The NewCo Daily: Today’s Top Stories
Antitrust fights in the tech industry have always been problematic. Software is a “non-rival” good — additional copies cost nothing to produce, and one person possessing it doesn’t exclude another — so monopolies don’t feel like such a big problem, and the industry changes so quickly that monopolies tend to be fleeting. The last big antitrust battle in tech, the 1990s-era case against Microsoft, created a lot of sound and fury but mostly succeeded in distracting, rather than dismantling, its target.
Nonetheless, Amazon’s deal to buy Whole Foods has raised a whole new wave of antitrust talk — like this in-depth discussion in The Yale Law Journal, or this essay by Oliver Staley in Quartz that compares Amazon founder Jeff Bezos to John D. Rockefeller.
In part, this is because Amazon increasingly does seem to be closing in on a monopolistic role in the online retail marketplace. But it’s also because Amazon mostly sells real physical-world stuff, “rival goods” kinds of things, and when you have a monopoly in that kind of business, it’s a lot more tangible than in a market like software.
Amazon’s growing power is also spooking its remaining competitors, as in this Wall Street Journal story about Walmart telling its tech contractors to forsake Amazon Web Services, the popular cloud platform. As long as Walmart remains a strong competitor, the antitrust case against Amazon is hard to press. But it certainly looks like Walmart itself is getting worried. Meanwhile, as Amazon-style selling online eats more and more of the retail world, it is massively reordering — and in some communities, devastating — the retail employment picture (The New York Times). That’s the kind of impact that can build political pressure and support for moves like antitrust action.
As orthodox economics has it, monopolistic companies tend to take losses while they build market share, then crank up the prices and profits once they’ve driven competitors out of business, hurting the public. That’s why governments intervene in the first place to break up monopolies, and that could still happen with Amazon. But the company’s 20-year history is one of resolutely disappointing shareholders by failing to boost profits, and instead making customers happy with fast service, good prices, smart web design and amazing selection. Until Amazon’s investors revolt or its market share growth finally wakes up the antitrust authorities — and neither scenario looks likely — its road to world domination remains unblocked.
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