The standard for antitrust enforcement for decades has been when the action of a company harms consumers.
How does Amazon harm consumers? I mean precisely, how?
Amazon is one of the most highly rated companies in the US by its customers. Its NPS score is 69 and 70 is considered "world class".
I can get almost anything online shipped to my house the SAME DAY. If Amazon sends you the wrong item they'll let you keep the wrong one and immediately ship you a new one!
How is taking action against Amazon going to help consumers? Seems to me that just ends up being a giant win for Walmart and target who offer worse service and often worse prices!
It's possible for a monopolist to have a great product that allows people to do amazing things that were never previously possible and still be harming the consumer.
Microsoft had the leading desktop operating system in the 90s that allowed millions of ordinary people to start using computers for the first time, yet their browser bundling was considered problematic.
Bell telephone allowed you to talk to people across town and across the country in real time. People love talking to their far away friends and relatives! But they were simultaneously providing this futuristic service and harming consumers with their anti-competitive practices and monopoly pricing.
It's possible for Amazon to both be providing a great service to you and me and be harming consumers with priority placement of Basics products and even harming competitors by abusing their access to product metrics in deciding what Basics products to make.
Let's be clear about something misunderstood about Microsoft: Microsoft won that litigation in America, which is the jurisdiction we're talking about. Framing Microsoft's browser bundling as being "considered" problematic is the same as framing someone who was acquitted as being "considered" a criminal. The Microsoft approach remains an acceptable practice in law and is one of the principle points of the Apple v. Epic fight.
> the district court ruled that Microsoft's actions constituted unlawful monopolization under Section 2 of the Sherman Antitrust Act of 1890, and the U.S. Court of Appeals for the D.C. Circuit affirmed most of the district court's judgments.
To expand on this: they basically won the right to bundle on appeal, but they were found to have abused their market power in support of IE.
First Trial:
> On June 7, 2000, the court ordered a breakup of Microsoft as its remedy.[19] According to that judgment, Microsoft would have to be broken into two separate units, one to produce the operating system, and one to produce other software components.
Appeal:
> On November 2, 2001, the DOJ reached an agreement with Microsoft to settle the case. The proposed settlement required Microsoft to share its application programming interfaces with third-party companies and appoint a panel of three people who would have full access to Microsoft's systems, records, and source code for five years in order to ensure compliance.[29] However, the DOJ did not require Microsoft to change any of its code nor prevent Microsoft from tying other software with Windows in the future.
If you’re convicted of murder because the government dismissed black jurors due to their racial prejudices in order to assure the jury was all white and then the conviction is overturned on appeal and the prosecutor declined to reprosecute, are you guilty of murder? No. You aren’t.
More closely: if you take a plea bargain and plead guilty to breaking and entering instead of murder, are you guilty of murder? What if you only agreed to the plea bargain because you didn’t want to spend the millions of dollars to litigate again? This latter hypothetical is the reality of corporate prosecution in America: companies will settle just to avoid tainting their reputation and spending the cash to win on the merits. That doesn’t mean that they’re guilty.
Most jurisdictions do not consider American Plea bargains a proper legal process.
You are suppose to be tried in a public process by an impartial judge and a jury of peers, not making a deal behind closed doors with a prosecutor looking to advance his career.
Microsoft's dirty tricks with DOS, Windows, and other would-be commodity software are legend. They should have gotten parted out into OS, Desktop suite, and probably several other fragments a long time ago. That stuff was a nightmare for me as a consumer.
I agree they should have been penalized (ideally more harshly than they were) for their legendary anticompetitive behavior, I'm just no longer as sure that partitioning the company out into distinct divisions would have been a net gain for the consumer as I used to be, especially against the specific behaviors they were accused of.
How, for example, would breaking up Microsoft into distinct divisions prevent, say, the OS division from enforcing the same anticompetitive requirements on companies licensing the OS?
I also think consumer perception of what's reasonable in an OS has shifted since then. I don't think any of us would argue now, for example, that shipping a desktop OS with no browser installed by default would be a reasonable choice. (Likewise probably a media player.)
