Thursday, October 28

Finally, the regime that enabled the monopoly power of Amazon collapses | Amazon

TThis week, Amazon announced that Jeff Bezos will no longer serve as CEO of the corporation, but will take over as “CEO.” Andy Jassy, ​​who heads the highly profitable cloud computing division of Amazon Web Services, will take the title.

It’s unclear what this announcement means, whether Bezos really wants to give up power or whether he wants to continue making decisions while someone else testifies before Congress or in potential antitrust proceedings. But in truth, it doesn’t matter, because the reason Amazon exists in its current form, for better or for worse, is not a function of a gifted man, but rather a legal regime that enables and fosters monopoly power. And that regime is crumbling.

The scale of the Amazon empire is impressive. This week, the corporation announced that third-party companies in the US sold 1 billion products through the Amazon Marketplace. It is no longer just an online retailer, but is effectively an economy unto itself, adding to its arms of cloud computing, retail, and logistics everything from podcasting to low-orbit satellite broadband, home security, microchip development and distribution of prescription drugs. to trucking to military recruitment. The corporation also reflects the inequality in the American economy, with the world’s richest man presiding over more than a million workers, many of whom earn minimum wage.

The corporation grew up in the 1990s and 2000s when new digital technologies were reshaping the American economy, which is why many people associate Amazon with technology and innovation. But this is not correct; Amazon took control of a whole set of emerging technologies that it did not create, at a time when antitrust laws had been weakened to allow such control. Basically, Amazon is a political institution designed to consolidate wealth and power.

Amazon’s origin story reflects the reality that the corporation is a creature of politics and politics. Bezos located Amazon in Seattle to take advantage of a loophole in sales tax that gave his bookseller a competitive advantage over traditional rivals. At the time, online sellers didn’t have to pay sales tax except in the state where they were located, and Washington was a relatively small state. Many of his initial clients eagerly sought this tax exemption.

Amazon grew at a time when conservative economists had undermined antitrust law, focusing judges and antitrust authorities not on market power, but on efficiency measured by a lower price to the consumer in the short term. Bezos saw that there was an opportunity to build a monopoly using the tools available on the nascent Internet, as long as it offered low prices. And he knew that this pro-monopoly legal framework meant that he would have to exclude his competitors, or they would exclude him. As he explained to one of the first employees, “When you are little, someone older can always come and take what you have.”

Bezos was able to build Amazon the way he did because traditional business tactics that had been illegal, such as below-cost pricing to drive rivals out of business, had become commonplace and legalized by an accepting judiciary. these arguments. When Bezos took on a competitor,, he allegedly made Amazon spend hundreds of millions of dollars a month to sell less to his rival, then offered to buy them cheap. Faced with unlimited capital willing to bear losses, they had no choice but to sell. The rules against this kind of pricing strategy had been undermined by docile enforcers and a conservative judiciary that had rewritten the law to allow Amazon to flourish.

Bezos understood this dynamic clearly. Early employees recall that their “underlying goals were not to build an online bookstore or online retailer, but rather a ‘utility’ that would become essential to commerce.” Amazon is now an intermediary in multiple sectors of the economy, setting the terms and conditions by which Americans conduct online commerce. “They are not messing with the system,” a literary agent told the Wall Street Journal in 2019. “They own the system.”

Amazon, in all its lines of business, uses tactics to bludgeon and dominate entire segments of the industry. You force merchants who sell through your marketplace to use your logistics service. It prefers its own products on the platforms it controls, be it Amazon Marketplace, Amazon Web Services, or its voice assistant line of business, Alexa. It uses its wide scale to set the prices of those who use its services. As the CEO of PopSockets testified in a congressional hearing, “Amazon’s retail team frequently lowered the sale price of our product and then ‘expected’ and ‘needed’ us to help pay for lost margin.”

The corporation also exploits and undermines workers and communities. The HQ2 fiasco, where Amazon had hundreds of mayors jump through the hoop and plead in hopes that the corporation would locate a facility in their city, is simply one example of how Amazon gets public subsidies for its operations. He has run nasty public relations campaigns against employees requesting safety equipment, and he is such an important labor buyer that he often cuts wages when he enters a community to set up a warehouse. And right now, Amazon is running an anti-union campaign in Alabama to stop its workers from exercising their collective bargaining rights.

There are a myriad of loopholes that Amazon is trying to exploit, to leverage its controlling power from one market to another or to exploit workers, communities or suppliers. But each of these is backed by a regulatory framework that allows it, be it antitrust law, labor law, or laws that empower the corporation to compel employees and merchants to sign arbitration agreements that deny them access to. the courts.

The legal framework that allowed the creation of Amazon also allowed business concentration in all other sectors of the economy, from large sectors such as airlines, search and social networks to pharmaceuticals, to niche sectors such as mail sorting software, production of mobile homes, private prison phone systems. and web domain registration. As Jeff Bezos takes a step back, or does whatever he is doing, we must also recognize that this framework is crumbling. Amazon’s sister monopolies Facebook and Google face existential antitrust lawsuits in which the government calls for them to be dissolved. Amazon itself is under investigation by the Connecticut attorney general.

Most importantly, Congress is getting involved. The House of Representatives antitrust subcommittee conducted a 16-month investigation into large technology companies and recommended strengthening antitrust law to prevent the accumulation of monopoly power and conflicts of interest in major companies like Amazon. And the policy has changed. Look no further than local Bezos congresswoman Pramila Jayapal, who praised Bezos for his creativity but also made it clear that the law is going to change. He said Amazon must be “held accountable for the unacceptable treatment of workers, including delivery drivers and warehouse employees” and that Congress must “aggressively challenge mainstream technology platforms such as Amazon and others and control anti-competitive behavior and practices. monopolistic “.

There are many wonderful capabilities Amazon has been able to capture through its raw muscle, so discovering how to restore competition, openness, and labor rights in markets where the corporation’s operation will be a delicate operation. But it is time for lawmakers to act. And luckily, there are good reasons to think that they will soon.

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