This strategy has been adopted by eBay as well and artificially drives up prices. Let me elaborate.
Recently, eBay has made it so that only the products with paid ads are shown in places where customers click. This drives up the cost of everything by more than 10% which is eBay's ad fee. I refused to buy a paid ad to sell my MacBook. It sat on the site for a month, which is highly unusual for an in-demand and rightly priced product. Finally I lowered the price enough to get it sold.
Most consumers use the default site, which filters by Recommended (i.e. ads) The play for consumers to win at this new payola ad scheme is to always filter by lowest price (or in amazon's case Prime + lowest price)
But really, consumers don't win (and neither do sellers) because now these ads take up space in supposed "search results" for items which don't match the search terms (but are close enough) This creates frustration when you are looking for something to meet a specification, like E26 light bulbs for example. Here, it is pointless to show anything that doesn't meet that specification and yet the site shows them, and the seller has to pay the ad fee.
You are touching on a point that Benedict Evans has made quite eloquently in the past:
>There was a joke a few years ago that rent is the new [Customer Acquisition Cost], and that now applies to everything. The [Total Addressable Market] for search ads is not ‘advertising’ (let alone online advertising) but everything that is spent to reach and serve a customer, starting with retail rents. This applies to Amazon, but even more to Google - you can ask whether Google’s ads are ‘advertising’ or ‘marketing’, but also ask whether the TAM for buying placement in Google search results is ‘advertising’, ‘marketing’ or just its customers’ operating margins. How do you reach a consumer? Do you spend your budget on TV ads or search ads, or on retail rents, or on giving retailers a margin versus selling direct, or giving the retailer a better price for better placement, or free shipping, or a better returns policy? Everything below P&G’s COGS line is up for grabs.
There will be no site that does not offer advertising, because advertising allows the site to determine which sellers can afford to pay more while still being profitable. It's a scaled version of the same way a landlord will raise rents on a profitable storefront.
>There will be no site that does not offer advertising, because advertising allows the site to determine which sellers can afford to pay more while still being profitable.
It's still possible that people exist who charge "what it's worth" rather than "what they can get". Those people can still make a fine living off of a two sided market place through flat transaction fees. Craigslist is an example that comes immediately to mind. Smart market participants are already punishing providers that maximize profit with payola, which is leading to success of new smaller niche markets - reverb.com comes to mind, or bricklink.com or alibris.com. That is not to say the market of markets is "solving" this problem - we probably want more consumer protection law - but it does show that your startement about ads is, strictly speaking, false.
Craigslist is a hell hole. I stopped selling there because even when I was practically giving electronics away (to prevent buyer’s remorse), people still emailed insultingly low offers. I just gave up on the site maybe five years ago.
CL has gotten much much worse over the last few years. So has FB Marketplace. Perhaps a hidden value of the payola approach is to avoid these outcomes. Or perhaps every marketplace declines like this. It may be that private secondary market online market is simply not a sustainable business. That would be unfortunate, but interesting.
I think that reflects more on your sales strategy than CL in general. If there's negotiating expectations in a market (Middle East or Craigslist) you gotta start higher to arrive at the desired "halfway point" (think Ross pricing for clothes) and you gotta ignore spam/lowballs altogether. In fact pricing things too low undermines the quality of the item you're selling perceptually and attracts lowballers disproportionately.
CL has gotten worse since FB Marketplace has gotten foothold people visit it much less. FB Marketplace on the other hand is a race to the bottom due to ease of sales by laypeople.
The problem is that "what it's worth" can only be determined via "what you can get". Flat fees are just operational costs + capped profit. And the next question would be, where do you place that cap and why there?
It's going to be a bit harder to win on this end I think. Manufacturer's require retailers to agree to this type of restriction all the time time (and it's mandatory, not voluntary) like it is with Amazon.
Thats not the only thing I caught, at least with Ebay.
During the pandemic, I decided to sell a bunch of a component I had stockpiled. (Im not a scalper. I got the parts when my dad died.).
I put them for sale with $100 minimum, auction. They ended up selling for $300. I was definitely happy.... until Ebay refused to send me my money, and instead demanded access to a bank account, after the sale was complete. Fuck that.
I found the user who bought it, traced to a business. Cool. I contacted him, explaining what happened. Turns out they did the same to him since he too was a seller. I told him that I'd honor the same price Ebay told me....
Ebay told me (seller) $300. Ebay told the buyer $350......!! Mind you, the fees are taken out of my $300, yet that $50 difference is Ebays scrape off the top.
Obviously, I sold it to them for $300, and provided screenshots of what I was being told, and they did the same. We arranged the sale over Paypal and worked like a charm.
And sure, Ebay's scamming as far as I can tell, everyone. But it's also reminded me to check on websites with a private mode browser and logged in, to see if there's funny games.
It's amazing how quickly I recognized eBay descending into this sort of stuff from its inception. Maybe Amazon did so quickly too, but it's so obviously scummy that even as a teenager I got this impression. Kudos to you for going the extra mile
I recently sold some items on ebay. ebay will not release the funds for 3 weeks. They give no reason for this. However I think the real reason is that if you do this over a large enough user base you can use the "time-value" of money to make extra money. It's nefarious, and I too will never use ebay again.
The reason they give/non-cynical take is that it's a hold for potential buyer dispute. If they do, and eBay decides in their favour (to refund or partially refund) then it ensures they already/still have your money, they don't have to try to bill you back for it. (Which would also have an associated cost, but surely the main aspect would just be already having it, you haven't run off with it, not unable or unwilling to pay it, etc.)
What is a company if not a collection of people? I fail to see the difference between "rogue execs did it" and "the company did it", except for who gets thrown under the bus.
This statement is very meaningful in our current society, but one I wish sounded as insane as it is. I hope more people will think about the basic dogma of corporatism in the coming years...
Now imagine a legal entity represented and managed by several officials.
One of them heads into town, hires a bouncer to break a guys leg using the legal entities money, letterhead, and declares that this is work on behalf of the legal entity.
What should happen to the legal entity wrt acts commisioned in its name?
They denounce the official and sue to recover the money he spent without authorization?
What happens if someone with no affiliation of any kind with the company hires a bouncer to break a guy's leg using company letterhead and a sworn declaration that the work is commissioned on behalf of the company?
If he's an official representitive of the comapny he is the authorisation - we're not talking about the janitor here, we're talking about people with fiduciary responsibility between themselves and the company.
A lone wolf acting alone and falsifying documents is entirely different to a direct representative who is authorised to act on behalf of a company acting in bad faith.
Otherwise company officials are free to do henious crimes in the name of and on behalf of a company with no blowback on the company when those actions go pear shaped and get exposed.
Commanders are responsible for the actions of their men, companies are responsible for the actions of their principals.
A cook is a bad analogy for the rank held by the people involved. It's more like "son of the estate owner" or "head guard", except it's both of them because it was multiple execs. So, yes, the estate owner should be held accountable. And in most civilized societies, he or she would be.
I’m not great/don’t have time for a good metaphor dance, but that’s definitely a good one IMO! I guess I’d say the big difference is that you’re asking “what should happen to rogue execs”, and I was more interested in the general “who is culpable for the actions undertaken by an organization? Can the organization itself be culpable?”
In that metaphor, I see it like this: you live in a big estate that operates as some sort of business (wine, tourism, B&B, w/e), and your live-in cook breaks a guy’s leg while working for the estate (say, in a case of kitchen negligence, or just plain-old kitchen assault). I come along and propose that maybe you and your other owners should be forced to sell the estate or seriously rework things, since the assault was so bad.
In this world, do you share my intuition that at some level the estate itself should be made to answer for the actions of its employees on the job?
Beyond just fining corporations for damages, I feel there’s an unaccounted for intuitive sense that corporations should forfeit their autonomy and very existence in light of serious or repeated malfeasance, even if it wasn’t voted on by every member of the board before being enacted.
Ok maybe I did have time for a metaphor dance lol. Hope all this was somewhat clear!
That's not 'rogue' that's completely and utterly unhinged. It's a walk-in position, not a 10th generation family firm. Why would you even think about it?
The deal I make with eBay is "I sell X for whatever the highest bidder pays, and then pay a percentage of that to Ebay for services rendered" (10% IIRC). That is: I would get $315 and eBay $35, but instead what happened is that I get $270 and eBay $80.
Note that it DIDN'T list a "higher price for the buyer"; people were bidding so that price was correct. What it did was list a LOWER price to the seller.
This is like you giving me your guitar and telling me "Martin, sell it for me and keep 10% of the price for your trouble" and then I lie to you about the price I sold it for so I can keep the difference.
I don't know how else to describe this than fraud. This seems wildly illegal in most jurisdictions and I'm surprised they're getting away with it.
Are you in a state with sales tax? eBay is required by law to collect sales tax from the buyer, and it does not get passed on to you (nor does it go to eBay, it goes to the state taxing authority). As you are currently describing the issue, it makes absolutely no sense otherwise.
Tax was being collected, on top of the $350 being told to the buyer.
Ebay told me $300 for the completion of the auction. There was the normal fees associated with listing, which again, are understood.
This $50 discrepancy was not accountable anywhere. It just went poof into Ebay's gaping maw.
Like I said, we both compared notes and what our respective screens said. The numbers absolutely did not add up. And Ebay reallllly doesnt want the buyer and seller to talk directly. It's why the "ebay mail" is so limited and crippled, to prevent actual conversations like this from taking place.
I talked with them over text and email proper. There was no filter, or daddy ebay censoring all my messages.
I see what you mean and indeed that does sound fraudulent. Initially it had seemed to me sort of like ebay acting as a middle man and buying from you/selling to the buyer but them saying they sold your item for X price when they did not sounds cut and dry.
eBay stole my money and made it impossible to get a refund fifteen years ago. I gave up and stopped using the site. Sorry I don’t have more details; it’s faded from memory. But it was dirty behavior, that’s for sure.
I used to sell items on eBay but I'm back to Craigslist and, for phones and other electronics, I've found Swappa to be a decent marketplace. On the latter products are moderated lightly for validity and, just like eBay, it was easy to build up a very positive reputation by selling items that are clean and have been taken care of well. I do go to eBay as a shopper for random items. But generally if it's on eBay I can find a better price by spending a few minutes looking for a site that specializes in those items.
I lost trust in selling on eBay due to buyers that have tried to scam me in the past. Not sure if it's still that way on the sell side for individuals but I felt like, for a while, eBay was favoring high volume users vs being fair. I sold some SFPs that were way under market value about 6 years ago and had serial numbers of each unit in the auctiom. A guy bought them to resell in his shop a couple states away and he claimed they were defective when he received them. I told him to prove it in a switch showing the serial numbers and the error condition he claimed. He wouldn't do it so I told him to ship them back. He shipped me units with way different serial numbers but eBay still gave him his money back and charged me. That's the last time I sold on eBay.
Thanks for the swappa.com recommendation! I see that I could have made $100 more on my MacBook there than on eBay. Also it was WAY easier to find the exact specs. Thanks again!
It’s the same as Airbnb and Uber and Netflix and literally everything else… they throw in hidden fees and play psychology (eg foot in the door technique) to get us to pay more and more without us realizing it. They preach convenience, but unfortunately use that to their advantage to get our guard down. You pay $X to not have to worry about something/get a service, but when you’re not paying attention they jack up prices.
I looked the other day and it’s like $19/month for Spotify Family now… when did that happen? It was like $14 when I signed up. But all my playlists are set up on Spotify… what’s more, all the fam’s are too. Huge PITA to move to Apple Music.
I hate to tell ya, but Spotify will eternally be stuck between unprofitability and price raises.
Spotify has to negotiate with record labels who mostly act as a unified block, and they have leverage because Spotify needs all major labels or else customers can’t find all their music. No one is a “interscope” loyalist - they’re loyal to artists. This gives them power to basically demand >100% of the profit margin. That’s why they’re trying to get into other markets like podcasts. Record labels get ~50% of revenue, then Apple/Google app stores get 30% from some customers - that doesn’t leave a lot of room for Spotify.
That’s also why YouTube music and Apple Music will be the only long term players - but they need Spotify. They can take a loss to keep customers in the ecosystem BUT they need Spotify to always be the first to break to keep rates tolerable.
I sold it for $540 (without using ads). Same specs are selling on swappa.com for $620-$780. My eBay reputation is 100% and the MacBook was 100% clean. Perhaps I could have sold it for "more" using ads, but then all that money would just go to eBay, which I don't think is fair. They already take a final value fee anyway.
Terrible. Price gouging has been worsening the last couple of decades. Perhaps the last few centuries, or maybe it comes in waves, like resets when there’s a government revolution. People keep paying though. I’m at my city’s town center and I’ve never seen it so packed, except in the Black Friday-Christmas season. It’s a random Saturday. Some people have Monday off but that doesn’t explain the domestic shopping. Where is the money coming from?
Is that a joke? It's far more of a nightmare. Sort by price and it's only sorting on the 'from' price, which isn't even necessarily the same product, doesn't include the shipping, and doesn't account for wild variation (in not just base price but also inexplicably shipping) when you change quantity or colour.
I would love to see some regulation (/ enforcement) that if you're going to lump different variations of a product together into one product listing, they need to be substantially identical in function and build.
Two different colors of the same specification iPhone are fine to group together (arguably even different storage configurations), but it should be illegal to have a product listing show up on a search page with a price of $5 when the title and photos show the $100 actual product, and $5 is what you pay for the charger brick. This is extremely common on AliExpress, and obviously the FTC's reach is limited there, but it also happens not infrequently on Amazon and eBay.
Amazon binds its sellers over to something called Most Favored Nation status. That means that sellers can't offer their goods more cheaply than they do on Amazon – even if it costs them (lots) less to sell in Target or direct from their websites. This means that every time a seller adds a dollar to their Amazon sale price, they have to add a dollar to the price of their goods everywhere else, too.
After a bunch of state AGs filed lawsuits against Amazon over this, the company promised to cut it out.
They lied.
A new filing in California's suit against Amazon reveals that sellers live "in constant fear" of retaliation from Amazon if they allow their goods to be sold more cheaply elsewhere.
According to the FTC's lawsuit, Amazon no longer binds its sellers with a Most Favored Nation clause. Instead, Amazon now will refuse to promote an offer in its "buy box" space if it detects a lower price for that good on another website.
The FTC alleges that this simply reconstitutes the MFA since most sales on Amazon take place from the buy box. Amazon responds that it is within its rights to not promote uncompetitive offers that make its site look bad for not having the lowest available price.
> Amazon responds that it is within its rights to not promote uncompetitive offers
Sounds to me like Amazon has found a loophole in the law. It agrees to list anything for sale, with no anti competitive conditions, but then only recommends customers buy things that it believes are in the customers best interests.
The FTC will struggle to argue that is illegal. Amazon can't be compelled to recommend stuff. (free speech etc). Also, what they recommend is in the consumers immediate best interests.
It will be hard for the court to argue that amazon should start recommending more expensive items to consumers, just to push consumers into looking for a cheaper platform.
> what they recommend is in the consumers immediate best interests.
How? Amazon routinely recommends products to me that are objectively inferior compared to other products. For example, I just searched for "peak design travel tripod" and the number one result, which is also marked with "Overall Pick", is a tripod made by a company with the name of KINGJUEEQUESTER that looks like it's made out of cardboard tubes, but at least comes with a free 21 piece lens filter set and selfie stick for $18.99. And it has 3000+ 5 star reviews that are almost nearly identical. "Edward Von McTavish: The KINGJUEEQUESTER tripod arrived. It is of the most impressive quality. The Leg Lock feature fulfills my needs. I recommend for you."
The thing I'm actually searching for isn't even on the first page of results. It's on page two, under "More Results" and has a title of "Peak Design Travel Tripod (Carbon Fiber)" and is priced at $599.95 (the same price you'll find on Peak Design's site).
How is it that showing me anything other than what I searched for supports me as a consumer?
Say Amazon offers three items all equivalent: one is priced at $9 and two are priced at $9.50 all are Prime.
If the vendor for the $9 offers it for $8.50 elsewhere and Amazon starts focusing on a $9.50 offer is that "better for the consumer"?
If the $9 doesn't exist and there are two vendors at the $9.50 price and one has a higher review history but offers it lower elsewhere is Amazon making things better by focusing on the other one?
The "buy box" is a product-level feature, not a seller-level feature. On any given product page, there may be multiple sellers with offers (one for $9, two for $9.50). The $9 offer would be prominently displayed in the buy box and the other two would be in the "other offers" section.
If another site starts selling the same product for $8.50 (regardless of who the seller is), Amazon may hide the buy box and put all the offers in the "other offers" section to avoid advertising an offer that isn't the best price available online.
Consumers price compare across sites, and Amazon wants to maintain its reputation for low prices (and in truly egregious cases prevent sellers on Amazon from price gouging).
Except they do the same for non-new products which muddles things tremendously.
If I don't see a price I assume it is out or they only have used ones. Certainly occasionally I have seen scalpers when I double checked anyway to see what the price would be if it returned but generally Amazon caught maybe half the scalpers in my experience.
Having a signal that means "you could get it less elsewhere" be the same signal as "I only have scalpers" isn't exactly good for consumers.
Also this implies that Prime shipping is worthless given they exclude it from the calculation...
The max price filter in the left margin is worth the effort to find the same product selling cheaper but only displayed a few pages later than than the primary search results.
Is buying from the buy box ever to the customers advantage?
Amazons fees are making the offer uncompetitive thus Amazon is actually not competitive meaning that they’re relying on their monopoly position to maintain market dominance instead of competition which they evidently cannot do.
>It will be hard for the court to argue that amazon should start recommending more expensive items to consumers, just to push consumers into looking for a cheaper platform.
Yes, 100% this. That's why I said that this lawsuit has a major remedy problem. Even if the court agrees this is anticompetitive, how do you fix it?
Amazon isn’t recommending “more expensive” items to consumers, it’s offering different products.
It should be recommending the best product for the user at the price it can offer the product at.
The fact that the product exists $1 cheaper on another site does not make it not the best recommendation for the customer’s need. If I search “tablet” are you saying I should be recommended a cheap off brand tablet promoted to me because Amazon has the cheapest price or an iPad even though I can buy an iPad on apple.com for $10 cheaper?
>The fact that the product exists $1 cheaper on another site does not make it not the best recommendation for the customer’s need. If I search “tablet” are you saying I should be recommended a cheap off brand tablet promoted to me because Amazon has the cheapest price or an iPad even though I can buy an iPad on apple.com for $10 cheaper?
I think you are misunderstanding the issue. Amazon is selectively determining to show the "buy box" on a specific product page based on whether the prices for that SKU on Amazon are competitive with prices for the same SKU on other websites.
In your example, Amazon might not have a buy box for a given iPad model if the same model was available on apple.com for less. The presence of cheaper non-iPad tablets would not impact the iPad buy box.
I was referencing the article which seems to indicate it’s more than just a buy box issue.
> Today, Amazon tells sellers that if it detects a lower price for their products on any other online store, they will be punished, which is to say, their ability to get their products onto a place on the Amazon website where customers click will go away. The net effect, as Amazon itself wrote, is that "prices will go up."
The insurmountable problem is that the practical interests of "consumers shopping on Amazon" don't actually align with the abstract interests of "consumers in general" that the government is purporting to defend. On Amazon we want to find the right item (search, description, reviews), have strong confidence in the inventory and shipping promises (fulfilled by Amazon) and have reasonable confidence we're not getting screwed on price including shipping (Buybox, Prime eligible etc). If you chop those things apart it becomes essentially impossible to offer the overall experience that consumers clearly prefer.