Should it be impossible to uninstall? Maybe not, but there's a not-unreasonable argument to be made for preventing someone from winding up in a situation where they have no browser installed at all and can't look up how to fix it. (Having no media player installed is obviously less catastrophic.)
If you were a competitor at the time, the Halloween documents were NOT NEWS to you, they were just a frightening admission of what everyone knew MS was already doing.
Yes, they absolutely should have been broken up into fragments, if not crushed and handed out to the rest of America for free.
> How, for example, would breaking up Microsoft into distinct divisions prevent, say, the OS division from enforcing the same anticompetitive requirements on companies licensing the OS?
That kind of breakup wouldn't have solved that anti-competitive problem, but it would have solved others (e.g. the Office Team being able to use undocumented OS APIs to get an edge on competitors).
Though, personally I kinda think a breakup of a tech monopoly should be more extreme, for instance by breaking it up by division and splitting some of those divisions further into competitors (e.g. split the OS division in two, each with their own Windows fork to sell, and all the Windows trademarks go to some independent interoperability consortium).
> it would have solved others (e.g. the Office Team being able to use undocumented OS APIs to get an edge on competitors).
I mean, it might have prevented learning about and using new undocumented APIs going forward, but it would be in none of the newly-broken-up companies' interests to break the existing usage.
> splitting some of those divisions further into competitors
Even that I'm skeptical of - first, because you'd need enforcement to prevent them from simply merging again after a while (glares at Ma Bell breakup companies reforming into a few huge companies which usually deliberately avoid competing in markets), and second, I'm not convinced that deliberately fragmenting Windows into 2 distinct codebases is beneficial for consumers?
Even assuming you could avoid one of the two competitors simply winning the vast majority of the marketshare after one round of OS upgrades, you'd likely end up with mutually incompatible API surfaces, thus breaking one of the main reasons people like Windows - compatibility.
(I still claim, though, that given two initially equal products and equal resources, that one will probably relatively quickly eat the other's lunch. Look at what's happened almost every time a large open source project has had a high-profile fork - look at egcs and gcc, or OpenWRT and LEDE, or libav and ffmpeg.)
They are using their power to force competitors out of the market. That's what antitrust is about anyway -- it's not really about how happy customers are. "We're the best!" is easy to say when you've decimated any potential rivals.
Laws that prohibit anticompetitive practices do just as the name implies -- they prohibit companies from acting in a way that inhibits competition with their competitors in the market.
The impact on consumers is often used as a justification and evidence of that, but it's not usually a requirement. It is assumed that the act of being anticompetitive itself is harmful to consumers as it limits their options.
And they would be wrong. The fact that everyone does it is the reason no one truly succeeds, not in the long run. A MAD strategy not only with two players but with millions.
That is why every free market monopoly that has ever existed has passed and we are not living under the thumb of a single all encompassing mega-corporation and the only pseudo-monopolies possible are the ones guaranteed by law in regulations.
>How does Amazon harm consumers? I mean precisely, how?
but burying alternatives, they basically drive smaller product competitors away, reducing their sales and their ability to grow and innovate.
Amazon has been blatantly copying products that other brand sold, and made them cheaper.
Great for consumers if the only thing you care about it price.
Because the game is getting rigged and Amazon products will always be more prominent, no-one can compete with Amazon on these products.
You end up with less competition and less choice.
Amazon can just undercut you, push you down in their listings and get the lion's share of any product type they find lucrative.
Certainly not all that bad but where do you imagine this is going if no-one else is able to compete with Amazon?
Amazon is already king and has power of life and death on countless businesses that rely on it being an impartial party so they have a chance to sell their ware.
The same things were said against Walmart, the exact same arguments word for word.
And yet we saw the rise of independent stores, gentrification, Whole Foods, the rise of e-commerce, the rise of etsy, amazon, ali, ebay, the rise of the Apple Store, the rise of...
And then we saw an explosion of "third party" brands. Millions and millions of alternatives flooded the market despite Walmart "undercutting everyone of their suppliers". From soda to nailclippers, to phone cases to chairs, to spoons, to...everything. Despite all the fear mongering, today there is not a single product category where only one brand exists, there is not a single product category where only the Walmart brand exists.
