Amazon stifles competition
We once imagined that the Web would make it easier for anyone with a good idea to start a business and succeed.
It hasn’t turned out that way. Online commerce has become dominated by a single company. Last year, Amazon captured almost half of U.S. online commerce. It’s now extending its tentacles in every direction, including by manufacturing more of the goods it sells and building a delivery network that could challenge UPS.
Many tell the story of Amazon’s rise as one of innovation. In fact, it’s also a story of how Amazon has used its financial might to stifle competition. Amazon has priced key goods below cost to undermine rivals. It has also copied the best-selling products of companies that sell on its site and then given its own versions top billing in search results. As one example, when the upstart Zappos gained traction with consumers, Amazon reportedly spent $150 million selling shoes at a loss and then, as Zappos foundered, bought the company.
Buying Whole Foods would enable Amazon to cement its dominance of online retail, while extending its power into groceries. It would give Amazon a full line of private-label foods to sell online. It would add hundreds of stores and fresh-food warehouses to its infrastructure, entrenching Amazon as the sole source for rapid delivery of groceries and everything else.
Should it be approved, the deal would likely end investment in competing grocery delivery start-ups, allowing Amazon to own the sector without having to work for it. And many small food producers, who’ve built thriving businesses selling regionally to Whole Foods, would suddenly find themselves married to a predatory partner.
Amazon’s dominance has consequences for all of us. It’s making it harder to start a business, hollowing out our communities of businesses and jobs, and giving one company too much power to pick winners and losers and steer the choices we have as consumers.
Our anti-monopoly policies were designed to prevent exactly these kinds of harms. We should use them.
Stacy Mitchell is co-director of the Institute for Local SelfReliance and co-author of the report “Amazon’s Stranglehold.”