The cause of this is that it should be an anti-trust violation for any wholesaler or manufacturer to dictate retail prices to the retailer. They agree on the wholesale price because that's what they're negotiating with one another, then the retailer chooses the retail price in their store.
Now if Amazon wants the MFN clause, no problem -- but it's the wholesale price they can't sell to someone else below, not the retail price. If Amazon wants the lowest retail price, that's up to them.
I haven't studied antitrust policy in ages, but IIRC one aspect of this in the past has been to forbid the monopolist from peeking at their competitors' prices.
> Sounds to me like Amazon has found a loophole in the law.
No, not necessarily. This is just what companies always do. As long as it looks like they're "trying" to comply, they don't get in big trouble. In the meantime, they get to make microadjustments to their policy and find out exactly how far they have to comply until they're legally in the clear.
It’s product placement. Happens in retail and grocery all the time. Sellers pay to have their products at eye level, stores optimize placement to boost spending.
Now that it’s digital it’s illegal?
This is a good point and your comment below ( https://news.ycombinator.com/item?id=37768419 ) highlights it well. What people don't realize is that this is in the interest of the consumer. I used to work at Amazon (although not on any of these teams) so that's probably why I know that "see all buying options" means the price is not competitive. As a consumer I value this.
Amazon scours the web to make sure their products are competitively priced. So if a Western Digital external hard drive is $99 on NewEgg, then Amazon wants to sell it for $99 or lower. If it's a 1P product (i.e., Amazon is the seller), they can easily price match in real time. But if it is a 3P (third party seller) product then Amazon cannot take that action unilaterally take that action since it is the seller setting the price. So the best they can do to protect their customer in real time when their crawlers detect a lower price elsewhere is to hide the buy box behind the "see all buying options" button.
I'm sure when this feature was rolled out, Amazon's sales must have dropped. They are taking that short term hit in order to protect customer trust in the long term.
How does an extra click help the customer? Unless the customer used to work at Amazon and specifically knows that "see all buying options" means "scour the internet to find a better price, it should be easy this time".
They aren't hiding the better priced items behind an extra click, they are hiding the worse priced items. If you buy something listed in the "see all buying options" it means that you are spending more than you have to, as you will likely be able to find it for less elsewhere, whereas the normally presented items are the ones Amazon is selling for the same or less than elsewhere.
Does anyone have examples of popular / name brand products that are pushed down in ranking due to this? I would love to see for myself how this looks in practice
You'll see that in the FTC's example, you need to click to see more buying details and that at the time of this comment the lowest price is $14.28 with free shipping (on October 12th for my location).
In the other example, the "buy box" highlights the best offer of $9.99 with free shipping (on October 5th for my location).
That first example is eye-opening for me. I always thought that when Amazon doesn't show a buy button on the product page, it's because that product is not currently available to be shipped from Amazon.
That's one possibility! But Amazon also hides the buy box when the only offers are not what Amazon considers "competitive" because it hurts their brand if consumers see shitty deals.
In this example, the pens with the buy box are 50% cheaper and have much faster shipping.
They're not the same pens though (extra fine v. ultra fine).
I can understand why the FTC is concerned. This has the potential to be worse for competition than MFN agreements, because it forces any supplier whose products might end up on Amazon to police its entire distribution network for minimum pricing.* It also forces suppliers to crack down on (legal, authentic) grey market imports, even if those are never sold on Amazon, or risk losing the ability to effectively sell on Amazon.
* Moreover, that minimum pricing has to be sufficiently high to account for Amazon's cost structure, even if other competing vendors are more efficient.
I was offering the comparison because those two pens should be priced within a few cents of eachother (the difference is the tip width and ironically "extra fine" is more expensive). If the products were the same then there would only be one product page and the $9.99 offer would be the highlighted deal.
The fact that one product has the buy box at $9.99 and 1-day shipping and the other product does not have the buy box at $14.28 and 8-day shipping lets us infer that $14.28 is not a competitive price for these pens and there may be a cheaper price elsewhere (likely closer to $9.99).
You seem to be thinking that manufacturing costs alone dictate the product cost. Demand and volume in circulation are also part of what determines costs, though. That is, your first assertion that they should be within cents of each other is clearly wrong.
It doesn't let us infer that there is a cheaper cost somewhere, it lets us infer that Amazon has a low confidence that someone will buy it. That or they have such a low inventory of it that they are not confident showing it on the buy box without more engagement from the users.
To be clear, I'm ok with the idea that this is getting investigated. I have low confidence of finding smoking gun reasons to punish sellers on this. I am far more confident that Amazon is optimizing to convert sales.
Actually, in this case I am cheating because I already know that this SKU is offered for a lower price with faster shipping from Walmart. I suspect that listing is what triggered the loss of the buy box.
But that is a non-sequitur. Literally, in that that doesn't necessarily follow. We literally don't know why the buy box doesn't have it here and I could guess at a few other reasons. Most likely, I'd guess that the cheapest option not being Prime factors in to it more so than external offers being cheaper.
You're right, shipping speed likely also factors into it in addition to cost (that's why I also mentioned the shipping speed). If Amazon can't deliver within its 2-day Prime guarantee it is less likely to promote the offer.
Of course, without access to Amazon's systems I can't say for sure why any individual listing is or is not promoted. I'm just making an educated guess based on what the FTC put in its complaint.
As a consumer I definitely avoid products with no buy box. I thought it was only related to Amazon fulfillment (which in turn I use as a proxy for being likely to receive the product on time and undamaged)
That's funny. I _only_ buy things from Amazon that are not shipped by Amazon.
Their logistics are utter garbage for me - part of it is an urban setting with nowhere to leave things, part of it is that they don't give a shit, and leave things.
Amazon is not a neutral entity or a public space. It's a private platform with its own interests that are very often in conflict with sellers.
There is this weird cultural expectation of platforms and platform-like applications (social media, multiplayer video games, online stores, proprietary libraries/engines, even entertainment media "universes" and franchises etc.). Participants and consumers seem to think that these platforms are somehow public spaces that they partially own, or at least they act that way.
But you only own what you actually own.
There are legal instruments and structures that actually let you partially own things and/or grant you rights so you can act on these kinds of expectations: coops, open source and other such licenses etc.
When internet culture and commerce wants to mature, then maybe we should start focusing more on building on _legally_ trustworthy foundations.
That's nice, but the reality is that Amazon has almost 90% control of e-commerce.
They have huge monopoly power, and laws exist to protect consumers from that.
Is it the ideal way to build a society? No,
But the government should still step in when it happens.
I actually misread fig. 14 from the article which was the set of top market participants.
So it has a 90% share of the ecommerce of those top 5, not the whole market.
Honestly feel the article intended that misreading
The weekly sales flyers that stores offer was/is another way around this as well. Some of them have coupons to specific items that are not allowed to have sales prices lower than the MSRP. Very few people are as draconian about their prices as Apple, but others sure wannabe.
> Some of them have coupons to specific items that are not allowed to have sales prices lower than the MSRP.
That's actually kinda disappointing. I'd always assumed those flyers were pieces of trash (at best, something I'd need to put in a recycling bin) which I don't want but now I'll be more tempted to take them when offered on the chance that I otherwise accidentally avoid the sales price.
It's still good to know that such coupons are likely just attempts by the retailer to circumvent the manufacturer's... ahem suggested price.
Coupons are a longstanding price discrimination technique. If somebody doesn't want to pay full price, you might still get their custom with a voucher. You don't want to make the discount too easy to find though, as you will miss out on revenue from people who were willing to pay full price.
ProTip: at some stores, employees are allowed to give discounts as well. i have 2 anecdotes from HomeDepot:
Since none of their lumber should ever be in the same building as the word "straight", I made a joke to a nearby employee that we should get a discount at how warped the wood was. He very seriously told me to separate the warped wood on my cart, and he'd mark them down. Got to the register, and they were marked down 40%.
Second instance was after spending time chatting with an employee in the appliances department, he pulled out a pre-printed, handcut piece of paper from his apron pocket, wrote 10% on it with his sharpie, and i got 10% off at the register.
Oh, and of course the Guitar Center stories of "you're a cool dude, and since I like you, let me knock of X%" are infamous
While it may not be as simple as changing a SKU, Amazon is chock full of products made in the same factory, many with identical product images, sold under different brands at different prices, and many of the "brands" are the output of name-generators.
That actually adds to the problem: If you put effort and money into brand recognition you need to provide best prices on amazon, but Amazon is easier to game if your brand is xyxxy12345.
This is a classic programmer response. The problem is not Amazon's software, it's their marketing, distribution network, huge audience that searches for products exclusively via Amazon, "free" and very fast Prime deliveries, etc. That doesn't all happen via simply open sourcing some code.
It's trivial to create a website (frontend and backend) that offers similar functionality to Amazon. There's nothing special about their software platform.
You can't open-source marketing and the insane delivery network Amazon has. Those, among other things, are the reason they are successful. They could release all of their software completely open source and literally nothing would change.
You're talking about the infrastructure for a specific seller, which in itself is by no means trivial.
What you want here is an open source replacement for Amazon's product search that will find products from multiple independent sellers. The hard part is probably how to curate it; you want to allow legitimate small sellers without allowing the thing to be filled with scams. But Amazon hasn't done a very good job here either, so maybe it's not a high bar.
And then a payments system which is something in the nature of GNU Taler.
Amazon's logistics is an advantage, but is it an advantage that can overcome the need to pay them a vig instead of having the product shipped directly from the manufacturer? Lots of people willing to wait a week for shipping if the price is 10% lower.
You can’t open source it but the government could nationalize it and make it a benefit to small businesses everywhere without the anti competitive profit seeking motives of a private business controlling it.
The original commented suggested that an open source Amazon was the “real solution.” Open sourcing Amazon’s software and then nationalizing their distribution network is a very different suggestion!
Expropriation is the first step to destroying the thing. There no reason for unbelievably good customer service if you get paid by taxpayers regardless of outcome.
No need to open source. Just to pick some examples to build something similar to Amazon's fulfillment part as it was like 6 years ago:
Shopify as the front end
CargoWise for transportation, warehousing and everything logistics
Which leaves some of the more sophistiticated stuff like demand ballancing across the network, but that is doable by either developing something in-house or throwing an ERP system into tue mix.
All available off the shelf as we speak. There are other reason why nobody manages to seriously challenge Amazon.
The basis of this entire case is that you can open your own shop and Amazon disallows you form competing with their monopoly. There are plenty of open source options to open a web shop. That part is almost laughably easy.
I find most of your content here to not have any good follow-through.
Amazon isn't just some software on a few servers. It's a whole vertical enterprise. Suggesting that some front-end and back-end servers can take the place of warehouses, delivery people, fleets of machines (served by AWS no less), payment companies, 3rd party billing is just laughable, and shows the naivete of a sw engineer.
However, that last paragraph is terrible and absolutely true...
> Otherwise, at best, you are just reduced to begging Daddy Government to force these corporations to break up. How well did that work for Ma Bell? The pieces were still a cartel, still charged $3 a minute. What the government couldn't do in a decade, open source technology and open protocols did in a few short years ... VoIP dropped the price to practically nothing. Now we have videoconferencing all over the world. Because once we decoupled the software (AOL, MSN, etc.) from the infrastructure via open protocols, the infra providers became a dumb pipes competing in a free market.
I remember Ma Bell. Charged stupid prices for long distance, but was a good service. And then, the splitup happened. Did we get better services? Nope. We just got dozens of smaller monopolies all engaging in the EXACT SAME SCAMS that Ma Bell was broken up for.
It was when we started pushing data around and got away from POTS lines did we finally break the stranglehold of the baby bells. Even DSL has been basically thrown away, given how little the RBOCs dont want to advance and grow. Monopolies are like that.
Thanks for un-flagging. How does one become an admin on this site, anyway? I've been active since 2008 but still get dinged for stuff, not sure for what in advance.
Yep, I think we are in agreement. My point is that for many decades, the government was barely able to make the prices drop. And then open protocols like VoIP did it in a couple years.
I am a libertarian and believe that good open-source software and open protocols cause the centralized services to face a free market of incumbents. Much of the vertically integrated systems can be unbundled.
Another great example is how the Web (HTTP was the open protocol) disrupted AOL, MSN, CompuServe etc. Or how Wikipedia disrupted Britannica and Encarta. How Apache and NGiNX disrupted IIS. And so on.
Basically, we need standardized, open protocols. Maybe one day OpenStreetMap and Mastodon and BlueSky will disrupt their centralized alternatives. In any case, the first step is to have open source software and federation. I'm not saying it's the only thing that needs to happen, but FBA and many other services can be done "sharded" per-product. We can do the same for other marketplaces, like Uber, Fiverr, etc.
Thanks but I'm no admin. Anybody with some minimum amount of karma can "vouch" for a flagged post. You just click on a flagged post in the "$time ago", and a vouch should show up there.
Youve got 7k karma so you should also be able to vouch. Just make sure "showdead" is on in your settings.
As to the subject matter:
> Yep, I think we are in agreement. My point is that for many decades, the government was barely able to make the prices drop. And then open protocols like VoIP did it in a couple years.
Mostly, but probably not on the actual mechanisms. I do agree that government's breakup of Ma Bell really made everything worse. And how it was broken up went from 1 monopoly to 20+ monopolies. The end user really just saw stuff stay bad or worse. Now, myself being an anti-capitalist, would have looked at this situation, and go "Well, communication networks are an integral part of national security, and should be nationalized, since this company was abusing the people", and would have federalized it under a nonprofit charter.
As to claiming that VoIP helped supplant - nah. People got their taste with dialup of the internet, and at a whole 4.3KB/s , and wanted faster. A 3 minute (3MB) song was 11 minutes to download... and Napster. Dialup was stagnating, and the telcos were being slow about DSL. I saw DSL eventually, cable networks, and WISPs pop up like weeds everywhere, because more and more killer apps were showing up. And frankly, at the time, Piracy was the killer app. Bittorrent, Kazaa, Gnutella, Napster.
> I am a libertarian and believe that good open-source software and open protocols cause the centralized services to face a free market of incumbents. Much of the vertically integrated systems can be unbundled.
That's the problem with the unbundling. That's not a software or code issue. That's a money issue, primarily with folks who have piles of money can force things others dont want.
And with vertical industries, it's never been a user-level experience in unbundling. To really force the issue, it goes back to the government to force it. And the US doesnt have a good track history in doing that well. This problem is always been a coordination issue, where larger monoliths can do well from a dictatorial governance (companies).
> Another great example is how the Web (HTTP was the open protocol) disrupted AOL, MSN, CompuServe etc. Or how Wikipedia disrupted Britannica and Encarta. How Apache and NGiNX disrupted IIS. And so on.
It's disingenuous to lump all those together.
The "Web" was a group of academics and governments, that finally agreed to let capitalist and commercial groups in on 1993. And those groups also included corporate private networks like the ones you listed.
Wikipedia was the first real test of anonymous and user-level editing across a website, under newly created Wiki software. Sure, the 2 encyclopedias were killed by Wikipedia, but Wikipedia only hastened their death. Bulk books like encyclopedias were already declining. However, we learned a great deal about the ills of letting users edit webpages like encyclopedias realtime. And we're still fighting with those problems. (for example, you'd never see the "lists of Jews", aside a few high profile people in a proper encyclopedia, but here it is.. https://en.wikipedia.org/wiki/Lists_of_Jews )
You mention "disrupt IIS"... and I'm here on my work laptop with 2 IIS consoles open. Free is going to win out cost-wise, for things like startups and hobbists. But there's lots of industries who've developed and maintain in IIS. And in my industry, I'm not permitted to use NGiNX.
> Basically, we need standardized, open protocols. Maybe one day OpenStreetMap and Mastodon and BlueSky will disrupt their centralized alternatives. In any case, the first step is to have open source software and federation. I'm not saying it's the only thing that needs to happen, but FBA and many other services can be done "sharded" per-product. We can do the same for other marketplaces, like Uber, Fiverr, etc.
First, BlueSky is closed source proprietary spun off from Xwitter's former CEO.
I'm not seeing it. Well, a part I do. Having the software to start doing stuff your own direction is a good start. But much of this isn't a software problem. Its a logistics and integration problem, with a massive vertical integration across the whole thing.
Amazon's probably too big to break up. The individual pieces don't make that much sense individually. That's why I'm for taking control of said organization at the C level and BoD level, and start disassembling the illegal parts from the top down under full transparency and oversight. Maybe that'll be enough to scare other companies engaged in extreme monopolistic practices that thhink they are "too big to fail", will just be eminent domained.
That's the thing people don't get about making competitors to Facebook, Twitter, and other centralized platforms as well.
You don't need to boil the ocean in order to serve a single community. For example, Facebook started in Harvard and its value to everyone in Harvard was based on how many people in Harvard used it, not how many people in the world used it.
Similarly, if a single product vendor and their customers form a community, then a free market of fulfillment companies can spring up to stock that specific product, and then partner with the delivery companies (who have their own networks) to deliver the package. You might say that the delivery infrastructure is a cartel, but they're open to everyone and Amazon has been relying on them until finally spinning out their own. Same goes for CPU chips that Apple relies on etc.
Look at IPFS for example, competing with AWS for storage. It is growing every year and now powers 1% of all storage worldwide! And there is a free market.
Whereas these platforms are all centrally controlled by some billionaire (Zuck, Musk, Bezos) and his crew. You don't need to have their scale because you don't need to serve ALL COMMUNITIES IN THE WORLD on day one. If you have an open source software like Wordpress or Magento, you can serve your customers with web hosting instead of Shopify or Amazon. Now the only question is, who would do fulfilment.
You are correct, but note that one very key edge that Amazon used to as a competitive edge is no longer available to new entrants in the business. For the first 15 to 20 years of Amazon, they were able to be cheaper than their competitors due to the fact that sales tax only had to be collected in states where they had a nexus.
This gave them a pricing advantage which drove more customers to them which they intelligently plowed back into the business in building out their own network, no small feat of course.
A newer competitor would no longer have access to that simple sales tax advantage, and so would have to find something else to compel customers with. Barring that, Amazon/Walmart/Costco/Target/Home Depot/Lowes/Best Buy are tough to compete with because they already offer rock bottom pricing and they don’t have to invest in a ton of new infrastructure for logistics.
Not to mention the advantage of having investors willing to burn billions for a decade+ until you got into a dominant market position to finally become profitable. Not always easy to get access to that.
yes, but the bar for better was much lower back then. if you released the original Facebook today it would be so obviously so much worse than the competitors it wouldn't get any traction.
and many other small examples. There was still AOL, MSN, etc. There was a time when they ruled.
The only reason that FB, Google and yes Amazon were even able to launch, is because the open permissionless web disrupted AOL, MSN etc. Imagine them allowing Amazon to launch on top of them. They’d cannibalize them just like Amazon cannibalizes sellers.
> Similarly, if a single product vendor and their customers form a community, then a free market of fulfillment companies can spring up to stock that specific product, and then partner with the delivery companies (who have their own networks) to deliver the package.
One thing that gets overlooked in this is returns.
One of the big draws of Amazon is easy returns.
Whenever you have decentralized fulfillment centers, returns become a huge pain, because the fulfillment center that is happy to take your money and ship you the product, doesn't want the liability of dealing with returns.
Amazon has also optimized returns (for itself) by making its sellers eat the cost of those returns, one way or another. That's not all that controversial, but when you consider what Amazon recommends people buy, it becomes obvious that they have no problem recommending garbage because they don't care if it gets returned. They won't eat that cost. They get the profit from the sale, then let everyone else work it out.