Competition cannot be stopped, the business cycle cannot be stopped. Birth, growth, death, repeat. Amazon is huge today because Walmart was so huge before it; people actively went out of their way to avoid it just out of spite.
Competition cannot be stopped, except by regulations. Give amazon by law a pen to play in and you are making sure they'll never let anyone else in.
Things never stay as they are, and retail has never been so competitive. Amazon won't be top dog forever, just as Sears wasn't, just as Walmart wasn't. Just as the mighty GE wasn't, or the even mightier East India Co. wasn't.
>The same things were said against Walmart, the exact same arguments word for word.
And?
>And yet we saw the rise of independent stores, gentrification, Whole Foods, the rise of e-commerce, the rise of etsy, amazon, ali, ebay, the rise of the Apple Store
They seem to have a lot of sellers (relatively speaking) that do "triangle fraud". So they sell the part, order it from another site using stolen card, ship to original customer. They could be doing a lot to combat this but basically say "call the police" if they don't just ignore well sourced reports. Moving to more "fulfilled by Amazon" helps but that's never going to cover of all the inventory so fraudsters will always have a home there.
Amazon cares substantially about stopping these things.
As is the case when you are fighting against other humans, who are crafty, financially-motivated, and are willing to break the law, and may be operating from different jurisdictions where attempting to get the DA to prosecute them or filing a lawsuit against them is ineffective, it's a very difficult battle to fight.
As an example I'd be surprised if Amazon could get China to prosecute a business operating from their country that's selling counterfeits on Amazon. Additionally, it's hard for Amazon to know if a product sold in its marketplace is counterfeit: there's no global API or method to look up if a product is authentic. The best you can do is rely on the trust of the seller. If you want to mitigate your risk, buy products that are only sold by Amazon itself, or name-brand 3rd party sellers who have high reputation (like Belkin for electronics; Apple even lists Belkin products that integrate with theirs on Apple's online store: https://www.apple.com/shop/accessories/all/power-cables?fh=4... ).
People occasionally experience counterfeits, but once reported the seller is typically caught and banned. (But if they're a corporation in another country, and willing to break the law and ToS, they'll reincorporate under another name and try to do it again. Stopping this is difficult.)
Reviews are also a difficult problem to tackle. Amazon decided long ago to allow people to leave reviews without purchases, though reviews from people who purchased the item get an extra "verified purchase" badge. But that doesn't stop the abusers: they "buy" the item under various accounts they've created themselves, give the product a good review, and then return it to their own inventory. Small sellers might get a bunch of friends & family to do this, which would be hard to detect as ToS-violating conspiracy; larger sellers will use sophisticated schemes to create many accounts and identities to do the same thing (or simply pay a network of actual people to do it, such as by asking on Craigslist and similar places), to boost reviews of their own products, or if they're willing to burn cash, buy and negatively-review products of competitors. When done from many names/addresses/credit cards/IP addresses, it requires sophisticated intelligence analysis to detect and stop.
Please consider the attackers that Amazon is actually up against when trying to stop these abusive behaviors before concluding that they don't care. They have multiple hundreds of people working on the problems. They are simply hard problems to solve, because Amazon is fighting against other smart, sophisticated humans who gain financially from their abuse.
Amazon could shut down its marketplace, which accounts for 50% or more of all sales on the store, and only sell products it acquires directly from manufacturers, but that would destroy many businesses who have built themselves up using Amazon as a primary venue to sell their product. Furthermore, it would disallow people who have legitimately acquired the product another way from reselling it--for example, say I buy a pallet of some authentic product from a retail store that's going out of business; shouldn't I be able to resell those products? The law says that I can. If Amazon has a marketplace, shouldn't I be able to resell there? These could be Nike shoes or any name-brand products.
(Sophisticated manufacturers who want to protect their supply chains from 3P reselling will repurchase inventory from retailers who are going out of business; or alternatively provide it to retailers on consignment --meaning Nike owns all the shoes being sold in a retailer's store up until the point where they're sold to a consumer; so upon going out of business the retailer is expected to return the inventory.)
