If you bought something on the internet today, there's a good chance Amazon was involved. The Seattle company captures nearly half of all dollars spent online. Half of all American households are Prime members. Half of all shopping searches originate at Amazon.com. Amazon is the one-click pioneer that drives down prices and makes our lives easier. But, arguably, it's also a monopolist that hurts competition, kills jobs, and harms local communities.
A scathing new report from the Institute for Local Self-Reliance (ILSR), which campaigns for sustainable local economies, argues for action to curtail Amazon's influence. It compares Jeff Bezos to a "19th-century railroad baron controlling which businesses get to market and what they have to pay to get there," and it argues regulators should break up the company, and that states should reduce tax breaks and subsidies that privilege the company over its competitors.
"By using Prime to corral an ever-larger share of online shoppers, Amazon has left rival retailers and manufacturers with little choice but to become third-party sellers on its platform," the report says, pointing to one way Amazon dictates trade. "In effect, Amazon is supplanting an open market with a privately controlled one, giving it the power to dictate the terms by which its competitors can operate, and to levy a kind of tax on their revenue."
ILSR estimates that Amazon has eliminated 149,000 more jobs in retail than it has created through its warehouses, and that it's undermining long-standing norms in employing workers. "Many of the workers in Amazon warehouses are subcontracted temporary workers, which the company refers to as 'seasonal,' but are, in many cases, year-round 'permatemps,'" it says. Last year, Amazon set up an Uber-like delivery network called Amazon Flex, which lets anyone over 21 years of age become an Amazon driver. Drivers get paid per delivery (not hourly) and have to cover their own fuel, maintenance, and insurance. Similarly, Amazon's Mechanical Turk micro-work platform enables companies to access labor at low costs without providing any social protection or benefits.
ILSR blames Amazon for the deterioration of many downtown shopping streets. By the end of 2015, it says the company displaced enough sales to cause 135 million square feet of retail vacancies.
Calls have been growing to rein Amazon in. During the presidential campaign, Donald Trump said Bezos has a "huge antitrust problem because he's controlling so much." In a speech in June, Senator Elizabeth Warren said Amazon (along with Apple and Google) "provide platforms that lots of companies depend on for survival," and that "in many cases [they] compete with those small companies so that the platform can become a tool to snuff out competition."
But it's far from likely that such regulators will be bold enough to take on Amazon. Thirty-plus years ago, under Ronald Reagan's presidency, antitrust policy shifted from preventing concentrated market power in all instances to the narrower goal of "maximizing economic efficiency." In other words, if companies benefit consumers—as Amazon surely does (except when those consumers have lost their jobs because of Amazon, of course)—then its outsized market position is beside the point. This change in thinking "has confounded our ability to see Amazon for the monopoly it is, creating a pathway for the company to gain a stranglehold on our economy with little interference from regulators," the report points out. We'll need drastic change in antitrust thinking before Amazon sees its increasingly powerful economic role threatened, let alone questioned.
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