Magento was badly designed- infinite levels of directories. Good luck on upgrade. There’s plenty of self hosted online stores. That’s hardly the problem.
I did a single contract for a Magento site and decided never again.
It was like a group of Java developers decided to write PHP code and it was horrific. I would estimate 80% of the classes in that codebase didn't have any implementing code in them.
Literally the only thing I liked about Magento was it's ability to outline everything that was being rendered to make it easier for you to identify the changes to templates you needed to make.
That's the same trap that TikTok influencers and others fall into.
You are sold "the dream" by showing top sellers / influencers / etc. and told you can be like them. Kevin O'Leary became a meme for promoting this bullshit: https://www.youtube.com/watch?v=AuqemytQ5QA
In fact, even the top influencers can be deplatformed in an instant, and their speech is controlled. And same with Amazon. But the thing is that the people you never hear about, the "middle class", are far more controlled and the "long tail" produces all that free content that basically gets almost new views / buys but all that free sharecropper content is then used to train AI models or provide proof of large available inventory / product / content BY THE PLATFORM that pits them all against each other in a zero-sum game.
> Kevin O'Leary became a meme for promoting this bullshit:
The women is Amanda Lang,[1] and the two were a 'duo' for many years with a business/finance reporting show. I'm not sure how she managed to put up with him for so long. :)
which is easy to compete with for a government platform.
in a lot of countries it would save a lot of money if the tax office had direct access to the product and purchase database. Thousands of people could move to more useful jobs.
Big box stores have a lot more leverage than a small seller on Amazon, who'll just get the "that violates our policies, we're nuking your business, no appeals" treatment.
It is interesting to note that the US government often requires the same kinds of MFN terms, even though it is usually much more expensive to do business with the government than the private sector. There are many ways of constructively working around MFN requirements but it creates collateral damage. For example, the practice of having very high prices that are steeply discounted for most customers is often an artifact of having the US government as one of your customers. For software, it is common to create a new product/service that is trivially different in some way so that you can justify a new SKU that is only sold to the government.
Amazon's practice is bad because it anchors pricing to their mandated cost structure. That the US government engages in similar practices should at least raise questions, because it has the same effect on the marketplace.
It's true that the US government does make those demands, but it's very important to note that the US government organization is not a reseller of goods. It is almost exclusively a consumer. It is not in direct competition in the same marketplace with private industry outside of a few select industries (e.g., USPS, limited healthcare).
Next, MFN tariffs kind of by definition only affect international commerce. For Amazon, a 100% domestic manufacturer producing goods would need to comply.
Finally, MFN is something defined by WTO treaty. If you have to abide by MFN when importing goods into the US, it's almost certainly because your nation is also a WTO member. Because almost all of them are. The General Agreement on Tariffs and Trade requires WTO members to extend MFN treatment to like products of other WTO members. It's literally the the first article of the treaty agreement. [0]
You are confusing unrelated things. As used here, "MFN" refers to a common type of term found in standard business contracts that have nothing to do with the WTO or the government. This discussion is about Amazon's use of MFN terms when contracting with ordinary domestic businesses.
Nothing I wrote suggests your interpretation. The US government uses MFN terms in domestic vendor contracts in the same way Amazon does. This was plainly obvious in context, since the term was introduced in relation to Amazon. It has nothing to do with international trade and nothing I wrote implied that, "MFN" is a standard term if art in ordinary vendor contracts.
You are the only person that introduced the notion that this had anything to do with the WTO, international treaties, etc.
> the practice of having very high prices that are steeply discounted for most customers is often an artifact of having the US government as one of your customers
That's one of the main cases of sticker shock in the healthcare industrial complex. Price a cancer treatment that would still be profitable at $10k/month at $125k/mo and offer sweetheart discounts to insurance companies (and treat self-pay patients as charity case writeoffs).
Common law is basically whataboutism. Whataboutism isn't inherently bad, it's not always a deflection. It is reasonable to expect similar treatment for similar actions.
If anything, reciprocity is one of the very foundations of society and of our justice system. You can't really discuss a lawsuits without talking about precedent, it's inherent to the discussion
(In a way it's amazing how shouting whataboutism is now more often used to deflect or excuse double standards and unfairness than whatboutism itself.)
It isn't "whataboutism". If the government's position is that MFN terms for vendors are fundamentally anti-competitive and bad for consumers, which I agree with, then it raises questions about any organization or sector of the economy that widely requires MFN terms. It discredits the FTC when the US government routinely engages in the same market malpractice that they are accusing Amazon of but are disinterested in changing their own contracting behavior. It doesn't become less bad because it is the government doing it to vendors instead of Amazon.
This "rules for thee but not for me" behavior is why trust in government institutions has been eroding. It is difficult to give good and necessary actions the aura of legitimacy required for democratic institutions to function when the hypocrisy is obvious.
This sort of practice is not as uncommon as one might assume.
It is extremely common for manufacturers to set a minimum advertised price (MAP) on the products they sell to retailers. This is done to keep the cost of, say, luxury goods above a certain value, or to ensure that even if demand falls off for a product, the product is sold from official channels at a price point that covers the raw-materials-plus-labor cost so the manufacturer isn't fundamentally selling at a loss. These agreements are generally enforced by both contract and tit-for-tat... Sometimes there are contractually-encoded penalties for going under-MAP, but sometimes the agreement is more "off the books..." If Amazon decides those Gucci purses are just taking up warehouse space and slashes their price to clear them, they can do that... If they don't want to have any Gucci purses to sell next year through official channels.
Why is this behavior legal for manufacturers but maybe not for Amazon? I can see no other reason than the law is path-dependent and arbitrary. "Fair trade" is a concept we invent as we go.
(Incidentally... As a consumer, it's useful to remember MAP exists when you hear whispers of "don't buy from unauthorized resellers." Sometimes the goods you get from those channels are shady, but sometimes they're exactly the same as the official-goods channels, shoveled into the back channel by an official retailer to clear warehouse space and reported to the manufacturer as 'damaged, lost' to preserve the MAP kayfabe).
> Why is this behavior legal for manufacturers but maybe not for Amazon? I can see no other reason than the law is path-dependent and arbitrary.
Market share => market power => different regulations.
(Of course, I would personally prefer to ban this behavior across the board; I just wanted to also point out that treating Amazon differently could plausibly be reasonable)
Those arrows also flow in reverse just as well. Whatever arbitrary decisions are made will advantage some other entity which may or may not currently exist.
Different regulations => market power => market share.
DC AG Karl Racine filed a lawsuit over this in May 2021. The judge threw it out, supposedly for lack of evidence that it actually raised prices: https://www.jurist.org/news/2022/03/dc-trial-court-dismisses... I can't find details; it's unclear what the evidence or lack thereof was.
I know that sometimes these lawsuits can take awhile but scheduling something 3 years away seems excessive. It feels like discovery can take months, but years feels like a very long time here especially since this is something that is actively still ongoing and damaging to the victims
I'm curious... how far does Amazon's MFN policy extend?
For example, let's say I independently decide to import an item from company X and sell it only on a Shopify site for a lower price than company X's items listed on Amazon. Will Amazon exert pressure on company X to stop shipments to me or impose a minimum sale price policy simply because company X's products are available elsewhere cheaper than on Amazon?
This is explained in the OP article linked here...
Although I guess not everyone actually reads the articles so reiterating in the comments is useful.
> Still, why can’t a third-party seller offer a lower price outside of Amazon? Good question! That’s where the scheme gets very clever. Originally, Amazon imposed contracts, as the FTC noted, “barring all sellers from offering their goods for lower prices anywhere else.” But Europeans, and Senator Richard Blumenthal, complained about these price parity agreements, so Amazon dropped its explicit contractual requirements in 2019.
> However, this change was a farce. The firm simply did through code what it couldn’t do through contract. "Amazon,” claims the FTC, “has implemented an algorithm for the express purpose of deterring other online stores from offering lower prices.
> Today, Amazon tells sellers that if it detects a lower price for their products on any other online store, they will be punished, which is to say, their ability to get their products onto a place on the Amazon website where customers click will go away. The net effect, as Amazon itself wrote, is that "prices will go up."
Yes, which is why searching "most favored nation clause" turns up legal advice on how to set that up in a good way.
Note, there is still a valid question on whether or not companies with enough exposure should be held to higher standards. Consider, we hold pro players to tighter requirements than we do local leagues. They both have basically the same rules, of course, but not fully identical. And enforcement is, of course, largely at the discretion of the agencies enforcing them.
The last is obnoxious, if you view the entire field as a homogeneous thing. And I do get the impression that there is something more going on in this case. That said, it is not abnormal to rank ROI on what gets enforced. I wish it was framed directly in those terms, though.
The US is strong on the doctrine that the law applies equally to people (legal entities) regardless of size / market cap. I don't think we'll ever see something like the EU's law that targets only large internet companies. It might even not fly on equal protection grounds.
I think that in either Finland or Iceland people receive traffic fines that are a percentage of their income. They would never fly in the US.
That is why I didn't say it applies differently. I said it is enforced on a ranking that is based on ROI. And... it really has to be.
There are almost certainly low key levels of bad practices in small shops. But it would cost more and take more out of the economy to enforce them than it is to just not care.
Now, that bar is rising, of course. Things that used to not matter years ago are easily enforced today.
So your view is that we should enforce extremely strict laws arbitrarily and capriciously based on however the particular regulator or prosecutor feels about a given entity?
If you've ever been on the interstate system, then you are basically with me. Literally it would be trivial in today's world to have a hookup on your car to check your speed against the local signage on a somewhat real time basis. Sounds absurd, but there is a pretty good chance every long haul truck you see out there is doing exactly that.
Similarly, mens rea is a thing. Such that statutory enforcement of rules is often a regressive policy that isn't necessarily a good idea.
I think most people who have driven on the interstate are quite aware that police arbitrarily pull people over for many things given the vast number of laws that are continuously broken by all drivers. I do not think a regime where you’re always breaking a law and can be pulled over just for driving while black is a good example when advocating for prosecutorial discretion. I’d prefer a system that doesn’t result in being subject to a regulatory action or prosecution because I was doing business while black.
Ah, agreed. And if you take the worst possible interpretation of my post I can see how you get there.
My point was that many rules get enforced on a cost benefit based system. Especially in business where enforcement is necessarily an expensive undertaking. Ideally, part of enforcement will include evolution of the rules so that people don't grow into a situation where what they are doing is suddenly illegal. That said, many of the rules we are looking at here are more along the lines of "you left interstate driving and are now in a city." That is, the landscape and situation pretty much has to factor into the rules. Is why you would be an asshole for worrying about the kid's lemonade stand down the corner. Any grandstanding on how the rules apply universally is... well, just not useful.
My interpretation isn’t the worst possible interpretation, it’s the realistic interpretation based on how permitting discretionary application of the law actually works in practice. Your view is fine in theory but fails (and not just fails theoretically - it has failed and continues to fail actually) in practice. Advocating for your theoretical ideal when we know it fails in practice is… well, just not useful.
I'm largely acknowledging that that is where we are. And not too concerned about that for many rules. But, and I said so in the initial post, expect that more and more will get enforced both as you get bigger, and as we get better at enforcing them.
That is to say, I also expect clarification and evolution of the rules during this enforcement action. Such that I would be most happy to have some of these arrangement flat out illegal. That said, https://www.ftc.gov/advice-guidance/competition-guidance/gui... was linked on Matt Levine's email today. And... "Our company monitors competitors' ads, and we sometimes offer to match special discounts or sales incentives for consumers. Is this a problem?" is answered with a no. Such that, this is a tough field to litigate right now.
And, what is it you are advocating for? That we only have rules that we can universally enforce? That would require that we know all of the ways that they can be broken from the beginning, so that we can encode those in law.
Isn’t this very common among all resellers? For example if you own a hotel and want other websites to sell your availability they will only list you if you don’t list the same availability for less money. They do this in part because people use the service to search for hotels and even they find one they want they go to other places to see if it’s cheaper.
This is an antitrust lawsuit filed by the FTC, not an accusation of specifically illegal conduct.
They're not saying amazon committed a crime by doing this, they're saying that it's evidence of amazon abusing their market position to create a monopoly. "most favoured nation" status is legal, creating a monopoly isn't.
You have that backwards. Monopolies are perfectly legal, it is only establishing and maintaining monopolies by improper conduct (ie specific anti-competitive practices) that is illegal. MFNs are not per se anticompetitive, but by the rule of reason they might be under certain circumstances. The FTC would have to prove that this is one such instance where MFNs are illegal conduct.
I suppose if ABC LLC makes the devices, and someone sets up ABD LLC to sell them on Amazon and ABE LLC to sell them on Target.com, ABE LLC and ABC LLC aren't bound to ABD LLC's "most favored nation" agreement.
Shell companies are for more than just tax evasion!
> A new filing in California's suit against Amazon reveals that sellers live "in constant fear" of retaliation from Amazon if they allow their goods to be sold more cheaply elsewhere.
Tangential, but out of context quotes used in your sentence makes me think you're lying no matter what you're saying. Or else you would have kept it in context and used the whole quote.
Not to defend Amazon in the slightest. Just tired of seeing Breitbert quality clickbait OOC quotes everywhere.
> That means that sellers can't offer their goods more cheaply than they do on Amazon – even if it costs them (lots) less to sell in Target or direct from their websites.
Is there a way to get around this by having the list price higher than Amazon but run specials for most weeks of the year that undercut Amazon? Could that only be a viable strategy if Target is the final merchant but not on the manufacturer's website?
I don't see the problem with this. They don't have to sell on Amazon to begin with. Amazon obviously wants their customers to have the best price available. Sellers can just go off Amazon if they don't like it. If sellers end up raising the price on other platforms as a result of this rule, then that says more about them than Amazon.
Demanding the lowest price does not harm consumers. Overstock, Wayfair, Walmart and others do the same thing. The result is the lowest price for a given product on all sites. This is unquestionably good for consumers.
If the price is higher then the fault is simply that of the seller for raising it. All e-commerce sites want the lowest price for their customers. Of course, people don't see nuance and just see BigCompany bad.
I'll take the charitable interpretation and assume you just don't understand the mechanics of the policy.
Amazon is saying that sellers cannot offer a fair low price to customers on other platforms if the seller can't also offer it on Amazon. This is 1) anticompetitive, 2) anticonsumer, and 3) insane.
Consider this test:
- Seller buys a crappy LED bulb from China for $0.80
- Seller is happy to list the bulb on Walmart, Target, etc, for $2.00. Net of fees and shipping and stuff they make enough money
- Amazon charges $3 in fees. Obviously the seller can't afford to sell for $2 on Amazon. They sell for $5 instead.
- However, now the seller also can't sell for $2 on competing sites. Amazon, leveraging its market share, has dictated that the seller must price Amazon's fees into pricing on non-Amazon sites, so consumers pay $5 to Target for something the seller would have been happy getting $2 for.
Let's use your example. The sellers should stop selling that item on Amazon, and sell their light bulb on Walmart, or where-ever. Customers who really need that will go find it at Walmart, or where-ever. This strengthens the competitors to Amazon, which is bad for Amazon and good for the consumer. The consumer also find the lower price that they wanted. Alternatively, they buy the alternate product on Amazon which would be cheaper than the inflated price (per your example). Again, good for the customer. Everyone wins in every scenario except for the seller, which is how Amazon
and every wholesaler operates.
Suppose the FTC wins this case and sellers can put whatever price on whatever site. Amazon, like any store wants the lowest price. Not to mention there are only some many items you can show on the first page of results. They will find some other reason to remove these sellers and/or their items.
Now maybe there's another case to stop that behavior too. The result is that companies are not obligated to let sellers on their site. That is insane.
In summary, there will never be a scenario where Amazon allows sellers to sell the exact same item for more than Amazon's competitors, unless the government forces Amazon to let sellers sell whatever on their site.
> Customers who really need that will go find it at Walmart, or where-ever.
So here's a weird externality. As a decently well off tech-worker, I don't care if I'm paying 5$ or 2$ for lightbulbs, even if I'm re-lighting my whole house. The seller will sell on Amazon, because it is the largest market and will set their prices on other markets to match Amazon. I'll buy on Amazon, because it isn't worth my time to check multiple websites to get the best price (especially when SKUs differ and I have multiple other items I'm buying, etc). And now people who do need to save money, can't also find this lightbulb at a cheaper price on competing marketplaces, even if this lightbulb is actually the best quality.
> And now people who do need to save money, can't also find this lightbulb at a cheaper price on competing marketplaces, even if this lightbulb is actually the best quality
It's the opposite of what you're saying. Sellers not selling particular items on Amazon is good for consumers who are price conscious, because if they need that particular item they will search for it and find it cheaper on another store, strengthening that one and hurting Amazon.
And if they don't care they will find cheaper items on Amazon. Everyone wins except for the seller, which is Amazon's MO.
> It's the opposite of what you're saying. Sellers not selling particular items on Amazon is good for consumers who are price conscious,
Sellers don't just 'not sell this item on Amazon', because it is the largest single market. This is like, the whole issue in question.
> because if they need that particular item they will search for it and find it cheaper on another store, strengthening that one and hurting Amazon.
This is the exact thing that isn't happening, because Amazon is abusing its market position.
But, even if this was the case and the seller chose to sell on a different marketplace and take the Amazon ban, then it still wouldn't be as good as having just having the item listed on both marketplaces at two different prices. Because then I wouldn't be able to buy the best lightbulbs in one convenient location.
You’re just wrong, Amazon controls around 35% of all US e-commerce. Not being able to sell on Amazon instantly removes most of your available customers. The second largest is Walmart and it’s closer to 7%. Walmart, target, whatever, don’t add up to Amazons market.
> Amazon controls around 35% of all US e-commerce. Not being able to sell on Amazon instantly removes most of your available customers
Math doesn't check out. Not to mention that if sellers stopped selling on Amazon they wouldn't control so much. How exactly is making everyone sell on Amazon going to solve anythin?
Sellers should stop using Amazon if they don't like their policies, and the issues will correct themselves.
And even if they price the same on Walmart as they would on Amazon: ($5 selling price - $0 fees - 0.80 COGS) * (100k * 7%) = $29,400
See the issue? The problem is that one seller on Amazon moving to another platform won't change the fact that Amazon has the majority market share. That's how market momentum works and it's why we have antitrust laws.
Even with exorbitant fees, they are still where sellers need to be. And they are using this market share to force sellers into overpricing on other platforms so that they maintain this unfair position.
If a seller raises prices to match Amazon, they can be undercut elsewhere by those willing to forgo Amazon for the larger overall market share.
Amazon is convenient to small sellers in that they offer more customers on a single site than any other, and with limited bandwidth sellers logically want to minimize how many different sites they need to interact with, but charging for convenience is not inherently anticompetitive behavior. Amazon may have abused it's position in the particulars of its MFN implementation, but MFNs in general are fine.
There are two reasons why that 65% number is wildly unrealistic:
1. We're ignoring fixed costs associated with onboarding with an ecommerce platform. Selling on one website has significantly lower fixed costs than it is to sell on every ecommerce site on the internet minus one. We're talking thousands upon thousands of retailers, not a handful. If what you were thinking is that they could sell across the next 5 to 10 most popular ecommerce marketplaces, you're somewhere between 15% and 20% marketshare.
2. Not all ecommerce sites represented in that 65% permit third party sellers. You can't just sign up and sell your stuff. You may have to convince their buyers to stock your product. This is not easy or cheap.
