It’s time to act against Amazon’s monopoly.
It’s time to act against Amazon’s monopoly.
W e all like to have options in life. Choices define us, whether it’s our next meal or the company we keep in our close circles. This is an important concept in every aspect of life, including how we use modern-day technology. In theory, shopping online should give us more choices. We should have easy access at our fingertips to the specific brands and products we prefer. It’s vital that we have full transparency and choice in our online marketplace, as we do in traditional brick-and mortar retail. But that’s not the case right now, when Big Tech titans such as Amazon violate these free-market principles. This monopolist regularly promotes its own products through its search algorithm, disadvantages its competitors, and even copies the products designed and created by these competitors, selling them under its own banner.
That’s why we need the American Choice and Innovation Online Act — a significant, bipartisan antitrust bill introduced by senators Amy Klobuchar (D., Minn.) and Chuck Grassley (R., Iowa) and representatives David Cicilline (D., R.I.) and Ken Buck (R., Colo.) — to pass into law, which would prohibit these practices. This legislation codifies protections for small companies from the behemoth tech giants and their anticompetitive business practices in the online marketplace. This has been long overdue. Big Tech regularly self-preferences at the expense of these smaller businesses. This legislation would stop that.
A recent article in National Review Capital Matters by Jessica Melugin, who works for the Competitive Enterprise Institute (to which Amazon has donated), argued the legislation doesn’t live up to its name. Amazon is aggressively lobbying against this bill. But its arguments are easily debunked.
Amazon has long been credibly accused of self-preferencing — that is, boosting its own products by manipulating its search algorithm. Essentially, Amazon’s search function would factor in the profitability to the company and prioritize those products above the most relevant or best-selling results. This helped Amazon pad its bottom line at the expense of the small businesses that rely on Amazon’s service to get their product to market. Scare tactics claiming that prohibiting this product will harm small businesses or slow shipping times are baseless and never presented with evidence.
Melugin additionally argues that “such companies as Amazon are not doing anything online that traditional retail hasn’t been doing for decades.” This could not be further from the truth. Amazon has far more power over customers’ purchases than any brick-and-mortar retailer ever had. In a retail store, consumers have near-complete control of their purchasing decisions. And they can always go next door or down the street. But Amazon controls its entire interface, from the home page, to search results, to the purchase page.
Most of the product clicks on the tech giant come from the first page of results. If you’re walking in a store, you see everything in front of you — nothing is hidden behind an extra page click. Amazon also doesn’t have to worry about inventory like a brick-and-mortar store would. Because of its dominance, Amazon doesn’t have to worry about sellers taking their products to another competing website where they may get more exposure. So much for the argument that brick-and-mortar stores are doing the exact same thing as Amazon.
The author also excuses Amazon’s use of third-party data to guide its own product development. But this is one of the company’s most dangerous and monopolistic practices. Amazon can look over multiple competing products that are sold on its platform, analyze which one is the most successful, and copy that one for its own product.
Amazon has denied these claims, of course. But this was evident in a recent Reuters report on Amazon’s copying of popular clothing brand John Miller in India. Amazon blatantly followed the measurements of the John Miller clothing to the point where it was difficult to discern any difference between the two. In response to the tech giant’s knock-off of the John Miller brand and search-bar manipulation, a spokesman for the brand’s parent company rightly stated to Reuters that Amazon is “in a powerful position of being both an online marketplace operator and a seller and collector of data,” which “is leading to misuse of consumer and seller data giving them the power to kill Indian entrepreneurs and their brands.”
Any company that partners with Amazon faces a dilemma. Amazon exerts such a firm grasp over the marketplace that businesses can either partner with the tech giant and cede some profits to them, or they can lose access to Amazon’s wide base of customers. But Melugin downplayed this dilemma, stating that companies that don’t want to sell on Amazon “are free to sell their wares elsewhere.” Unfortunately, because of Amazon’s effective monopoly, there is no “elsewhere.” Its market dominance is such that sellers flock to Amazon, leading to more buyers following those sellers. The more buyers on the platform, the more sellers operate on the website. The customer base grows to a point where Amazon can set any rules in its favor, and nobody can do anything about it.
That’s why we need to pass The American Choice and Innovation Online Act now. Amazon’s growth is suffocating competition. Its practices are monopolistic. We cannot afford to wait any longer. The time for more choice and innovation is now.