Now you run into tricky situations. I buy a pair of Nike shoes brand new from a retail store and never use them. I decide I don't like their look after all. Should I be able to sell my shoes on Amazon as new at a lower price than Nike does? Yes, you should and you can (though you're unlikely to be selected as the default offer as a new untrusted seller with a single product; unless Nike is one of the companies with brand protection for what may be offered as "new"; though I believe you could still sell as "like new"--I am not an expert on this space).
Some brands were counterfeited so frequently that Amazon has started to offer the ability to limit who can sell trademark-protected items that are only sold by their manufacturers with its Brand Registry: https://brandservices.amazon.com/
I believe the sellers who are accused of fraud or counterfeiting will be asked by Amazon to provide proof of authenticity, such as purchase orders from the manufacturer or other proof of authentic origin, but allowing people to open accounts and sell means they start with a presumption of trust -- creating the possibility that some people will have bad experiences with counterfeiters until they're caught and shut down.
Imagine you're the Amazon engineer responsible for figuring out how to stop people willing to break the law and all of your policies to make profit; then put yourself in an attacker's shoes and imagine all the things you could do to circumvent the best ideas you can come up with for stopping fraudulent reviews and counterfeits. (Assume for the sake of argument that your company is committed to allowing third-parties to sell on the store.)
I don't buy it. This is why companies have (sometimes government-mandated) know-your-customer policies.
Allowing anyone to sign up and do business on your platform with minimal friction is great for growing your platform, but it's terrible for growing a trustworthy platform.
The things you bring up are the result of an allow-all policy with a denylist. Deny-all with an allowlist would fix the problem. But of course that costs a lot more to implement, and as long as people still buy stuff on Amazon despite the hassle of dealing with counterfeits, Amazon will continue to fail to fix the problem.
> Amazon cares substantially about stopping these things.
And yet Amazon doesn't even let their customers choose the correct reason for returns when they receive counterfeit items. Instead of being able to choose "This item is a counterfeit" or "I believe this item is a counterfeit", the customer must choose between reasons for their return that aren't entirely accurate, like "Inaccurate website description" or "Item defective or doesn't work".
You'd think that a company that claims it is throwing vast amounts of resources at stopping counterfeiting on their platform would at least try to collect data on the counterfeits their customers receive.
They care substantially, yet still don't have the ability for users to report counterfeit and fraudulent goods in their report form reasons after 25 years.
Yeah, I've personally run into that myself. It's not that the listings are being renamed, it's typically that the seller is listing their product as a "variation" of the other product has has good reviews.
What you're describing is another kind of abuse called Listing Abuse, specifically Variation Abuse. If you encounter Listing Abuse, use the link on the page "Report Incorrect Product Information" [1] and say that the product is experiencing Listing/Variation Abuse, and give a couple examples of reviews that are clearly for unrelated products. It will be investigated, taken down/unlinked from those reviews, and the seller will be punished as appropriate.
("Variations" are products that have different SKUs but are all linked together and share reviews, such as the same product that comes in different colors or patterns or sizes. For example, the Speedo Swim Cap has 20+ color and pattern variations: https://www.amazon.com/Speedo-Silicone-Solid-Swim-Black/dp/B... . Each is actually a distinct product SKU, but since they're all functionally the same, just with different colors or patterns, they have one page and share reviews.)
The fundamental problem that makes Listing Abuse hard to stop is that, if you allow people to sell on your store, that means you allow them to enter their own product information -- which you don't have any way to verify. There's no World Authority for Product Information that you can check against. And not all sellers use Fulfillment-by-Amazon where Amazon holds the inventory; plenty of sellers ship the product themselves, meaning that Amazon never has an opportunity to see or inspect the product. Even if Amazon had a policy requiring new sellers to ship a product to Amazon to inspect, that wouldn't stop malicious sellers from shipping something different to customers.
Sellers have a lot of power to describe the products they're selling that they legitimately need. Unfortunately this means they have the power to list their products as variations of other highly-rated products to falsely make them look like they have a lot of good reviews. This is another one of those problems that is difficult to solve, because you need to give sellers access to describe their products to support legitimate usage patterns, like adding a new variation. (Like Speedo deciding to offer yet another color or pattern beyond their existing 20+).