> Not to mention that if sellers stopped selling on Amazon they wouldn't control so much.
This is a problem in terms of organisation. If lots of people stop selling on Amazon this would be true. The problem is individually each seller is motivated to deal with Amazon so long as lots of other sellers are. A mass exodus from Amazon would in short order make the Amazon store far less relevant, but nobody wants to leave before everyone else is doing it because until then it costs them
Or, hear me out here, The Federal Trade Commission orders a study done and the study corroborates the general sentiment here that Amazon is abusing their power in the marketplace. So, the FTC then sues Amazon.
Your 'feelings' about how this works only matters to you. The US branch of oversight for trade has declared (with a lawsuit) that this behavior is unconscionable and either is or will be illegal by the time this suit is finished.
You're welcome to dispute the FTC and the crowd here on HN, but you need to provide some sort of data to back up your claim of: Sellers should just stop using Amazon...the issues will correct themselves.
The FTC's suit alleges the exact opposite of what you allege. The FTC states that there is harm to the entire economy if Amazon is allowed to continue this practice.
Please cite the studies, data, or metrics you used to claim '...will correct themselves."
And if lots of items became available on other sites, but not Amazon (as per the theory being propounded), then Amazon would no longer control 35% of all US e-commerce.
This is a classic coordination problem: you need all the sellers to leave together so that individual merchants don't take a loss. And coordination problems like this are one of the main areas government action can help!
Also, I'd imagine that coordination would probably leave them vulnerable to their own set of anticompetitive allegations (i.e., some variant of cartel behavior/price-fixing). To the extent anyone acts, it would probably have to be government.
There are companies that do not sell on Amazon. I seek them out. They will tell you that if their product appears on Amazon, it's counterfeit.
It's probably an impossiblity if your business model is selling cheap imported Chinese garbage at a profit, but that's the businesess you chose. Others have chosen to sell quality items on their own terms. Those are the businesses I want to reward.
A company makes a product - it costs $10 per unit to make. To list and sell with Amazon, they are charged $12 per unit. To make a profit the company adds and additional $1 per unit. They sell the product on Amazon for $23 per unit.
Online retailer Foo also has a store, and provide the same services that Amazon for their online shop at $5 per unit. The online retailer adds a profit of $2 per unit. Total price $17 per unit. Retailer Foo is more $ efficient for those services as a result customers price compare. Foo is rewarded for their effi with higher volume, manufacturer is rewarded with higher profit and consumer is rewarded with lower prices. Enforcing market competition led to all 3 parties involved being rewarded. Retailer Foo over time grows a larger customer base as people learn to price compare with them and forces Amazon to stop rent seeking.
But the above doesn't happen in the real world. Amazon enforces that the retailer lower their price on Amazon to $17, while still collecting $12 per unit. The company now can sell on foo, but only by selling on Amazon at a loss. They can't afford that amount of loss from Amazon and stay in business. So Amazon avoids competition. They can't pull their product from Amazon because not enough customers vist Foo retailer yet to make up the volume.
So in the end Foo retailer is more dollar efficient, but is prevented from growing and benefiting the marketplace. Amazon leverages its outside market size to avoid competition. Market participants preventing competition is against the benefits of capitalism and harms the consumer. So, it benefits the consumer to ensure Amazon has to actually compete with the more efficient competitor and stop rent selling behavior.
> They will find some other reason to remove these sellers.
I think this speaks to the nut of the problem. Unless there is an incentive upstream of the misalignment of parties, then any number of lawsuits after the fact will have a "war on drugs" level of futility.
What to do then? In an alternative universe perhaps the FTC was implemented to improve trade by promoting standards, ontologies and authenticity verification that lead to greater freedom of trade and less gatekeeping.
It is none of Amazons business what prices they put when they list their wares on other services, the only reason they care is that they want to crush the competition.
Dictating how retailers can interact with your competitors is anti-competitive. Dictating what prices they can offer when they put up listings is a part of that, it is anti-competitive.
It's exactly their business. Amazon is going to use the limited "shelf space" to promote and highlight those products which are most likely to sell (and to generate best margins). If a product is for sale for less elsewhere, it's less likely to do so, so why should Amazon waste the "shelf space"?
This is no different than what non-e-commerce stores (such as Walmart) have been doing for years.
Amazon doesn’t need to promote every single item they sell and it would be meaningless for them to do so. They have a long tail of items which rarely sell and only show up on very specific queries disproving any kind of limited shelf space argument.
As a simple practical manner a small manufacturer can more cheaply sell products at their factory than the overhead of selling through Amazon or anywhere else. You often see this where mid sized brewery offers beer kegs more cheaply on location.
Amazon’s policy simply increases prices without any benefit to consumers or the overall economy.
Overstock & Wayfair scan + compare identical & similar listings at Amazon and other sites, and will message sellers if their price is not the better price.
It's annoyingly a pretty standard practice. And they will see through the "different SKU" trick simply by comparing the product images.
I think that's a good solution in this case (ban it for everyone), but remember that there are different rules for companies who are found to have monopolies in a specific market. Something a monopolist does could be illegal while being completely legal for their competitors (who don't have a monopoly).
To be fair, every single wholesaler operates this way.
I have personalky spoken to wholesalers who sell widgets X (lighters etc) to retail stores.
If the retail stores undercut everyone else and drop the price below MSRP, they will exclude them in the future. There is centralized price control even though the retailers are free to do what they want.
That is done by auto dealers and anyone else who does MSRP. The difference is that they are still competing in that product category. Amazon on the other hand is a platform that stands BEHIND them. This leads to an emergent price cartel, just like in the propu lica piece on NYC real estate:
You can repeat that comment here as many times as you want but it will not make it a valid one. Amazon is practically a monopoly, and they have reached that position by often selling goods below COG prices, incurring losses but outliving the competition. Now without a competitive marketplace for quite a lot of stuff they can dictate the prices at a loss for everyone except them.
If somebody was to challenge them with lower prices they can just repeat the cycle. They simply do not have proper competition for a lot of stuff and they are abusing it.
Amazon isn't a monopoly by any definition. There are plenty of places to buy things. Repeating it over and over again won't change reality. Feel free to bookmark this and come back to it 10 years from now. Amazon won't be broken up, either.
Customers are so lazy they want the government do everything for them. If you don't like Amazon, close the tab and go to eBay.com or Walmart.com. It's very easy, and can be done in seconds. This isn't like telecom monopolies where you can't actually switch.
I will say that I used to buy stuff from AMZN all the time and now I hardly ever do.
For me the last straw was when Amazon Prime deliveries stopped arriving in two days despite being claimed to arrive in two. It made a difference because in two days it could be a hassle to drive to the store but in five days I can easily find the time.
Not long after that, Prime service became officially five days at my location while Amazon was shouting to the rooftops that other people were getting one day. Around this time it seemed every other retailer was trying to impress me with fulfillment and often shipping is free if you buy $200 of camera equipment or $80 worth of games, even when it isn't it isn't very expensive but it is always faster than AMZN, I even get Ebay packages from Japan faster than AMZN gets me packages from the next state.
There was also the rising problem that the quality of the listings was going down on AMZN; I'm not so concerned that the $24 product is crowding out the $17 product but rather that there are so many junk products that crowd out good products. On top of that there are many product listings that make no sense at all and it all adds up to a stressful process of sifting through a lot of junk and then not knowing if some absolute garbage is going to show up at my door.
So I went from buying something on AMZN probably several times a week to now less than once a month... I canceled my Prime subscription because I couldn't have any self respect if I was paying a subscription for something that was worse than average as opposed to better than average. And boy is it annoying to shop on AMZN now. The only thing you have to click more times than to cancel AMZN Prime is to order something from AMZN without signing up for a free trial of Prime.
For b2c monopolies matters, for b2b it is enough to be a dominant player to engage on a lot of harmful anti-competitive practices. This is a b2b situation that harms consumers, in that situation it doesn't matter that there are competitors, what matters is how much power Amazon has over vendors.
I disagree. Demanding the lowest price does not harm consumers. Overstock, Wayfair, Walmart and others do the same thing. The result is the lowest price for a given product on all sites. This is unquestionably good for consumers.
This is very short sighted. Lower prices inevitably come at a cost to quality. Normally this is corrected for in physical stores (you can see if something looks cheap), but it's not so easy with online shops. So yea, everything's cheap now because Amazon/Walmart/Temu and the like drove prices into the ground, but it's also all garbage. And the quality alternatives? Mostly gone because consumers flocked to cheap products.
> Most disagrees with you here, including those who makes the laws and the courts.
Downvotes don't mean anything. Most of the folks on here have no idea how e-commerce works. Amazon will win. It's simple to see - them losing would imply they are obligated to feature higher prices, which is clearly worse for customers and inherently at odds with what the FTC is supposedly trying to accomplish.
To be clear, you disagree because you fundamentally don't understand what's going on. I'll explain it to you.
A company makes a product - it costs $10 per unit to make. To list and sell with Amazon, they are charged $12 per unit. To make a profit the company adds and additional $1 per unit. They sell the product on Amazon for $23 per unit.
Online retailer Foo also has a store, and provide the same services that Amazon for their online shop at $5 per unit. The online retailer adds a profit of $2 per unit. Total price $17 per unit. Retailer Foo is more $ efficient for those services as a result customers price compare. Foo is rewarded for their effi with higher volume, manufacturer is rewarded with higher profit and consumer is rewarded with lower prices. Enforcing market competition led to all 3 parties involved being rewarded. Retailer Foo over time grows a larger customer base as people learn to price compare with them and forces Amazon to stop rent seeking.
But the above doesn't happen in the real world. Amazon enforces that the retailer lower their price on Amazon to $17, while still collecting $12 per unit. The company now can sell on foo, but only by selling on Amazon at a loss. They can't afford that amount of loss from Amazon and stay in business. So Amazon avoids competition. They can't pull their product from Amazon because not enough customers vist Foo retailer yet to make up the volume.
So in the end Foo retailer is more dollar efficient, but is prevented from growing and benefiting the marketplace. Amazon leverages its outside market size to avoid competition. Market participants preventing competition is against the benefits of capitalism and harms the consumer. So, it benefits the consumer to ensure Amazon has to actually compete with the more efficient competitor and stop rent selling behavior.
I do understand, but what you're describing is bad for Amazon's customers, as you note yourself.
Furthermore, again, no one is obligated to sell with Amazon. There are thousands, if not tens of thousands of sellers who do not sell their stuff on Amazon. It's not some requirement to do business in the 21st century.
In any case, we can come back to this case a year from now, and we can pretend to be shocked when nothing meaningful happens to Amazon.
I think you're looking at the short term and small scale instead of the long term and large / societal scale.
Yes I'm the short term Amazon's customers don't get the discount they could get om Foo retail. Bit then they become Foo retailer customers and they benefit. Too many things optimize for the small scale.
Similarly Amazon's upon losing customers to Foo retailer has to become more efficient overall (or reduce its rent seeking fee) to stop losing customers. So now all of Amazon's customers for that product benefit, even those that didn't move. And potentially even those customers for other Amazon products.
This is the purpose of capitalism - marker competition. Nobody wins with laisse-fair capitalism except rent seekers. Society benefits from market competition in capitalism and this is pushing for it.
You must be aware that producers can sell their own product and not be dependent on neither Amazon, nor any other middle man.
If I make light bulbs and sell them to customers through my own channels – exactly who is the rent seeker?
In my industry there are actors that are as dominant as Amazon are in retail, but there's also a huge part of the industry who just sell directly to the customer. It's your own choice. If you don't accept Amazon's terms, you don't have to do business with them. And vice versa.
That's a nasty way of arguing against his or her point. And "most" in this comment thread seem to have no idea of how sales and economics work. But go ahead, make a government Amazon like everybody is suggesting here. It's not like it's been done before? Government controlled production and distribution of goods, seems like a fresh new idea...
https://www.law.cornell.edu/wex/monopoly "For instance, the term monopoly may be referring to instances where: [...] There are many buyers or sellers, but one actor has enough market share to dictate prices (near monopolies)"
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I'm not replying to anything you might reply with because the rest of your comments in this thread have clearly been in bad faith. But this was one of the few smoking gun comments betraying either a biased position you hold or your lack of background on the topic, so it was easy enough to just post a link to an authoritative source + definition and just move on.
No, it's an extremely valid point. Government antitrust policy has been heavily shaped by Robert Bork's "The Antitrust Paradox" which proposes that antitrust law should only focus on consumer welfare rather than market structure or number of competitors.
It's not pro-consumer in any way. If the seller can profitably list it for a given price on a given platform, competition will almost certainly drive their price down to that level. The only time a policy like this becomes significant is if another platform, or the sellers own platform, can offer the product for cheaper than Amazon (eg. maybe they can ship straight from the factory), in which case this policy would force them to raise their prices, while simultaneously removing potential competitive pressure on Amazon.
Your assumption here is that they have to sell on Amazon to begin with, which they do not. There are plenty of products that you cannot buy on Amazon, so your entire post is ridiculous as it shows again, you don't need Amazon to succeed to begin with.
You are a seller. Amazon makes up 40% of your sales. You have your own first party website where you can profitably offer your product for 5% less and still make an additional 10% profit but it only makes up 5% of your sales currently.
What's your move in this position?
You can't just imagine all companies as perfect frictionless spherical interchangeable cows. In reality companies as large as Amazon can have significant market distorting effect, while much smaller companies might have to choose between their principles and going out of business.
What about taking out an ad to let people know where to buy your cheaper item? People didn't know walmart.com existed until a tv ad told them. Doesn't seem unreasonable to take some of the saving from not selling on Amazon and use it for services the platform was providing (discoverability).
You can lower the product for 5% on both your site and on Amazon. Since Amazon makes up the plurality of your sales you gain more sales both there and on your site. Everyone wins except for you, and such is the life of race-to-the-bottom e-commerce sales.
What I'm describing is already what happens, by the way. Look at Anker for an example.
Which is why your scenario here wont happen. Thanks for clarifying so well why your argument "there is no consumer harm" is bullshit, what you said here means you know that what Amazon does here increases prices.
The consumer is Amazon’s end customer, not the seller. Amazon sellers can and do take a loss to sell on Amazon, and ultimately the seller's fate is of no concern to Amazon. Again, they don't have to sell on Amazon to begin with. I buy plenty of bike parts, for example directly on their site and they're not even offered to Amazon to begin with.
How is Amazon forcing them to raise prices on other platforms pro consumer? The only one who benefits from this arrangement is Amazon, everyone else including the consumer just loses out.
Amazon is not forcing them to raise prices on other platforms? Amazon is telling their sellers that they must offer the best price on their platform. That does not necessarily mean they have to raise prices on other platforms.
> That does not necessarily mean they have to raise prices on other platforms.
It does, since losing sales on Amazon costs them more than raising the price on other platforms then that is what they will do, since companies are motivated by profit. Amazon knows this, that as a dominant market player if they add this rules the vendors will have to abide it since they will lose more from not using Amazon.
This is how anti-competitive practices works and why we have laws against them.
What you're saying doesn't make any sense. They could also just lower prices on other platforms - good for the customer. They can and should continue to lower prices, also good for the customer, until it is no longer profitable for them.
If they decide to raise prices, then that has more to do with the seller than Amazon.
If another ecommerce platform wants to compete on price to encourage customers to shop there, they cannot. Any discounts will only go to the seller's bottomline. How is that helping customers?
Clearly you are not a believer in free markets, because by the theory of free markets these prices would naturally arrive at the lowest possible price all on their own.
You are right that this policy is very simple, it's very clear both mathematically and logically. Companies cannot lower their prices lower than their costs. If costs are variable across platforms but prices are fixed to a single value than this will de-facto result in INCREASED prices. If this policy causes someone to leave a platform, that STILL doesn't result in prices any lower than they would absent the rule.
In fact, the sheer existence of the rule is a clear statement from Amazon that they believe they have significant and durable market pricing power, since if they didn't, this policy would clearly lead to sellers and buyers leaving their platform.
What you are advocating for here is the opposite of a free market. Two independent parties contracting with each other and agreeing to a most favored nation clause without government intervention is a free market: either party may choose to leave the relationship. The government stepping in restrict parties’ ability to contract as they see fit is a restraint on the market.
In a free market sellers will leave the Amazon ecosystem and move to a platform with less restrictive agreements, resulting in lower consumer prices (albeit with less availability). That’s exactly what GP is arguing. Obviously GP believes in a free market.
Amazon’s belief in their own market power is irrelevant.
Yes, because there are not literally thousands of e-commerce stores out there. Amazon is the only one. UPS, USPS and FedEx don't exist either. You must use Prime to transport your stuff.
Look, with this reasoning there is literally no world in which Amazon can be implicated for monopoly abuse of power. Apparently, having any other option (even if it is damaged by monopoly abuse) is good enough for you.
Clearly the FTC disagrees with your logic, and I'm glad they do. FedEx, UPS and USPS should be sued too if they did what Amazon is doing.
> It is none of Amazons business what prices they put when they list their wares on other services…
It is literally Amazon’s business to offer pricing at equal to or better than their competitors.
> …the only reason they care is that they want to crush the competition.
Every company wants to beat their competition, and many (most?) want to “crush” their competition. Don’t you think Target wants to crush Amazon? Don’t you think Google wants to crush Apple in smartphone sales? Don’t you think a local retailer would love to crush Amazon for products in their niche?
The only question here is whether Amazon is doing this in an abusive way and/or a way that negatively impacts consumers.
From what I understand, it’s not that simple. Sellers need the sheer volume of Amazon to compete. There is also the risk of Amazon duplicating their product and continuing to sell it on their platform… or their competitors filling the void.
If your product doesn’t have any value that can be protected by copyright, patent and you haven’t built any type of affinity with customers, isn’t it by definition just another commoditized product?
Well, here's a real example. About a decade ago there was a simple video conferencing system called Nautilus. A simple LCD screen that let you call other people with the device and talk to them, not having to bother with computers or smartphones. The sort of thing that is good for talking with elderly relatives who may not be very computer or phone savvy. I bought one (from Amazon) for myself and my elderly parents. It worked well, but a few years later Amazon came out with their Echo Show products which are basically the same thing, which killed the Nautilus. I'm sure it was covered by patents and what not, but you can't protect the idea. Amazon obviously saw that it sold reasonably well and used its power as both a marketplace and a technology company to undercut their own seller.
Really? That’s your example? Everyone and their mother has a video conferencing solution and the idea has been around as something to aspire to since the 60s with the Jetsons .
Do you agree with the look and feel lawsuit that Apple had against MS? Or think that Roku, Amazon, Google , etc did something untoward because they came after Apple with set top boxes?
> thousands of pages of internal Amazon documents examined by Reuters – including emails, strategy papers and business plans – show the company ran a systematic campaign of creating knockoffs and manipulating search results to boost its own product lines in India, one of the company's largest growth markets.
Again have you heard of the Kirkland’s brand? Have you been to a CVS and seen the knockoffs? Literally every single major retailer has house brands that compete with third parties.
Your response shows that you did no read the article. They specifically show cases where Amazon copied sizes:
> Among the victims of the strategy: a popular shirt brand in India, John Miller, which is owned by a company whose chief executive is Kishore Biyani, known as the country's "retail king." Amazon decided to "follow the measurements of" John Miller shirts down to the neck circumference and sleeve length, the document states.
It’s not whataboutism at all. Only people that don’t know that housebrands have been a thing forever would think that the evil Amazon is doing something unique.
And CVS follows the formula of name brand OTC drugs down to the very ingrediant to make house brands. You can’t copyright a shirt measurement.
