by third-party merchants on its online marketplace, making prices even more attractive to customers.[…]
The discounts will help Amazon lure customers away from ultra-low-cost rivals such as Walmart and any of America’s many dollar store chains (considered among the businesses most resilient to Amazon).
Who delivers Amazon orders? Increasingly, it’s plainclothes contractors with few labor protections, driving their own cars, competing for shifts on the company’s own Uber-like platform. Though it’s deployed in dozens of cities and associated with one of the world’s biggest companies, government agencies and customers alike are nearly oblivious to the program’s existence.[…]
Near the very bottom of Amazon’s complicated machinery is a nearly invisible workforce over two years in the making tasked with getting those orders to your doorstep. It’s a network of supposedly self-employed, utterly expendable couriers enrolled in an app-based program which some believe may violate labor laws. That program is called Amazon Flex, and it accomplishes Amazon’s “last-mile” deliveries—the final journey from a local facility to the customer.
While investigating the nature of the program, we spoke to 15 current or former independent drivers across nine states and two countries whose enrollment spanned between a few weeks and two years, as well as three individuals attached to local courier companies delivering for Amazon. Their identities have all been obscured for fear of retribution.