All that being said, I agree that this should really be one of the easier types of fraud to stop, and don't understand why it's taking so long for the company to shut it down effectively. I think they need to build some machine learning systems that compares product information to review content when new variations are created, to flag likely variation abuse for human review. I also don't understand why variations are not required to all be shown on a single page (which would stop the abuse); there are probably legitimate use-cases that require it.
imagine hiring a thousand people to do the work while engineering is figuring out how to make them redundant, eventually. not every problem needs a technical AI solution. if people need to be a part of the process, so be it. just don't pretend it's too difficult because somehow the scale of the problem on other platforms simply doesn't compare.
As one example, I used to sell textbooks on Amazon. Our account would be suspended at ANY report of potential issues with a book, despite a 98%+ positive feedback rating. It was a constant battle against the platform, despite doing everything under the sun to ensure our customers had a perfect experience.
Meanwhile, Amazon Warehouse was slinging hot garbage and getting constant negative feedbacks (80% positive range) and they never got suspended. Amazon Warehouse even cancelled a massive number of their own negative feedbacks by blaming Amazon Prime for things that had nothing to do with shipping.
We were undercutting Amazon on price for a long time, but in the end we threw in the towel because it was just an impossible marketplace to participate in. Interestingly there was another textbook seller that had a similar experience that got their testimony read to Bezos by Congress.
But just offering better service for a lower price destroys competiting businesses. There is a reason competitor harm wasn't the standard for anti-trust despite it being about competition between companies.
Under the Bork standard, to which skystarman is alluding, rising price is the only concern. "Consumer harm" doctrine.
This was invented from whole cloth by Robert Bork, Richard Posner, and Aaron Director, at the University of Chicago, as part of a decades-long project and organisation to redraft US antitrust policy. It was devastatingly effective.
It also has little if any basis in the legislative rationale of original antitrust legislation in the US.
Thanks for clarifying! That "consumer harm" is a term of art here, and not a catch-all for all downsides the consumer experiences is exactly the kind of confusion I was hoping to clear up.
I’d rather see legislation that focused on both improving worker wage and making it easier for new companies to enter the marketplace and compete with Amazon rather than punishing Amazon for having a store brand or whatever (store brands very often seem to be a good thing for consumers, even if companies don’t like being undercut).
“The standard for decades”... the article is about a new laws being proposed because the current laws don’t properly account for the harms monopoly actors cause.
Isn't that itself very suspicious that they are going all Calvinball and changing the rules which long stood out of the blue?
Now they say it is a monopoly is a problem after Walmart managed to become the biggest employer in several states and literally becoming the only option in many areas? Now they cite vague unspecified harms while long ignoring concrete ones and claim the ones with no ability to exclude from the market are too far? That just screams "pretext".
Out of the blue? We’ve been talking about Amazon’s market power for a long time—longer in tech years. If we expect tech companies to move fast, I’d like regulation to be less than a decade behind.
Price and selection. You may love what Amazon offers today. I think they're moderately terrible, even compared to the Amazon of 10 years ago, and I have fewer alternative marketplaces to choose from and products in those marketplaces. Try finding the exact thing/seller/manufacturer you're looking for... for some things I find it damn near impossible due to how they now consolidate listings. I'm also pretty sure that the prices aren't as good as they would in a more competitive environment but can't be certain as Amazon has wiped out much of it. Competition is a key mechanism that allows markets to self regulate.
The vast majority of companies are incapable of self regulating because it is contrary to their primary mission of 'maximizing shareholder value'. This generally just means eliminate your competition and then maximizing profit. In the absence of competitive markets, the government often needs to step in at some point.
How does Amazon harm consumers? I mean precisely, how?
Amazon is one of the most highly rated companies in the US by its customers. Its NPS score is 69 and 70 is considered "world class".
I can get almost anything online shipped to my house the SAME DAY. If Amazon sends you the wrong item they'll let you keep the wrong one and immediately ship you a new one!
How is taking action against Amazon going to help consumers? Seems to me that just ends up being a giant win for Walmart and target who offer worse service and often worse prices!
So how are consumers being hurt?