And before you call me an “Amazon shill”. I got PIPed from Amazon less than two months ago. I’m the last person who has any love for Amazon. Honestly I don’t have any feeling either way. It was just my 8th job over 25 years, they gave me a nice check and I had a comparable offer within two weeks.
The major difference here is that Amazon has major market power as an online mall.
Like with the sears example, large 'mall' like organizations do outright steal designs and stonewall the original copyright holder.
A random housebrand does not have access to Amazon's statistics, logistics or reach. Amazon is looking at stats that they hide from their providers, to choose who to copy, then out-price the original seller. (Due to inhouse logistics)
And CVS doesn’t have major power when it comes to selling drugs and knowing which ones it should knock off with home brands? Every single store knows what to knock off based on what it sells.
And Walmart sells a lot more than Amazon.
You don’t think that every store knows how to undercut other products in its own store with house brands?
Well, for historical accuracy, Roku was first in regard to streaming devices you hooked up to your TV. Apple and the rest copied them. And it is pretty much obvious that Microsoft copied Apple (and yes, you can argue that Apple in turn copied PARC). But what makes Amazon copying things different is that they are a marketplace for other people's products and a maker of products themselves. That has an intrinsic conflict of interest.
Yes, anyone here can go out and find an ODM from China to anufacturer them, send a custom version of AOSP to the ODM, slap their brand on it and sell it on Amazon.
So what? That's how e-commerce works. Why should Amazon be obligated to fill their store with higher priced items compared to their competitors? No one is going to visit a store where every item could be purchased cheaper somewhere else. This is exactly why price match is a thing, because they don't want their costumers soliciting different stores to begin with.
The move that Amazon's price be no higher than offered elsewhere is the most pro-consumer move possible. Hilarious people are complaining about it. Any second-order effects of this are on the actual seller, not Amazon.
I don't even know where to begin with this comment. Do you know what anticompetitive behavior is? Do you know how markets are supposed to work? Amazon is leveraging their position in the market to unfairly disadvantage their competitors, thereby distorting the market, decreasing its efficiency, and increasing end prices for consumers everywhere. Market-distorting behavior like this is why antitrust regulation is necessary to keep markets functioning efficiently.
Everything you're stating is false. Amazon is trying to do right by its customers, and they are not obligated to let sellers not give their customers the best price available. Sellers are not obligated to sell on Amazon.
Your conclusion that this increases end pries for consumers has nothing to do with Amazon, but the sellers themselves.
Amazon was already told not to do this for anti-trust reasons, and they promised to oblige. Unless the government, Amazon, and the general public are all incorrect about what constitutes monopolistic behavior, you are. The idea that Amazon is openly defying pro-consumer laws to do right by its customers is absurd.
The move that Amazon's price be no higher than offered elsewhere is the most pro-consumer move possible.
Yet here we are with sellers WANTING to sell their items at a lower price on places other than Amazon, but if they do, they'll go out of business. That doesn't sound pro-consumer.
I'm a consumer. I'd like to be able to buy items for the lowest price the seller wants to offer me. That's not happening in some cases because if they do, Amazon will exclude them and they'll go out of business. Yeah, definitely not pro-consumer. Pro-amazon, sure.
Would Amazon be obligated to list the items regardless? Otherwise just dropping pricing conditions would only help those sellers that Amazon has enough interest to list regardless - for some products the "equilibrium" might not be great.
They are not dictating how they sell elsewhere. They are saying they need to offer the best price on their site. It is easy to detect whether or not they actually are, and sellers are simply being called out.
There is no obligation to sell on Amazon, nor a requirement for them to raise prices on other platforms. They could simply offer the lowest price everywhere. The result? Lower prices for Amazon customers. If they raise the price, then that's the seller's fault, not Amazon.
While true, this ignores the important point that Amazon is only able to do this anti-competitive practice due to their market dominance that effectively forces many sellers to sell on Amazon.
> nor a requirement for them to raise prices on other platforms.
That is what this whole thing is about. Sellers that sell on Amazon aren't allowed to sell for lower prices on other platforms that are cheaper to sell on.
If Amazon was able to offer lower prices for its customers by offering sellers a marketplace with lower costs compared to competitors that would be great. Instead, they abuse their market dominance to prevent any competitors from offering lower prices by being more cost efficient for sellers. This is extremely nasty as it effectively prevents any competitors to Amazon from building a market share since consumers will have no price incentive to switch and sellers will not want to switch due to the smaller market share on those competitors' platforms.
It could not be more clear that this is anti-competitive behavior achieved through abuse of a dominate market position.
I'm not GP. I didn't make that argument. I agree that Amazon is not obliged to allow just anyone on their platform. Sellers must abide by the rules that Amazon sets in place. At the same time, Amazon must abide by the laws of the locations at which it wants to sell. So if a state says that they cannot force a seller to keep their lowest price on Amazon, then that's the way it is.
> So if a state says that they cannot force a seller to keep their lowest price on Amazon, then that's the way it is.
Yes, but at the end of the day Amazon to remove the seller for any reason, so even if the FTC succeeds here, Amazon will simply purge those sellers who are not offering the best price, even if not explicitly stated.
There is no reality where Amazon allows their site to be inundated with higher priced goods compared to competitors.
it would be sensible to require a reason for refusing to do business with someone. Normally it wouldn't be but if you are a repeat offender it seems a sensible requirement
certainly, you can write anything on the form. Any reason is not without? I do doubt you can refuse one foo for being fooish but not the other. Now multiply by 10 000 and pretend you are explaining it to the judge in a context where you've been convicted multiple times.
Amazon is a product search engine and should be treated as such. Vendors must have the freedom to set pricing on any platform as they see fit. If all product search engines and ecommerce platforms
behaved in this anticompetitive behaviour then what would we have? A weird commercial landscape that lacks flexibility… in the end the consumer looses because free market forces are not in play.
Amazon is not a product search engine, so the rest of your post is irrelevant. They are a store and describe themselves as such. You cannot find products on Amazon that are not for sale by them or sellers who agree to their rules, an actual product search engine would allow this.
Good luck with that! Amazon is the most powerful product search engine available. I love it and use it almost every day. Amazon will spend a lot of money trying to convince the feds they are otherwise… no amount of lobbying, PR pieces, paid ops and persistent commenting on boards like this one will stop valid questions being asked in hearings. It’s only a matter of time sorry.
So, to be clear, you have no problem with Amazon writing their own laws and collecting their own taxes? Because that is what they are effectively doing.
If sellers were obligated to sell on Amazon that would be the case, but it's not, is it? Ironically, people complaining about this are exacerbating the issue. If sellers who actually cared left Amazon it would loosen Amazon's dominance in e-commerce.
Sellers are in effect obligated to sell on Amazon, because the alternative is “go out of business”. That’s the whole goddamn point of FTC intervention.
I've often seen the complaint that developers think the law is purely strategic, like a computer, and if they can find a technicality then the law must follow through.
But that's not how this works.
It's technically true that fiber has competition if another ISP is offering dialup in the same area. No one in their right mind would agree that's actually a competitor in anything but name.
And so it is here.
If not selling on Amazon is an existential risk for your company, Amazon is effectively a monopoly, and THAT is what the law cares about.
They're obligated to by the grip Amazon already has on the e-commerce market. Letting Amazon make anti-competitive moves that increase their grip will only worsen the situation.
This grip you're describing only exists because they don't leave, and nothing is stopping them. Again, no one is forcing people to sell on Amazon. They could use Shopify or sell on eBay.
People act as if you have to sell on Amazon. You don't. That assumption and expectation is why Amazon is dominant to begin with. Sellers should leave if they don't like it, and that will naturally soften Amazon dominance.
Imminent collapse and bankruptcy when they leave due to Amazon's dominant market position. That you can set up a shop anywhere does not mean anything when all of your potential customers are only going to the Amazon digital strip mall.
Listen, maybe you've never heard about antitrust law, but using one's dominant market position to maintain dominance in the market to the injury of consumers is pretty much the exact definition of an antitrust violation in the US. So write your local congressman complaining that antitrust law is restricting your ability to lick Jeff Bezo's boots, or run away to the Rockies somewhere and start a radically laissez faire community where everyone's asking about John Galt, but as the law stands in this country, it's illegal, and that's a good thing.
What possible complaint could you have about government overreach that doesn't equally apply to corporations? Antitrust law is the only thing standing between us and a corpohellscape "America, an Alphabet Company".
Government has the power of the state to force their wills on people. Please tell me a scenario where an adtech company will gain the ability to take away my rights and property the way the government can?
The government has a “monopoly on the legal use of force”.
Look no further than Florida to see what an overzealous government can do when you disagree with them or the police that raided a newspaper office because they reported on police corruption.
I’m much more worried about when the police are behind me because “I don’t look like I belong” in my own neighborhood than the Google car mapping my street.
Companies can use anti-competitive behavior to curtail your rights in all sorts of ways. Look at America's storied history with company towns. Free speech doesn't get you very far when being blacklisted from the company store means you starve, or your company scrip that you've been being paid in is no longer accepted to keep you housed, or they pay the Pinkertons to beat you senseless for using the word "Union". The reason we don't have that anymore (well, except for that last one Amazon) is government regulation.
The government at least has the obligation to appear as if it's beholden to your will and rights. Corporations have no such qualms.
So please tell me a realistic scenario where Google goes from an adtech company to one that can take away my freedoms and shoot me with impunity?
Also please tell me a scenario where Amazon takes over all retail?
If you haven’t been paying attention, the justice system and political parties gerrymandering hasn’t even been trying to act like they are behaving fairly.
The governor of Florida has actively been punishing companies both big and small that have been speaking out against him.
There are numerous examples of private corporations or non-governmental actors engaging in violence, with or without state support or sanction. There are the 100 million souls lost, respectively, to the British East India Company's occupation and administration (as a private entity, with military powers) of India, of the transatlantic slave trade by numerous private commercial operators, and of the genocide against the indigenous populations of the Americas, again much by privately-chartered corporations (as the original British colonies were). There are extant mercenary forces such as Constellis (formerly Academi, formerly Xe, formerly Blackwater) in the US, or the Wagner Group presently transacting genocide in Ukraine. There are oil companies who have initiated coups, paramilitary actions, and assassinations throughout the world. There is the Pinkerton Agency, still extant, and with a storied role in violence against labour and civil rights movements. There are railroads, with their own (private) police forces, which are in fact registered as law enforcement despite being nongovernmental.
The truth is that there is no clean distinction between State and Private use of force, lethal or otherwise. What there is in government is, one hopes, legitimacy and accountability to the citizenry rather than to creditors and investors.
Every company has the right to set the terms and fees to use them. A “tax” is something you are mandated to pay. I get plenty of crap advertised to me on FB that you can’t find on Amazon.
Because Amazon is a retail company and the amount that Amazon charges is not much different than the cost overhead of getting any product through the channel.
Sure, if all you care about is money, then you can already go on Amazon and choose alternate vendors that are available at a lower price with slower shipping.
I happen to know exactly what I’m talking about - you right now can look for an item on Amazon and see “this product is available at a lower price with <slower shipping>”
You right now can set up a site on Shopify and sell your goods.
If you are selling a differentiate product instead of cheap crap imported (or drop shipped) from China, you can create demand without going through Amazon.
For instance, I was specifically looking for Samsonite zipper less luggage because I trusted that brand and it wasn’t available on Amazon. They chose not to sell on Amazon and I bought it directly
-- I happen to know exactly what I’m talking about - you right now can look for an item on Amazon and see “this product is available at a lower price with <slower shipping>”
Sure, on Amazon. Not other platforms.
I'm not going to bother explaining further, but thanks for confirming you don't understand the issue.
It's not my job to educate you.
You have to add Microsoft to this list unless you live in complete denial about the massive monopoly that they have in office IT. And they are actually the first that should be broken up, splitting the office suite from everything else.
Microsoft should be the first one to be split up. Their dominant position is more pervasive than any other market because the operating system people use in their computers is the gateway to get too these other services.
If Apple had >5% desktop market penetration, you’d have a point.
They should definitely open up iOS to installing apps outside the app store, but their position isn’t nearly as abusive as Microsoft’s. Even their 50-60% share of the mobile market is pretty competitive compared to Windows.
you can't use 99% of apple services on Android. no apple maps, no find my, no iMessage, no apple calendar, no reminders.
nobody forces people to use windows either, but yet a company having 60% of the global phone market is pretty comparable considering that's literally probably more phones than people actively using windows daily
Make corporation tax progressive, resulting in it being easier for small companies to compete with big ones, without requiring the government to decide what is and what isn't a monopoly.
All of them enjoy market domination in their respective areas of expertise. Their size makes them effective monopolies and their behavior has many times ruled anti-competitive. Competition between them is insufficient and they have been convicted of organizing in monopolistic manners before.
For consumers and the market as a whole it is more healthy if they are broken up into smaller companies.
Even if they weren't near monopolies in their respective fields, I think we should be wary of permitting the sort of concentration of power that arises from the existence of trillion dollar corporations.
To me it does feel much worse if one company is singled out. But, yes, bring back the Sherman Antitrust Act with good enforcement.
Personally, I think much of this is in large parts the fault of one party that likes to systematically defund government institutions, so they can say "see big government doesn't work!"
If you don't think about it, could create a weird set of local/product/etc. monopoly like things instead. Not thinking about isn't an option because it ignores the incentives if you force limit sizes.
Yes definitely agree a hard limit on sizes doesn’t make sense, but I just think it’s not going to be a problem any time soon with the current state of affairs in the US economy.
I honestly think that this is underestimating how good companies can get in optimization their positions. The smaller companies would inherit these abilities from their "parents".
At the very least a line can be drawn when a company cross-subsidizes a barely profitable enterprise to the tune that they're drowning out competitors, or when they exploit workers so absurdly insane that they're forced to resort to piss in bottles because the algorithm penalizes them for taking a civilized bathroom break. AWS makes boatloads of money on AWS and uses that to stay afloat with shipping stuff.
Governments' and companies incentives are highly different. I live in Turkey where not every service is corporate like it is in the US. I can see in practice that a competitor service offered by government happens to be that real competition which drags the prices down.
Only an ecommerce store of that list, but many other things. Though the store doesn't really matter because competition is already rampant in the ecommerce space.
I wrote a letter to our Presidency asking about these other things you mentioned last week.
Capitalism is based on competition, but the rules of said competition are largely written by the winners of said competition - this isn't a perversion of capitalism, this is capitalism as it has always functioned in reality. Like, oil companies get significant political sway over our policy on climate change, which is why over the last 40 years, the biggest sources of emissions reduction were the 2008 GFC and the 2020 lockdowns.
The #1 reason why Comcast hasn't been ousted by local community fiber networks is because Comcast politically lobbied to make it illegal. This is normal. The solution is to cut the moneyed interests out of politics as harshly as possible, because otherwise we'll always require the permission of junk-food companies before we limit how much sodium is permitted in kid's food.
Lobbying needs to be rate-limited to match what individuals can say.
Level the playing field by making the largest possible political contribution equal to a multiple of the minimum wage which one could reasonably expect someone earning that to donate in a given year, then require that each contribution be made using a check or money order mailed with a hand-written note in a first-class envelope.
Especially the media companies! They put artificial limits on the range of acceptable thoughts, acting as both a muzzle and a noose around the neck of the public.
It’s a strawman because GP wasn’t commenting on whether or not there is a technical way of reaching the public, but rather that media consolidation hurts the public. Those are orthogonal issues.
It’s not orthogonal, consolidation of media is only important if it keeps people’s messages from getting distributed broadly. Is that really a problem in 2023?
The “media” - ie ways to reach people is less consolidated now than any time in history.
I can invent a new protocol and app right now thats 100x easier to publish on and access. No one is using yet, is the harm of propaganda stories in corporate media lessened in any way by the fact of that tools availability? No
Yes, that doesn’t mean the corporate media doesn’t have a huge amount of influence due to their consolidation. Technical ability to communicate is not the only factor in power of reach. I’m not sure how else to explain it.
Right because in the good old days, people weren’t propagandized to think it was dangerous for Black and White people to drink from the same water fountain or go to the same school, that gay people should go to jail (“anti-sodomy laws”) and that it’s a sin against God to allow interracial marriages (laws against miscegenation).
I object a lot less if the trustbusters don’t stop with tech and apply their hammer equally to other industries, agree with telcos/ISPs (I’m not sure how uncompetitive airlines are, they seem really low margin). I haven’t really seen evidence that Khan is interested in going after non-tech companies though. (Would love any pointers to the contrary.)
Much of what Amazon does is what other retailers already do. Amazon just does it more overtly and with smaller businesses. In fact, various aspects of this where pioneered by WalMart and Costco.
1. WalMart determines the expected product and expected price and tells vendors to take it or leave it. The agreement often has a stipulation that the same product can never be cheaper elsewhere which is sometimes easy as WalMart gets specific SKUs.
2. On the other side, Costco makes the majority of its money from memberships. The membership is a significant sunk cost and maintains brand loyalty from a mass affluent customer base (notice the similarity to Amazon Prime). Existing vendors will work closely with Costco to tailor products to this desirable market (see Costco specific SKUs for TVs, routers, etc). Upstart brands will go even further to get their wares in front of an audience with ample disposable income.
The Amazon policy basically says that the vendor must offer free shipping. Coincidentally, nobody can offer shipping for less than what Amazon offers therefore Amazon(FBA) is by default the lowest price. The only other company that can fight this with a logistics network of its own is...WalMart.
Then you have Chinese vendors who sell through networks of dropshippers and resellers at Amazon and other venues. It's why you see many vendors of seemingly the same item.
One thing to note is that it's mostly small and medium vendors of relatively low margin items that are the most hurt by Amazon's policies. Seller's of high margin items just eat into their margins while large vendors push back at Amazon and sometimes win e.g. Toilet Paper that comes directly out of a Georgia Pacific warehouse instead an Amazon warehouse despite being labeled as Prime and sold by Amazon.com, not a third party.
I hate that every discussion of reigning in abusive companies has to come with 1000 comments about how other companies are also being abusive, which should apparently make us just wave the white flag. Nah, let's deal with all the monopolies, and Amazon is a good place to start since like you said, they are just incredibly blatant.
The top two posts with the most upvotes are "Ebay is just as bad" for the startoff line, and "Everybody's just as bad as Amazon. Why are you being so mean and cruel to Amazon?"
Obvious astroturfing, just like the entire Amazon review ecosystem. Surprise? No.
https://mkorostoff.github.io/1-pixel-wealth/ Bezos' wealth relative to "normal" shown as 1-pixel comparisons. Be careful once you get to the $Trillion portion (you'll be scrolling for the rest of your life.)
I LOVE that link, but I think serious accusations like that need better justification/explanation.
Are you saying that Amazon is buying upvotes for comments they like, or that that comment was written by a shill? The former is very possible but hard to prove either way, but the latter seems really unreasonable. In this example, it's a poster that's been here since 2017, talking about things like startup culture, Covid-19, and investment banking. They even say they're ex-AWS in their HN bio, which would be a very unconventional move for an Amazon-corporate-operated fake account.
I still don't get how for me as a consumer it's bad that I see the full price and don't have to add the shipping on top only at the end of an order pipeline.
Doesn't showing the total price make it much easier to compare? Aren't politicians pushing on other service industries (airlines, ticket sales) to do just that with all their stupid hidden fees?
It's not astroturf. It's pointing out you've been living with this stuff for years, Amazon isn't new and special. If you want the problem solved then it shouldn't be about Amazon, it should be about entire process.
