Amazon Oligarchy

Paula LabrotBy Paula Labrot

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Convenience is the temptress of Big Tech. Amazon can get you anything you want to buy and deliver it the next day. By providing such convenience, Amazon has built itself into a behemoth corporation intent on taking over the world. Its tentacles reach into every aspect of our lives. Amazon’s ambitions are global. It seeks to dominate the world. It’s tentacles are firmly enmeshed in the economy of this country. Amazon is now focused on taking over India’s e-commerce market. (Amazon founder, Jeff Bezos, called this 21st century the “Indian Century.”) Amazon is beginning to swallow up all the competition in India as it has in the USA. Bottom line… consumers are complicit, seduced by discount prices and swift delivery. What Does This Mean? Lina Kahn is the current nominee for Commissioner of the Federal Trade Commission (FTC). For once, both parties seem to agree on something, because she has bi-partisan support. Kahn is young. She is part of what has been called a “hipster anti-trust movement.” She has extensively researched the consequences of corporate consolidation and monopoly power. Her main focus has been Amazon. Her academic paper for the Yale Law Review on the subject of Amazon went viral when it was published. For Kahn, it’s not just about monopoly pricing, it’s about unchecked monopoly power and the undermining of freedom. Kahn quotes Senator Sherman of the anti-trust Sherman Act, who said, “In the same way as we would not tolerate a monarch over our political system, we should not tolerate a tyrant over commerce and trade.” Concentrations of economic power undermine democracy. Kahn points out that current antitrust laws are too antiquated for 21st-century monopoly problems. Kahn has recognized that the current laws depend on the notion that, sooner or later, competitive entities will once again level the playing field. This is not the case with Amazon. They are decimating the playing field, the competition…scorched earth! A Little History First, you must understand the concept of predatory pricing. This is when a company sells below cost with the intent to become dominant and then leverages that dominance to profit by raising prices. (When Amazon completely controls the price, you will pay!) In other words, wipe out the competition by undercutting their prices, and, when the field is cleared of competitors, push the prices up. That, by the way, is illegal. Next, you must understand the concept of integration across business lines. Amazon keeps adding divisions that support each other. There is e-commerce, supported by all the airplanes, drones, and delivery trucks Amazon owns supported by acquisitions of warehouses and factories, all supported by the Amazon web services which can filter vendors up or down in search engine results. Amazon keeps adding tentacles until everything is so connected that, oops, conflicts of interest emerge…also, illegal. For example, selling books and movies but publishing or producing your own and controlling the search results consumers see on the website is not fair for the independent creators. Scaling up is a modern term for getting bigger. Blitzscaling is an aggressive business strategy based on Mark Zuckerberg’s motto, “Move fast and break things.” According to Reid Hoffman, one of the founders of Paypal and Linkedin, “It’s the science and art of rapidly building out a company to serve a large and, usually, global market with the goal of becoming the first mover at scale. This is high-impact entrepreneurship. These kinds of companies always create a lot of the jobs and industries of the future while ruthlessly destroying competitors.” Put ’Em Together and What Have You Got?....Bibbety, Bobbety, Amazon Oligarchy! According to Kahn in her landmark paper for the Yale Law Review, “Amazon is the titan of twenty-first-century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. (And now, add pharmacy and medical provider.) Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it. And Amazon makes its dependents tow the Amazon line or be removed from the platform or filtered down to obscurity in the search-engine results. So, here’s an example of the monopolizing power of Amazon. Amazon started marketing books on the internet. It put a lot of brick-and-mortar companies out of business with predatory pricing. It became the primary place to market books. Publishers had to make deals with Amazon that included deep price cuts. If they didn’t sign the draconian contracts that let Amazon control the price, Amazon didn’t sell their product. Then, integrating across business lines, Amazon started publishing its own products! And opening their own cashless ‘book’ stores! And deciding which books to filter up in their search engines! Reading a list of platforms Amazon has its tentacles in, you are able to see how easy it has become for them to destroy any competition. They are, essentially, well on their way to running the world of commerce, and their ambition is to do just that. That amount of centralized power makes democracy difficult. Coupled with a growing, intrusive and controlling government, individual freedom and choice in the market place are very much at risk. And…that amount of centralized power strangles innovation and outside-the-bell-curve gumption. What To Do? You know, we are dealing with some truly ruthless, beyond greedy, power hungry people in the world of Big Tech and E-Commerce. It’s quite beyond the last turn of the century, because this group of magnates are striving for world domination, no matter the cost to individuals and entire cultures. Their practices are so morally vacant. So, it looks like anti-trust regulation may be one answer. Lina Kahn is a good choice to lead the FTC. Another solution that could put the kibosh on the oligarchs is the solution I love the most: the distributed web and blockchain commerce where producers and consumers have direct access to each other. No need for middlemen. Fingers crossed! It’s going to be crazy folks. I hope Lina Kahn gets support from the politicians of both parties, a lot of whom have been bought out by Big Tech “donations.” I hope India is smart, and doesn’t fall for the “convenience temptress.” Remember, dear India, another meaning for the word “convenience” is “toilet.” And, of course, dear readers, try to support local businesses! Vamos a Ver!
Paula Labrot

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June 11, 2021

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