Is Amazon A Monopoly?

Franklin Foer argues that the company is “the shining representative of a new golden age of monopoly that also includes Google and Walmart”:

We seem to believe that the Web is far too fluid to fall capture to monopoly. If a site starts to develop the lameness of an AltaVista or Myspace, consumers will unhesitatingly abandon it. But while that meritocratic theory might be true enough for a search engine or social media site, Amazon is different. It has a record of shredding young businesses, like Zappos and, just as they begin to pose a competitive challenge. It uses its riches to undercut opponents on priceAmazon was prepared to lose $100 million in three months in its quest to harm Diapers.comthen once it has exhausted the resources of its foes, it buys them and walks away even stronger. This big-footing necessitates a government response.

Yglesias counters that “having a lot of the market is not the same as having a monopoly”:

One important hint about Amazon’s non-monopoly status can be found in its quarterly financial reports. That’s where you find out about a company’s profits. In its most recent quarter, for example, Amazon lost $126 million. Losing money is pretty typical for Amazon, which is not really a profitable company. If you’d like to know more about that, I published 5,000 words on the subject in January. But suffice it to say that “low and often non-existent profits” and “monopoly” are not really concepts that go together.

Competitors hate Amazon because retail was an ultra-competitive low-margin game before Jeff Bezos ever came to town. To delve into this field and make it even more competitive and even lower-margin seems somewhere between unseemly and insane — but it’s the reverse of a monopoly.

While conceding that Amazon “does have something like a monopoly over the books market,” Annie Lowrey also fails to see how the term applies to the company overall:

Who is losing when Amazon is winning? Does the government really need to step in to protect Amazon’s rivals, provided that the market remains a market? Why is it wrong for Amazon to demand more and more from its suppliers? Is there any evidence that Amazon controls other markets like it controls the books market? All this is unclear.

She continues:

None of this is to say that Amazon should not face new regulations to force it to treat its workers better. None of this is to say that Amazon could not become a monopoly by pushing out or buying up more of its e-commerce rivals. None of this is to say that its harassment of Hachette is right or should be legal or should not face some serious pushback from the government and consumers. None of this is to say, either, that our legal framework should not view seemingly benign monopolies, like Google, with anything other than skepticism. But Amazon being a shitty, vicious competitor and Amazon being a monopoly are hardly the same thing.

Derek Thompson joins the “what monopoly?” chorus but acknowledges that Foer’s essay raises an interesting point that “there is something devilishly seductive to the conveniences of digital capitalism that makes life better for us as consumers and worse for us as workers”

Does buying diapers once from Amazon makes one morally complicit in the working conditions of its warehouse employees? What about subscribing to Amazon Prime? Having an Amazon credit card? These are harder questions, but they have nothing to do with Amazon’s mythical status as a monopolist. If the government thinks warehouse workers deserve higher wages and better conditions, we don’t have to go through the Justice Department’s anti-trust squad to improve their lot. We can just pass new laws. Don’t ask consumers to boycott a good deal.

Previous Dish on Amazon’s controversial business tactics here.