If Amazon can't sell an "Amazon Brand" that competes with other sellers on it's site, the Trader Joe's should not be able to sell wine that competes with the other branded wine in it's own stores. Nor should Target be able to see it's Good Stuff brand (or whatever it is) that directly competes with other things it stocks.
Similarly, if Amazon is going to be barred from having people pay to be the top of search results than Safeway should be barred from having companies pay to have their items placed on the end shelves.
There’s no “entire process” you can target. You going to pass a law on how every company can raise prices? Impossible
No, the actual way is to go company by company and dismantle them. And by Starting with the biggest it sends a message to others that perhaps they should change before they too get broken up.
So by killing a few prominent hostages the system ends up changing “on its own.”
> No, the actual way is to go company by company and dismantle them. And by Starting with the biggest it sends a message to others that perhaps they should change before they too get broken up.
You will never finish if you go company by company, there’s just too many. Additionally no company ever stops anything until forced to. Your suggestions will not solve anything.
If they are all so interchangable, then I guess no one should care too much about them being split up either. Just need a high enough frequency of splitting to keep the market sane.
Are you suggesting free markets are a bad thing? If people think it’s bad, they can stop using the company. If you can’t convince everybody that it’s bad and they should stop using the company, then doesn’t this mean your thoughts are not the average?
I reverse this question to you, what is the solution? I have none but asking companies to change will do nothing. Forcing them to change is a dictatorship. So you tell me what the solution is?
1. Set the example by creating or joining organizations that are not based on Capital owning the majority of the organization (cooperatives, non-stock not-for profit etc..)
2. Increase taxes on non-labor capital growth to directly fund full employment programs Eg make "profit" impossible
In what sense is Costco an "abusive" company? They squeeze their suppliers, but their suppliers legitimately have other options. I'm not aware of any market what Costco is the only game in town.
I can see this both ways. Obviously, nobody is forced to sell to Costco, Amazon, or Walmart, but in a business with thin margins, like Retail, the only way to stay afloat is to sell high numbers. A quasi-monopoly does force vendors to comply in a way.
Costco meets no reasonable person's definition of monopoly. Not quasi, not sort of, not anything. They do a couple hundred bill of sales in a multi-trillion dollar market. Sub 10% share.
Legal precedent exists for a reason. It's not waving the white flag, it's having actual standards and rules. I think Amazon is a shithole of a website and one of the worst examples of downward spirals into mediocrity, but there has to be some semblance of fairness.
Targeting amazon for something Walmart or Target does, but without targeting them too is just wack. You can't just handwave that issue by saying that we can just start there! Because it's been decades, it's standard industry practices, and the law hasn't changed (I know that the FTC has a wide executive mandate, but conjuring a rule is still not great).
Even if you want Amazon broken down, you don't want such a process to start on super shaky grounds like this. I don't know how to explain exactly what I mean here, but it just feels off!
The basic question is "does the FTC have the right to make rules about our society". I think you're answering "no, it should be the legislative only", which sounds great but I think is a serious status-quo bias. The FTC makes rules about our society all the time, both _de jure_ and _de facto_.
There is no moral justification for "starting here", but there is a definite practical one. It would be quite hard for the FTC to open 3-5 different massive lawsuits at the same time, each of which would require tons of funding at a time when funding is seeming scarcer by the day.
Actually, I think I agree with most of your points! I wasn't trying to advocate for the status quo or even a legislative only approach. I think what I would prefer is more of an "EPA" like approach of setting progressive timelines for compliance to a new standard or rule, then strict enforcement. Instead of grand and "bomb shell" one off attempts that sometimes feel just bizarre. Maybe the FTC does not have the power to implement something similar to the FTC , but it definitely would help more imo.
It's a very strong argument to say that the practice currently being pursued by the FTC has been a long standing and generally accepted as legal practice in the retail industry. The fact that they are going after Amazon for this, but have not ever gone after anybody else who has been doing it for decades leads me to the conclusion that this is not about the actual trade practice it claims to be about, but rather a politically targeted attack on Amazon.
And the FTC is very much capable of running multiple enforcement actions at once. Why are there no such charges against other companies doing the same thing. They don't have to be one at a time.
I checked, Amazon does indeed sell tiny violins. They are keychains that make sounds. Unless there's a claim here that the FTC is working directly for, say, Walmart, everyone else benefits from Amazon being brought down a handful of pegs.
Sorry if it makes things hard for some AWS customers, but eggs, baskets, etc.
The mechanics might be different, but the "free shipping" is still subsidized by driving the price of the product itself up. Either way, all consumers pay a higher price, so that a subset of them don't have to pay for shipping.
Historically you are careful with free shipping to ensure the loss is less than say a retail cut of the price.
That is why minimum orders were so popular, if it cost say $8 to ship something and a retail margin is 15% I can do the math on a break even point where it is a wash or better for the vendor.
> The agreement often has a stipulation that the same product can never be cheaper elsewhere which is sometimes easy as WalMart gets specific SKUs
Yep, this is anti-consumer and anti-competitive -- it should be illegal. Here's where it gets interesting though...
In wal-mart's case they're trying to win on price competition alone. They're hoping with their volume, operations and efficiency, nobody else can sell with a lower margin. But Amazon is doing the opposite.
I looked into selling on Amazon recently and the fees were over 30%! Amazon requiring that sellers can't offer a lower price elsewhere drives the prices up on Amazon and off Amazon. Primarily, they're trying to prevent sellers from directing buyers to their own website where they can offer the product at a lower price because there are no 30%+ fees.
To what extent do the randomly-named Chinese Amazon storefronts manage to circumvent Amazon's price-competition algo? If you make a storefront named qwduburtf on Amazon and a storefront named civendntip on eBay, I can't imagine Amazon would be able to match up your product listings between the two sites.
> Costco makes the majority of its money from memberships
Not really. Their total profits last year were $2.8B and their membership income was $1.5B. It only represents the majority if you assume there is no cost to their membership income. But we know there is, because they have to have employees who do nothing but process memberships and they have to maintain all their membership benefits which also requires employees.
It's fair to say that about 1/2 of their income is from memberships though, which is still high.
> Their total profits last year were $2.8B and their membership income was $1.5B.
According to their 2022 annual report, their membership revenue for their reporting year (the 52 week period ending August 28, 2022) was $4.2B, and their net income for the same period was $5.9B, so neither your numbers nor the relationship between them seems to be correct, unless Costco committed massive securities fraud.
If those numbers are precisely accurate, it should be noted that Costco could be paying up to $100M to process memberships, and it would still literally actually be most of their profit. Also "about 1/2" and "most" are not mutually inclusive. In fact, I'd expect they mutually occur with some frequency.
> The agreement often has a stipulation that the same product can never be cheaper elsewhere which is sometimes easy as WalMart gets specific SKUs.
Are you sure this is done overtly by Walmart? As the article says Amazon had this policy but it was dropped because of EU and US gov pressure. I'd be surprised if Walmart got an exception.
Unless there's some distinction for retail stores not just online.
Isn't that totally different? I thought brick and mortar stores actually buy inventory (or commit to buy orders in this age of just-in-time) where Amazon is just the middleman connecting buyers and sellers and charging fees on both ends.
If Amazon wants to commit to certain sizes of orders, I'm sure the vendors will be happy with contractual price setting.
> The agreement often has a stipulation that the same product can never be cheaper elsewhere which is sometimes easy as WalMart gets specific SKUs
Does the trick of creating different SKUs work for amazon though? If not, it seems like what they're doing might be worse. Since according to the article they're now enforcing the rule against having lower prices elsewhere through software, depending on how it's implemented it could end up having a much broader effect.
Amazon Prime isn't the same as Costco Membership unless you ignore everything beyond "richer customers are willing to pay for it".
Costco makes its profit off its membership.
Amazon Prime offers a product at less than cost and then shifts that cost onto its manufacturers.
After all if I am paying Amazon for Prime shouldn't Amazon pay for the difference between more typical free shipping and two day shipping at minimum? Isn't that what the payment is for?
The reality is Amazon Prime is more akin to a loss leader and Amazon realized it could use its market position to avoid inflating it's price to reflect that loss by putting pressure on its partners.
Of course whether this is legal is an open question obviously but it certainly isn't the same as Costco using a membership as a profit source.
Walmart vs Amazon is more nuanced as the difference gets into market overlaps. Should Amazon be able to force you to use its fulfillment service to use its website (which is generally illegal for drop ship style setups like Amazon who doesn't take ownership).
So Amazon is certainly rubbing against a "you can't force bundling like that". The question is whether their "forcing" you in the way their website heavily focuses on Prime.
This has been pretty obvious for a while. Whenever I do product searches on Amazon the prime eligible results are more expensive by exactly the shipping costs of the non prime vendors.
The only reason I keep it is for the video service which I'm guessing is the same for a lot of people.
Tangentially related, even in YouTube Premium you can still see ads if the content creator embeds ads as part of their content. This seems like double-dipping to me and I am seeing more and more of this.
I consider that stuff part of the content and weigh it appropriately. Creators who get too obnoxious with sponsored content are dropped from my subscriptions.
The creators I tend to watch the most these days either don’t have sponsorships or they only run their ad at the end of the video in which case I just stop watching or click to the next video.
I love the take that talking about a sponsor isn't an ad. <facepalm>
Even the lame concept of throwing up Pateron supporter's names on the video for mere frames scrolling by is just moronic to me. Do people really think they are special for having their username flashed on a screen? What value/meaning is derived from this?
They can say "thanks to all my supporters". it's just fallacy to think the creator actually cares. it's a simple copy&paste from a list from their patreon (or whatever) to the text editor of their editing software. it's even less if they aren't even the ones doing the editing. sure, they all say "we love our supporters". it's just like people that donate to NPR so they can have their names read out over the air.
how is their sincerity (more to the point, lack thereof) confusing to you?
> They can say "thanks to all my supporters". it's just fallacy to think the creator actually cares.
How deeply cynical and also, besides the point; even if you believe all creators don't give a shit (I believe many do), people still like being thanked.
what you call cynical, I call naive on your part. We clearly have different opinions on creators and their level of sincerity towards supporters. i hold them just this side of influencers. i understand that they may depend on the support, but it's not like adding someone's name on a screen for .5 seconds means "they care about me". it just means they're fulfilling some obligation they used to entice people to donate. people that decide "because my name will be on the video for .5s" is what pushes to donate is beyond silly.
Is Instacart an Amazon replacement for you? Generally, if I can buy something at a store within 15 minutes of me I'll usually just make the drive to buy it rather than going to Amazon. I use Amazon for the things that I generally can't get locally (such as heavy duty floating shelf brackets that I bought recently. No idea what store sells those near me).
But the idea of replacing Amazon with Instacart is definitely intriguing to me
Try a local hardware store, not a big-box like Home Depot or Lowes, though they’re likely to have it too! I’ve found that so long as I am patient, local hardware stores are happy to order things for me.
Amazon is great at instant gratification and that’s about it IMO.
The “hidden tax” described in the article is to sellers, not consumers. Free shipping is subsidy for consumers that costs Amazon billions of dollars. I have personally never seen what you’re describing.
Which products do you observe this for specifically? I buy from Amazon US all the time and I can’t say I’ve ever noticed that discrepancy, so I can only assume we’re looking at different products or from a different region.
While this varies by territory, I'm UK based, I find the main benefits of Prime to be the next-day (even weekend) delivery, Saturday (even if not next day) delivery, and sometimes the locker delivery option.
Even where prime price is the same as other+delivery this wins out. Though at each price rise or other change I have to rethink if I consider I'm getting a good deal.
I’m not sure I agree with the opening premise that offering “free shipping” is dangling a free lunch that doesn’t exist.
Technically this is true but it makes a lot of sense by creating an analogous experience as with retail.
If I walk to the corner store to pick up something I’m not paying a line item for the logistics that delivered that item from a factory in China, nor a line item for the rent to keep that item sitting on a shelf in walking distance. I just pay the price of the item, and those costs are baked in.
Maybe an economist can argue this isn’t the most efficient way of paying for externalities but it’s hard to argue it’s without reason. It’s clearly a preferred consumer experience. Amazon prime is like a Costco membership. The only difference is Amazon handles last mile from the fulfillment center, Costco expects me to provide last mile fulfillment with my car.
Offering free shipping is not a problem. The problem is that mandating your suppliers subsidize free shipping and don't sell for cheaper prices elsewhere is blatantly anticompetitive, and has the effect of raising consumer prices on non-Amazon markets.
I agree with that, and I think buy box suppression should be stopped. I’m just responding to the opening paragraphs of the link (and some near the end) where the author appears to be arguing against the very conception of free shipping as if it’s something that can only be offered in distorted and monopolistic markets.
I think a physical retail analogy would be to imagine that every store charges a variable "restocking fee" based on how much it costs to get a replacement for the item that you are purchasing. You don't know what that fee will be until the clerk is ringing you up. Then one day a store decides to bake the restocking fees into the price, and no longer surprises the consumer with a variable fee at the checkout counter.
This is clearly a win for consumers, who can now shop the aisles knowing exactly what they will pay for the item upfront before they put it in the cart and go to check out.
This was blatant monopolistic behavior, control over prices outside your platform with the threat of platform access to enforce it is a slam dunk case.
Legality aside, I'm not sure that Amazon is winning in the long run with this strategy. I mostly buy products direct from the manufacturer these days and virtually all manufacturers have high quality websites with solid ordering experiences. As long as they have the name recognition, they can either sell for higher on Amazon and take the advertising hit or just ignore Amazon altogether.
I continue to buy some stuff on Amazon. Mostly books (they're way cheaper than book stores) and gadgets (I bought a 12 volt car fan recently). The sort of stuff where I don't care who makes it.
i would pay more money to not have to put my credit card into or attach my identity to 100 different random websites all of which almost certainly have worse security practices than amazon and many of which absolutely will have that data stolen at some point.
even for people who don't think about stuff like that, it's way easier for the average person to buy everything from a single place than to go to a bunch of different random websites to buy things they want.
I coded a credit card payment a few times in my career and from what I saw it's always just a token. That token could be only used to make transactions from your account to the specific vendor's account. Of course there's always could be some incompetent developer who thought that saving credit card data into a database is a great idea, but overall it's not as risky as people think.
There was this feature provided by banks. I remember BofA was one. Unfortunately they removed it. You could create a temporary credit card number for specific vendor.
It even had option to set one time limit or recurring limit.
I don't understand why it was taken away, was it giving too much control to the customer?
Google offers virtual credit card numbers fyi. I don’t think they are vendor locked, but offer a potential solution for you. Albeit one with additional drawbacks.
I don't know why people get paranoid about this, in the US and most Western countries payment processing has minimum security requirements and you have blanket protection from fraud by credit card companies anyway. All of this means in practice consumers are very safe putting credit card details on websites. The websites that don't have the skill to meet minimum security requirements find a payment processor, so a hacker wouldn't get it from website, they'd have to get it from a processor like Stripe or Paypal.
It is. I've even found myself searching within the shop app to find products from smaller stores vs the larger stores. It's nice they have a shipment tracker built in and so far i've not had any issues. They're even running promotions / incentives with their Shop Cash, so they're trying for sure.
I would (and sometimes do) pay more money to not give money to Amazon. Also, I feel like the vast majority of sites support Google Pay, Apple Pay, PayPal and/or Venmo these days so I rarely find myself entering my credit card number.
> I'm not sure that Amazon is winning in the long run with this strategy
Completely agreed. Anecodotally, I used to shop on Amazon for things. As in, use the search function to find items to buy. These days, that is impossible. The only way to use Amazon today is to know exactly what you want, or for the item's value to be small enough that it doesn't matter (deoderant, ethernet cable, etc...).
It's quite frustrating to shop on the internet today. Google search sucks since SEO has made the results terrible. Amazon search is a frustrating mix of FANPOP brands and Amazon Basics. DDG, Brave, Bing, etc.. are all slightly better, but still very difficult to find anything genuine. Appending " reddit" to searches sometimes help, but the quality of reddit is quickly declining.
It seems like there is a significant opportunity for disruption in this space. The user experience sucks and prices are high. Sure, shipping is fast and free, but that doesn't help with product search.
> I mostly buy products direct from the manufacturer these days and virtually all manufacturers have high quality websites with solid ordering experiences.
I can’t say I agree. I’m not defending Amazon here but shipping is a nightmare with literally every other business. You aren’t going to get 2-day and you’re lucky if it ships within a week of ordering. In most cases there aren’t even options for faster processing/shipping for an increased cost.
I was recently at my parents at they have Bartesian (think Keurig for alcoholic drinks). I wanted to try some drinks they didn’t have so I went to the official site and started adding some stuff to my cart. IIRC the free shipping minimum was higher than Amazon (without prime) and there was _zero_ information on when I could expect the stuff to ship or the shipping time. I did some googling and found people complaining about how long it took to ship and I was only going to be at my parents for a little under a week. I went to Amazon and while there was a significant markup (20-30% IIRC) I was able to get it next day or 2 day depending on what I got. I bit the bullet and ordered from Amazon.
Not everything has to come in 2 days or less but some things absolutely do and I rarely see fast shipping from even big names like Apple that that rival Amazon (I just bought a mouse and keyboard from them and it took 4 days vs same day with Amazon, same price). In a number of cases you have literally no information on processing or shipping time to make an informed decision.
Again, not defending Amazon, I wish there were better alternatives, but it’s not as easy as “just order from the manufacturer”. I’ve been burned so many times doing that.
I do the same. I try to buy on manufacture sites when I can. Mainly because of the 1 bin policy. Feels like some times I get products that a seller bought at a discount because of defects or package damage, and these are treated the same as new.
Here are some possibilities (not claiming these are practical or a solution):
The first is splitting Amazon-retail from their other products (Alexa, Ring, AWS, etc.)
The second is splitting Amazon-logistics out. I'm not exactly sure how this would work, but it could be argued that Amazon logistics could operate standalone.
FBA as a separate business would be interesting for sure. It would separate out the value of Amazon marketplace from the value of outsourcing your order fulfillment logistics.
All I ever wanted was to be able to search "shipped and sold by Amazon" results only. If this is the heavy hammer needed to get to that end result, so be it.
The first one seems obtuse. If here were some 1960s-style comglomerate that sold shower curtains and offered professional bowling ball waxing, with a 95% monopoly in both...
Why would splitting it out into two monopolies improve anything? Even if there are some unknown, misunderstood synergies between the two businesses, will they not just collude in that way that bridge players do, without any overt actions that could be punished?
>will they not just collude in that way that bridge players do, without any overt actions that could be punished?
Currently, they get that for free by virtue of being the same company. If they were separate companies, it would require actual collusion and may, depending on the specifics, be illegal. It's also be less likely to occur since they'd need some motivation to do so. Why would the shower curtain company even attempt to collude with the bowling ball waxing business?
> If they were separate companies, it would require actual collusion a
I don't play bridge, never learned. A game consists of two teams of two players each. My vague understanding is that you might win if a partner gets ahold of a card that you discard, but that you can't know what card that is without saying so (cheating).
Good players can tell what cards their partners might need, and discard anyway. This isn't cheating, it's just good play.
In a court of law, the former is definitely some violation of antitrust law. But the latter is just good business. And even if it weren't, no overt acts have been committed that could lead to successful prosecutorial outcomes.
Philosophically, it may still be collusion. Good luck doing anything about it.
> It's also be less likely to occur since they'd need some motivation to do so.
Game theory supplies that just fine. If I have a monopoly in A, and you a monopoly in B, then I might just protect your monopoly in B without you requesting that, without you giving me instructions.
And from that point on, if you see a place where you can hurt or help me, you might choose to help without me requesting it or asking. Because if my monopoly on A is hurt... I can no longer afford to help you without you asking. Supporting me is a no-brainer. At least if the other party isn't a complete imbecile, they can see it. While there's no accounting for stupidity (second most powerful force after compound interest), we can already assume that the leadership of these companies is non-stupid just because of the success they've already achieved.
> Why would the shower curtain company even attempt to collude with the bowling ball waxing business?
When they break these companies up, they don't fire 100% of management and rehire. Most of them know each other. Most are friendly with each other, if not friends. Sure, employee attrition will eventually break those bonds ten years down the road. But they already know how each other thinks.
Silent collusion, without so much as a wink or a nod, is definitely within the realm of possibility. The previously existing social connections are present. Their goals were largely aligned before, and nothing has occurred to de-align them. Mutual success may be easier than individual success. A sort of "corporate altruism" can emerge.
Evolution does this shit all the time with symbiotes. It's not like their colluding to co-evolve with each other. You won't find conspiracy evidence in the fossil record that they just started helping each other, it only proved to be a better strategy than individuality, and so they went with it.
To a vastly lesser extent than when it's one company with one board and one CEO in charge of multiple business units that would be unrelated after the breakup. If you break off Costco's chicken selling business from the rest of the store, the chicken business isn't going to keep their prices so low to boost the other company's sales because it costs them too much money to do so and they get far less benefit from boosting the other company's sales than when they were the same company.
> If you break off Costco's chicken selling business from the rest of the store,
It sure seems like that, but in the real world we do have many counter-examples where a singular company does do the loss leader thing for a long while, going into the red year after year. Often, it's never clear why or how they could think this was a winning business model.
The chicken-selling business might do the same, and their justifications for doing that might never be sound, they might not even be the reasons why they're doing it, but just some post hoc rationalization to themselves and the real reason is poorly understood by all involved.
If the rest of Costco sees this happening, are they going to step in and sabotage the chicken-sellers? Lord knows it drives some traffic to their stores (they might be unwilling to study that and write reports, as it could then be used against them if the FTC comes after them again, but they'd still notice). If they can subtly act to somehow ease the pressure, or make that worthwhile to the chicken-sellers without leaving a paper trail, they'd be fools not to do it right?
Of course, without exotic economic principles, that can't last forever. But unless you're claiming that there are business units for AWS are deep into loss-leading, your analogy only applies very generally and it's difficult to see how they could fall into similar snags.
The latter seems plausible to me, but the former makes no sense. If the problem is that Amazon-retail has too much market power, how would splitting off AWS help with that problem? Amazon-retail would still have the same fraction of the retail market as before.
Splitting off AWS wouldn't be enough on its own, but I think the argument would be that Amazon makes a substantial amount of its operating income from AWS (70% in the latest quarter: https://ir.aboutamazon.com/news-release/news-release-details...), which allows it to fund anti-competitive marketplace practices like undercutting competitors at a loss to force them out of business. It would be more difficult to sustain such practices without AWS income.
Amazon marketplace, AWS, Whole Foods, Twitch, Fulfillment by Amazon, and maybe Amazon Studios could all be separate companies. I think Amazon marketplace would also be forced to end some practices like not allowing sellers to have lower prices elsewhere.
If you imagine the situation in reverse, where they were two independent companies it would make very little sense to merge them. One is a high margin technology business and the other a low margin distribution company. There would be very little synergy.
He thinks Amazon is acting in good faith, and he's also an ideologue who doesn't see anything wrong with Amazon deplatforming anyone who passes along lower costs on other platforms.
Amazon Retail (Vendor Central), Amazon Marketplace (Seller Central), and Amazon Brands (Amazon Basics, Pinzon, etc.) probably need to be separate companies. You also have decide where Amazon Ads and Amazon Registry will live.
Currently these four services all exist under the same roof and it gives Amazon basically unlimited power to unilaterally destroy entire companies or brands with zero consequences and no effort.
One option is to divide AMZ along business units. Thats the natural, easy way to do so. Itd cause least loss of value to the shareholders.
I disagree. AMZ babies would still be essentially monopolistic in their markets. Nor do I think shareholder value, after being inflated through monopolistic abuse, is sacrisanct.
Divide AMZ slicing through the business units. Make a half dozen vertically integrated baby AMZs. They all have access to AMZ IP, held by a separate company that can license it out to third parties (ie if they don't license their web tech to, say, Best Buy this AMZ baby has no revenue and goes to receivership since all other AMZ babies don't have to pay licensing fees).
EDIT: I almost forgot liability. Transfer all current known and unknown AMZ liabilities, including fraud and sale of fake goods, to the baby AMZs.
I’m suspicious, I think most people underestimate how hard it would be to split companies.
If you have everyone in the company go dig holes for 24 months, the stock price would tank and much value would be destroyed.
Likewise splitting is a massive effort that amounts to burning resources that wouldn’t otherwise be spent.
Now part of the point is to destroy the monopoly, which reduces company value too. This is a subtle point; we are probably ok with this because implicitly this is profit extracted as rent and which should really go to competitors. We’d probably say the value here is being redistributed.
But the monopoly rent is different from the actual OpEx and CapEx required to restructure. I really want to see even a rough quantitative analysis here before making any commitments.
The approach you put forth here seems maximally complex and inefficient as an end state, FWIW. Shared access is going to be a nightmare to operationalize. Much better to cut at existing business unit org boundaries.
>If this suit is resolved in the government’s favor, the remedy could be anything from ending anti-discounting measures to breaking up the firm.
There's a bit of an odd remedy issue with this lawsuit. The harm being asserted by the FTC is that Amazon charges more fees than competitors but requires that sellers not charge more on Amazon than on competing sites. Originally Amazon allegedly accomplished this with a Most Favored Nation clause, and today Amazon will kick you out of the "buy box" promotional space if they detect you offering lower prices elsewhere.
First, a breakup doesn't cure this harm. You could go all the way to the extreme of splitting Amazon's third-party marketplace into its own company and yet that company could still charge higher fees than competitors and condition the buy box space on sellers not offering lower prices elsewhere.
Second, no injunction makes sense either. Is a court going to force Amazon to advertise a price in the buy box that Amazon knows is not the lowest price available on the market? That's an absurdly anti-consumer thing for a court to order (and so a court would likely not order it).
But how? The smallest unit of a possible breakup would be a standalone 3rd-party marketplace company, and yet that unit would still have the same market power for 3rd party sellers as Amazon as a whole does today.
Why is that the smallest possible unit? It may not be especially practical, but it's certainly possible to break Amazon up by retail product category (one company for books, one for kitchenware, etc).
Because you run into the issue of "unscrambling the eggs". If Amazon is not organized by retail product category (and I would assume it is largely not), then it will be very difficult to split the company in that way. Courts really aren't in the business of restructuring companies and the last thing you want is for the new baby companies to fail because the restructuring went poorly.
Which employees go where, who gets what IP, what happens to all the underlying website/physical infrastructure? A "3rd party marketplace" unit is already likely smaller than is feasible for a court to oversee. By comparison, it would be a lot easier to split Amazon into "AWS" and "not-AWS" because the company is already organized that way.
The FTC is going to lose this case like they have lost others.
They are suing someone with the power of a government. Whether it is "right" or not, the legal case needs to be incredibly strong and airtight to make it through court, and a loss looks really bad. It signals that other companies can be even more anticompetitive because they know the FTC will lose against the biggest fish in court.
While they are at it they should also go after the credit card companies. They have managed to extract a 2-3% tax on most retail transactions. There is really no reason why the fees should be that high in the age of electronic transactions.
Also, ATM fees should be capped at 1% of the money withdrawn. And I've noticed lately that I'm getting hit by two ATM fees -- one from the ATM machine, and another from my bank, which is more than twice as much as the ATM machine's fee. I end up paying $3.50 to withdraw money from an ATM.
They also need to be required to act more in line like telco common carriers. The payment processors have too much say in what they will and wont allow to be transacted on their networks which has nothing to do with financial risk or legality.
In order to effectively break up Amazon someone needs to deliver a trusted e-commerce layer for payments and delivery that rivals it and their delivery side.
People buy from them because it’s incredibly easy to check out, and because it’s incredibly reliable for delivery and most importantly they are the verb for e-commerce on the Internet: they own “buy online” as a brand and that’s a hard thing to compete with even if it gets broken up like ma Bell. Those three elements are very hard side problems you have to overcome to build a competitor.
Shopify is well on their way to delivering an easy checkout experience that could be aggregated to create a competitor of sorts, but delivery remains the hard side problem — the network of warehouses and reliable short term delivery windows you can count on. This aggregates demand and enables centralized payments, but you end up essentially replicating Amazons delivery system eventually to gain efficiency or remaining vulnerable until someone comes and takes you out with shipping rates.
It’s also the Craigslist problem all over again as well, because every small category of Amazon is an ocean to a competitor and each needs to solve all three hard side problems, so peeling off each division and improving the experience to consumers is a colossal task that wouldn’t create the same potential for efficiencies of scale or would end up advancing the possibility of winner take all relocation of the exact same issues.
I really do think Amazon needs to be broken up to create more competition, because the alternative seems like it would look a lot like the Costco scene from Idiocracy. That’s not a healthy end-result.
Also IMO Jet.com was the last upstart of any seriousness and they got taken out by Walmart, and that’s another angle anyone who breaks up Amazon has got to think about.
And then their is their oil and gas pipeline in the form of AWS, which is a strategic barrier all itself and allows Amazon to have insane scale that’s entirely paid for by entirely different customers. They can effectively operate for free on their own cloud.
They have layer upon layer of network type advantages that have to be unbundled if they are to be broken up, and unless it’s done profoundly well, they’re going to remain 1100 lb gorillas.
I could probably organize these thoughts better and more concisely but don’t have time at the moment, but this is what immediately comes to mind.
Maybe it's because I don't live in the 2% of the land area where 30% of people are dogpiled (if like 5% of you moved someplace else the Republican party would be gone, baby, gone...) but in my area AMZN deliveries are always UPS or USPS or FedEx delivered so insofar as AMZN deliveries are reliable it is because those systems are reliable. (I've seen an AMZN delivery truck driving around in a particular neighborhood between home and the office but it has never stopped at my place so far as I know.)
In my area AMZN deliveries are 5 days which is nothing special compared to the 1-3 day deliveries I frequently get from Wal-Mart, Best Buy, and every other online store. In fact, I regularly order stuff from Japan on Ebay that arrives faster than AMZN deliveries. (As Flavor Flav would say: "I ordered from Amazon Prime a long time ago, Amazon Prime is a joke in 'yo town")
I hear a lot of zip codes that have huge AMZN warehouses in them have 5 day delivery too but if you are Jim Cramer or a Congressman or something they have to have you believing AMZN is a little better than average as opposed to a little worse. If they had slow shipping in Hollywood you'd see sitcoms making jokes about slow Prime deliveries.
As for payments isn't AMZN just having Mastercard, Visa, and American express do all the heavy lifting?
As for easy checkout, checkout has very few clicks on Ebay. I check out from stores like Best Buy, Adorama, etc. and they all are pretty easy, in fact they don't make me click 4 times saying "NO I REALLY DON'T WANT TO SIGN UP FOR A FREE TRIAL OF AMAZON PRIME".
Product listings on AMZN already look like a scene from Idiocracy; often I see the same bullshit listing spammed hundreds of times, listings that are word salad and make so sense at all (and that AMZN doesn't want to investigate unless you bought it.) I am not worried that AMZN is privileging a $5.99 product over a $3.75 product, I find it highly stressful to filter through product listings that are obviously 75% bogus and call into question if I can trust any of them.
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Maybe if you live in Manhattan they send a bicycle messenger backwards in time to deliver you packages as soon as you order them but from my viewpoint as someone who lives four hours away from a big warehouse in PA, AMZN is the Dollar General of e-Commerce and the retailer of last resort which I'll only order from if I can't find the item elsewhere. So far as I can tell Amazon Prime is a big Jedi mind trick that makes people think it is all OK because they want to watch Rings of Power that bad or maybe that Xanth series that AMZN bought the rights to but will stay in development hell forever because it's just too squicky.
I think the general idea across many companies in the U.S. is a good one: breaking up monopolies that are more vulnerable to external, globalized forces. The goal is to fertilize the business landscape with their metaphorical "whale-fall carcasses," enabling a flourishing of smaller, competitive entities. This strategy aims to revitalize and fortify the American economy against the looming tidal wave of foreign competition. Although this approach may be painful on a local level and even humiliating for some individuals, it's ultimately a sound strategy for macroeconomic management.
yes , one good reason for the break-up, that also Scott G. explains in this new vid: https://youtu.be/jl-SRHMzZHk?si=o2LpMMESWEIrejld
( Interestingly he his Amzn stock holder, favors the breakup, and believes the parts more valuable than the behemoth currently itself. thus a Win,Win,Win !)
Though, to be fair, the switching cost for a consumer to start using Target.com (for example) isn't that high. I go to vendors like Target.Com, HomeDepot.Com, BestBuy.com and AliExpress.com for most of the things I used to use Amazon for.
The issue here is that Amazon's behavior makes the switching cost higher than it would otherwise be. You are penalized for the existence of Amazon even if you don't use Amazon.
Sometimes things take a few days longer, but no real problems. Target and HomeDepot also both allow "third party sellers" so there's the same clutter issue, though it's not nearly as bad as Amazon.
I think this demonstrates a way in which all centralized power becomes, for good or for ill, partially absorbed into state power. A major country's government will always be able to exert lots of leverage against, e.g. tech companies, whether for legitimate or illegitimate reasons, it matters not which. They can always threaten regulatory or legislative actions which would be annoying or devastating to shareholders. Hence, behind-the-scenes conversations will always have an implicit fact of "please censor as we ask, provide data and backdoored access to which servers we ask, please don't take on the wrong political causes, elsewise there will be consequences."
Goodness knows that if the intelligence community or state law enforcement has ever wanted access to anything in AWS, now of all times would be when they have the easiest time asking for it! Anything to curry favor with someone who can speak a word of support to federal agencies and state officials.
I guess this makes me a little demoralized about the utility of "anti-big-tech government actions," because to the extent any of these actions succeed, it's probably just sending a clear message to enhance state influence/access of other tech companies. If I get excited (and I want to) because "Amazon might be broken up!!1!", maybe that just means Google finally got the message and decided to put backdoors into <insert platform here> on behalf of <insert agency>.
"Fortunately, our work on the secrecy of the Google trial is paying dividends. Here's FTC official Douglas Farrar arguing that the commission will push to get rid of the redactions:
We share the frustration that much of the data and quotes by Amazon executives in the complaint that describe what we allege is monopolistic and illegal behavior is redacted. Amazon has 14 days from the entry of a temporary sealing order to provide legitimate justification for preventing this information from being revealed. We do not believe that there are compelling reasons to keep much of this information secret from the public."
If Amazon has done nothing wrong then why so many redactions. It might succeed in keeping the facts sealed away from public view but it only raises more questions.
It sounds like Amazon is a heavy source of bots on the web if they need to continually scrape millions of websites to monitor pricing. Perhaps someone can explain how that works.
HotTake: the result of this should be to nationalize Amazon to be the defacto national provider of AWS services, delivery, logistics, and backstopped retail services.
Might as well just shut it down in that case. Amazon would be abandoned in mass if it was government run. People groan every time they see that the USPS is handling their delivery. I can't imagine how bad it would be if that same level of government competence was applied to all of Amazon's operations.
> People groan every time they see that the USPS is handling their delivery.
They do? I am usually pleased when I see it's them. They are very consistent and rarely make mistakes, in my experience. I don't know what there is to complain about, outside of pointless hatred for anything related to the government. Meanwhile, it's a crapshoot if the FedEx or Amazon driver even gets it to the right address.
Come on. My interactions with the IRS, TSA, Social Security Office, Passport Office have all been slow and arcane. It is a total fantasy to think the Government could run Amazon well.
Fair play to this reporter for shining a light on all this, especially in relation to the redactions. Hopefully the secret court restrictions are lifted.
You basically can't shop for products with many options on amazon anymore. It still works for books and things where you know you are getting the right product. But for most goods its easier to use Apple Pay on a shopify store.
This is getting silly on the same level like the EU demanding Netflix to pay a certain percentage to local movie funds or enforcing certain rules to platforms owned by Meta to protect "user interests" about which no user really cares about. Amazon is not a self-evident service run submissive on behalf of the citizens. It's a private company. Nobody forces to do business with amazon nor is one forced to buy anything from it. There is something called freedom of contract. Amazon could demand a 90% fee, if that's a fair price to do business / to pay is up to the business / the customer. Looks like a ton of businesses are ok with not selling at a discount elsewhere - they signed. As money, markets are amoral. Consumers choose what they choose. There is no such thing as a monopoly in a free market system. At anytime anyone can compete with Amazon or Google, the 'gatekeeper' argument does not hold at all, this is competition - there is no such thing as fairness in markets and that's good. Nobody forces you to use android where googles product can't be removed and nobody forces you to use amazon for being just amazon, the number 1 in e-commerce. If your the operator of a business and whining about 'fairness' you surely should go find a normal job. Free will and free markets is all what matters, adults are mature, nobody needs a gov organization like the FTC wanting to split up businesses. People want to use amazon, period. At the same time amazon has 0 obligations to them or anyone else. Be real and sane to yourself.
The unlimited “freedom of contract” is an idea that the US Supreme Court reversed position on in the 1930s – merely 30 years after it was invented – and for good reason. For those wondering, “freedom of contract” as a term of art is essentially the idea that a government cannot regulate the behavior of parties to a contract, because the involved parties have some unlimited power of contract. The US Supreme Court found this in Lochner v. New York (1905), and reversed it in West Coast Hotel Co. v. Parrish (1937).
You seem to have implied a business’ right to exist, and operate at the expense of others free from regulation. As demonstrated, the earlier part of your comment was rather light on factually correct information, but could you cite the jurisprudence backing this idea of yours?
The Court reversed its position because many of justices that supported the Lochner case retired only to be filled in by political allies friendly to the New Deal like senator-turned-judge Byron White. The ones that remained were allegedly pressured by the Roosevelt administration's threats to pack the court (i.e. the switch in time to save nine). Regardless, the actual jurisprudence on Lochner hasn't been rebutted, only deemed unpopular by both wings of the court. The conservatives, due to the invocation of substantive due process, and the social progressives, due to their general aversion to recognize negative economic rights. Law schools will cite Oliver Wendell Holmes Jr.'s lone dissent as "proof" of Lochner's failings, but a close study of it (and of Holmes's legal "realism" as a whole) reveals it to be fallacious, hypocritical, and nihilistic.
In addition, your definition is inconsistent with the standard applied by Lochner or the Constitution. In the majority opinion of Lochner, the power of contract was not unlimited, as the court deemed health regulations in general as a proper exercise of the state's police powers. However, the State of New York had to demonstrate that its health law regarding employee hours was not employment regulation in disguise (hint: it was) and that any such regulation did not infringe upon the protection of rights afforded by the 14th amendment (hint: it did)
Contrary to your statement, freedom of contract had preceded Lochner for over a century. Article 1 Section 10 of the Constitution explicitly recognizes that the states may not inter alia impair contracts. The Contracts Clause has been invoked in Fletcher v. Peck and Trustees of Dartmouth College v. Woodward. Both cases form the bedrock of modern contract jurisprudence today.
Yes, almost every country in the world has restrictions on this. For example in the case of employment, with a contract stating that you have to work for life for a company, you can easily challenge it in court since it is more than obvious unconscionability. But the limitations on 'freedom of contract' by the us government never made or make the contracts businesses went into with amazon illegal or contestable.
There is no such thing as 'operate at the expense of others' in this case. Again, nobody forces you to buy at amazon. There is nothing illegal with setting requirements for a seller, e.g. not selling at a discount elsewhere. If you do not wish to sell on amazon you can freely choose to sell at any other store. If one is whining about not having the same reach: Nobody has the right to challenge amazon for just being good and demand anything from them. There is no law that gives you the right to be able to do business 'in the land of amazon' at conditions that please you.
Amazon is a private company. The FTC is treating amazon exactly how many people wrongly see it, as a sort of common good - quote:
'Amazon is a monopolist. It exploits its monopolies in ways that enrich Amazon
but harm its customers: both the tens of millions of American households who regularly shop on Amazon's online superstore and the hundreds of thousands of businesses who rely on Amazon to reach them.'
Bureaucrats.....Good luck proofing 'conspiration to monopolize'???. A thing which is not even possible in a free market society. The practices of amazon are in fact competitive - doing everything to kill the competition - a thing every capitalistic incentivized company who wants to become or stay at the top does. Those practices of the FTC are anti-competitive and a huge intervention, their policies is what hurting customers.
> Once it achieved monopoly power, Amazon squeezed on price through fees to third-party sellers. As a third-party seller, you pay fees for listing on Amazon; for using Amazon’s warehouse services, known as Fulfillment by Amazon (FBA); and for advertising services. If you don’t pay, you don’t get put in a place on the site where consumers click.
So consumers get free shipping that is mostly paid for by third party sellers because it gives them access to a massive customer base. I dont see the problem?
FBA de-risks the transaction for Amazon and the vendor. You sell a known quantity with a known delivery window. Small businesses often struggle with this and criminals use this to their advantage.
If eBay/non-FBA is a flea market, FBA is a online mall.
One of the benefits of a tightening economy is that people pay a lot more attention to monopolies. The pain inflicted by a monopoly reaches a boiling over point when money is tight.
I don't understand why you would "Break-Up" Amazon? Why can't we just have common rules that says "Hey, we will fine you $50M a day you continue to do X,Y,Z?". Then we have precedence and law to back up doing monopolistic things.
How does breaking a company work? I mean... we broke up Microsoft and that only slowed them down for a few years.
Yeah, the breakup was overturned on appeal, and the resulting settlement was watered down into "we'll reduce the number of tentacles between Windows and IE".
If proven true in court, I don't see how breaking-up Amazon would be the right remedy because doing so would increase costs to consumers through unnecessary inefficiencies and losses of economies of scale. Just forbid anti-competitive behavior and levy a sizable fine accordingly.
Oh man the people defending Amazon in the comments, I understand many of you are investors but come on... let's stop pretending for a second that Amazon doesn't deserve a break up for what they've been doing for years now, even after being called to congress for it.
I never understood why Walmart bought jet.com, but that was extremely good for Amazon. It's not really possible for the FTC to unwind that approval without suing amazon though, right?
FTC should go after other industries that are far more harmful to customers than tech. ISPs, healthcare/insurance, etc. Tech should be no where near the top of concerns for the FTC.
This is a political stunt. If Lena Khan and the FTC were actually interested in consumer protection, they would go after other industries first.
Tech is omnipresent, is flush with cash that it frequently uses to disrupt (drive existing businesses out and then monopolize) and has an outsize influence on people. It absolutely should be first on the list for anti trust action. and it’s Lina Khan.
The only actual monopoly in the tech industry is Google search. There is also a very concerning duopoly with Google / Apple app stores controlling all software loaded on mobile OS that needs to be forced to allow alternate channels. Besides that, I can't think of anything in tech that is actually a concerning monopoly. Amazon has no such monopoly position in e-commerce. The market share really isn't that big.
Even with Google search being so dominant, there are alternatives like DuckDuckGo, Bing, Yahoo. Many people are also starting to use ChatGPT as an alternative to some of the things they used search engines for.
On Android you can sideload apps, install alternate app stores.
Implying these companies are monopolies is an overstatement.
Big tech is no longer the disruptor. Mature big tech way too easily devolves into rent-seeking just like those other industries you listed, just with shinier tech.
Tech is still immature compared to those other industries. I believe generally the more mature an industry is, the more it moves from disruption to rent-seeking. There may be a time at some point in the future to consider breaking up tech when but right now it makes more sense to break up the more mature industries.
Realistically, this rot runs so deep I'm not sure how you can stop it. The US economy is built upon a bunch of these hidden taxes. Healthcare, the way insurance works and hundreds of middle-men between. Google baking in advertising search terms into things you search for. Amazon subsidizing delivery by baking it in as a hidden cost which causes in-store goods to rise in prices to match. Large real estate firms like Greystar using algorithmic models to raise prices uniformly across the US rather than based on local availability.
It's a good step, but our economy is dominated by rentseeking behaviors from large corporations buying their way into monopoly and then warping the rest of the market. And unfortunately I feel like this case will end like many others, with a handshake and a promise to 'properly show consumers how much our stuff on Amazon costs'.
Whats the likely scenario if they lose? Stop offering free shipping? Doubling the price of Prime to factor in lower margins if they cant artifically push up prices? Bully sellers for more margins even more than before?
I fear a negative decision against Amazon so much more than other big tech. Amazon's offering is so far and beyond all their competition, I'd hate for the government to kill any future innovation they have.
Their 'offering' is totally artificial. Prices are low because suppiers aren't permitted to offer lower prices elsewhere. They have a history of blatantly abusing their monopoly position. The law even includes personal criminal liabilities for CEOs in these cases.
What does this mean realistically? If I were Bezos, would I just have more companies on paper? Maybe more manangement and different companies doing business with each other but they all have the same owners?
Hm, is the forced price country dependent? Because I’ve actually bought or found several products via Amazon, that I later started buying for less on the seller’s private store. Germany.
I routinely see higher prices on German Amazon than on other stores to the point of seeing sellers for third-party products asking for almost twice of what an item would normally cost when bought directly from a seller who doesn't sell on Amazon. For example you can buy Starlink equipment on Amazon but it'll always cost a good 20% more (or more) than you'd pay when buying from Starlink directly.
I'm not sure if the forced price exists in Germany for first-party sellers but it might explain why there seems to be a cottage industry of third-party sellers selling overpriced goods on Amazon. That is of course in addition to the universal problem of a dozen brands with names lifted from a word generator selling the same dropshipped white label product out of a factory in China at vastly different price points to create the illusion of choice.
This is somewhat misguided. Unless it results in a very specific breakup, it won't be what consumers actually want from the market. A lot of what drives me to Amazon is shipping. Smaller retailers can't scale this at all, so what's needed is a company that just does the fulfillment side of things with Amazon-level speed.
Actually we don't. We just need the bureaucracy and judiciary to overturn the last 50 years of subversion of the original intent of the antitrust acts. The appointment of Lina Khan was a good first step on that path. This case is a good second step.
But a new act would make the process a lot simpler. Judicial precedence is powerful and doesn't change quickly or easily. A new law would make precedence for the old law moot.
I'm gonna disagree - the original act from 1890, still used, had interpretation issues from the start, which all of the "subversion" you speak of comes from.
It is a difference in how the text is read for sure, but the text is badly written.
It says ""Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. . . ."
The immediate problem with this is easy.
he act does not define restraint of trade, either, so courts were left to define it.
This led, nearly instantly, to limiting the act to those contracts that "unduly" restrict trade using the rule of reason.
"To treat as condemned by the act all agreements under which, as a result, the cost of conducting an interstate commercial business may be increased would enlarge the application of the act far beyond the fair meaning of the language used. There must be some direct and immediate effect upon interstate commerce in order to come within the act."
Standard Oil, quoting Addyston Pipe & Steel Co. v. United States (1899).
Standard Oil also goes into the fact that restraint of trade is not defined anywhere in the act, etc, as further justification.
All that has happened since then is deciding what "unduly" means for this section
At this point, the sherman act is 133 years old. It would be good to update it and make the language less subject to interpretation.
It does feel like some updating would be helpful. The existing language, for example recognizes that markets are sometimes restricted by geography, that you don't need market domination nationwide to be a monopoly. But it doesn't recognize modern day non-geo boundaries. Like, for example, poor people are mostly stuck in an Android "monopoly" because they can't afford an iPhone. It's a separate market. That's just one example. Captive app stores and their relationship with developers are another. I imagine there's more.
Maybe if they weren't going after FAANG exclusively I could take this seriously and not think it is entirely politically motivated BS. ISP monopolies are 10x more harmful than anything they are going after. They have even taken subsidies and then refused to deliver what they promised to get the subsidy, and kept the money. But all I hear about is cases against Google and Amazon for things that sound to me like a real legal stretch.
What magic does apple work behind the scenes to avoid scrutiny? If we're talking about hidden taxes, surely the only app store allowed on 50% of smart phones taking 30% is a hidden tax?
And if not that, surely visa/mastercard's fee is it's own hidden tax?
These are clearly different scales of manipulation. On one hand, you have a brand controlling their own luxury devices, and on the other, you have a brand controlling literally everything else.
Walmart? Every grocery store? Its hardly required to shop at Amazon if your point is it's a true monopoly, I'm not sure what domain you're trying to say they're the only competitor in.
Prioritizing your own brand has been the norm at every grocery store I've ever been to.
But Google, Amazon, Microsoft, Facebook would all be higher on my "FTC TECH TODO" list than Apple so I'm not sure why you focused on Apple in this "whatabout"?
Interestingly one of the possible starting point for this investigation was a complain from Amazon to the FTC.
I am eagerly awaiting the acrobatic justifications Amazon lawyers will have to find out to justify that their MFN clause is perfectly legal without contradicting their own claims of the 2013 case...
Well Google, Amazon, and Facebook simply don't have monopolies, though if you define the market as iPhone app, then Apple does, no argument. And the harm to consumer is incredibly easy to spot, a 30% tax on any app purchase or in app purchase.
Each of the web companies also have one of the most comically low barriers to change of any 'monopoly'. When att was broken up it was truly the only phone carrier for much of the US, switching was borderline impossible. You could replace Google search in the next 30 seconds.
The TL;DR is that the “hidden tax” is onerous advertising fees paid by third-party retailers to have their products appear high in search results.
I don’t really see the issue here, since this appears to be a win-win for both consumers and sellers. Consumers get the cheap stuff they want with free shipping, and sellers get access to hundreds of millions of customers and the volume of sales needed to survive in a low-margin business. The fact that sellers are willing to pay these fees suggests that’s it worth it for them to be on Amazon. If it wasn’t worth it, they would be somewhere else.
You pay these fees so the products aren't cheap. And Amazon (using its size) made it impossible for sellers to sell their products cheaper elsewhere.
This is anticompetitive.
> You pay these fees so the products aren't cheap.
Except they are, otherwise consumers wouldn't use Amazon. Whenever I want to buy anything, I check Amazon first. 9 times out of 10 it's the same price as every other retailer with the added benefit of free shipping and free returns. If that wasn't the case, I would have no reason to use Amazon.
> Whenever I want to buy anything, I check Amazon first. 9 times out of 10 it's the same price as every other retailer with the added benefit of free shipping and free returns.
That's the problem! The issue is that Amazon forces sellers to raise their prices elsewhere, so that Amazon is the best deal for a shopper. But if Amazon didn't have the power to do that (if it didn't have a monopoly as the gateway to online shopping) then other retailers would be able to lower their prices.
That's the "tax" referred to in the article. By inflating prices across the board, but still ensuring that they're the least expensive option, Amazon retains customers and increases profits. Individual consumers choose it because it's the best deal, but the system as a whole loses out because prices are higher than they "should" be.
I'm a consumer who uses Amazon for 90% of their online shopping and let me tell you: I'm not doing it because Amazon is cheap. In recent years more often than not, Amazon isn't actually the cheapest option except for the occasional deal for a subpar product they want to remove from their inventory (but these would be cheap in brick and mortar stores too). Even the deals are largely bogus: "Prime Day" largely exists to buy Amazon equipment at a more reasonable price point and the rest of the time the deals are either for "stocking fillers" (i.e. the kind of stuff you'd find in the discount bin at the supermarket) or noname white label dropshipping products you can barely tell apart from the real deal until they arrive.
I don't use Amazon because it's cheap. I use it because it's convenient. I can do 99% of my non-groceries shopping on Amazon and I get 30 day free returns on most products and next day delivery for some of them, not to mention free shipping on most things I buy (or near-free shipping if you consider the cost of Prime).
What's been pushing me away from Amazon recently is that they're not very good (or even increasingly worse) for some categories of products and in many cases search results are cluttered by Chinese dropshipping products to the point I can't find trustworthier brands at all or for categories I'm less familiar with have to do research to figure out which brands actually exist outside of Amazon's Chinese dropshipping hell. And again because of the free returns (and in the case of non-free returns the A-to-Z guarantee still often resulting in free returns or full refunds) this is not a cost issue but more about the reduction in convenience.
Mind you, I live in Germany and German Amazon is likely different. But Amazon is still the biggest online retailer here despite not being the cheapest. Arguably it still maintains the illusion of being the cheapest because of the free shipping (if you pay for Prime) and the constant barrage of "deals".
And that is why this case is being brought. Amazon are requiring that the price on Amazon is the cheapest price, even if the retailer would like to sell it on their own store (or eBay, Walmart, etc) for cheaper. If it’s sold on Amazon you won’t see it cheaper elsewhere.
did you read it all? it claims the prices are higher due to the hidden tax and that amazon is price fixing by threatening to block 3rd party sellers if they sell at a more reasonable price elsewhere. this doesnt necessarily mean that consumers will get a better deal elsewhere but it is probably unhealthy to put all that price setting behaviour in the hands of one company.
That doesn't really sound like price setting power. They are saying you can set whatever price you want, but it has to be the same as other sales channels.
"Other sales channels" being Amazon's competitors - suppose you sell a... cup that costs $1 to produce, and you sell it on Amazon and Bmazon. Amazon charges $2 in fees, and Bmazon charges $0.50 in fees.
In this hypothetical example with demonstration numbers for effect, you could sell your cup for a minimum of $1.50 on Bmazon and $3 on Amazon - everything above that is pure profit. In such a scenario, you would obviously much prefer selling at $2.50 on Bmazon over selling for $3.50 on Amazon, since you make 2x the profit, and the average customer would much prefer to buy the device at a ~30% discount! Unless the customer legitimately derives an extra $1 worth of value from using Amazon instead of Bmazon, in which case Amazon gets the sale anyway.
But, if 90% of your sales are on Amazon, then you can't offer this deal that both you and the customer are legitimately incentivized to do, because you'd lose 80% of your revenue.
In such a scenario, Amazon has no competitive incentive to reduce their fees! It suppresses market signals towards lower-overhead sales platforms, i.e. you have no way to signal to your customers that a sale on Bmazon benefits you twice as much as on Amazon.
Basically, Amazon is trying to abuse a network-effect instead of actually competing with their competition. They're deplatforming anyone who doesn't voluntarily price-fix for them. It's insane.
If Amazon did that, sales would drop to zero and retailers would leave Amazon. eCommerce is a low-margin business. Sellers will only stay on Amazon as long it's profitable for them.
I don't understand the people in this thread defending Amazon. They're just an impersonal corporate conglomerate that doesn't give a *&$! about you. Capitalism is about competition and the more competition the better.
Lina Kahn is the worst type of politically motivated bureaucrat. Instead of executing the law, seeks new interpretations so that she impose her world view on others. She's never created or done anything of value other than be a student or a bureaucrat.
Hopefully this case will be another in her long list of failures.
I think US anti-trust law has been far too toothless for far too long. I wish we had some politicians from the 1920-30's that would actually go after big companies instead of taking bribes. Did I say bribes? Sorry I meant campaign contributions.
I mean, I doubt you have any understanding of actual anti-trust cases. But by the time standard oil was broken up it was down to 60% market share and the price of oil continued to fall.
The only monopolies that have truly existed in the USA are government granted ones.
It seems the government's main issue is that they have problems with companies being large. If that's the issue they should lobby congress to simply enforce some maximum size/impact a company has.
My opinion on this is that e-commerce is extremely competitive and consumers are already highly motivated to pay the least amount of money. If it were cheaper for consumers to go elsewhere they would, and sellers would follow.
That's a very naive view of the free market. What has been happening is Amazon consolidated the market, creating artificial barriers to entry as they do so (e.g. any and all exclusivity deals). This was always their plan, and they operated in the red for a very long time to get there. Hardly fair competition.
A free market is where everyone can sell their products in the town square. Amazon isn't a seller on the town square, they are (a large part of) the town square. And that's not in the best interest of consumers long term.
There are other examples, such as Apple's app store that have this pattern too. It's true that there are other players, but when Amazon has the market share it has, it's often not feasible to ignore that customer group. And that means customers pay too much.
I think you're right that the government does have 'limit the size of companies' as a motivation, but I don't think that's their main motivation.
For one thing, how would you even right and enforce a law on maximum size/impact of a company? How would this even politically get through? There's already enough push-back against enforcing laws like "don't form cartels". The pushback on maximum size/impact of a company would be even more intense.
In any case, as the article states, "Today, Amazon tells sellers that if it detects a lower price for their products on any other online store, they will be punished, which is to say, their ability to get their products onto a place on the Amazon website where customers click will go away.". In other words, e-commerce is not extremely competitive.
> In any case, as the article states, "Today, Amazon tells sellers that if it detects a lower price for their products on any other online store, they will be punished, which is to say, their ability to get their products onto a place on the Amazon website where customers click will go away.". In other words, e-commerce is not extremely competitive.
This is a good thing, and those sellers can leave Amazon.
I agree with you. I quit using Amazon late last year and it's pretty easy to change to different vendors. Hopefully more consumers do this so that vendors don't have to use the Amazon price everywhere else on the internet.
Where do you shop online now for things that you used to buy on Amazon? Have you found any unexpected pros or cons from going to alternative online stores?
I’m not planning to leave Amazon, but I’d love to find good alternatives.
For smaller things I use Target. I rely more on Costco as well (versus Amazon's subscribe and save)
For more niche items I buy in bulk from different the manufacturer's site. To be honest it's a little more work but to help retailers it's worth it. Sometimes I have to pay for shipping but I do remember that I'm saving 130 dollars a year by not being Prime.
eBay, Walmart, Wix, Shopify stores, etc. You can use Google Shopping to find even more places. Amazon rarely has the best price for all items these days.
Recently, eBay has made it so that only the products with paid ads are shown in places where customers click. This drives up the cost of everything by more than 10% which is eBay's ad fee. I refused to buy a paid ad to sell my MacBook. It sat on the site for a month, which is highly unusual for an in-demand and rightly priced product. Finally I lowered the price enough to get it sold.
Most consumers use the default site, which filters by Recommended (i.e. ads) The play for consumers to win at this new payola ad scheme is to always filter by lowest price (or in amazon's case Prime + lowest price)
But really, consumers don't win (and neither do sellers) because now these ads take up space in supposed "search results" for items which don't match the search terms (but are close enough) This creates frustration when you are looking for something to meet a specification, like E26 light bulbs for example. Here, it is pointless to show anything that doesn't meet that specification and yet the site shows them, and the seller has to pay the ad fee.
Please somebody make a site with no payola!