[daveFNbuck]

The interviewee didn't define monopoly by anti-competitive behavior.

> Is Amazon a monopoly?

> Yes, monopoly power is defined as the power to control prices or exclude competition. Amazon has the power to do both. But being a monopoly on its own is not illegal under the antitrust laws. Illegal monopolization requires both 1) monopoly power and 2) that the firm acquired, enhanced, or maintained that power by using exclusionary conduct.

[AnthonyMouse]

> Amazon has the power to do both.

No they don't.

If Amazon significantly raises prices it charges customers, or lowers prices it pays suppliers, to above/below what Walmart or a hundred others do, are the customers and suppliers going to stay with them? No. When they don't put you in their store, can they also prevent you from reaching the same customers through any other store? No.

The fact that they can choose not to buy from you, or won't pay more than a given price, doesn't make them a monopoly. Anybody can do that. The mom and pop coffee shop on the same corner with six other mom and pop coffee shops, a Dunken Donuts and two Starbucks can do that. But the fact that they won't do business with you doesn't mean you can't sell your goods for a similar price to the same end customers through a hundred competitors, which is why they're not a monopoly.

[chumali]

This is a ridiculous argument, Amazon clearly has substantial market power which can be used to reduce the exposure of their suppliers [1] (the loss in exposure means there a significant costs associated with suppliers moving to another platform/store - the very definition of market power).

Comparing them to the mom and pop coffee shop is absurd - unlike the coffee shop, there are not hundreds of Amazon competitors that you can sell your product through. You are literally comparing textbook definitions of perfectly competitive markets (e.g. coffee shops - hundreds of competitors and low barriers to entry) to oligopoly markets (e.g. Amazon - very few competitors and high barriers to entry), and somehow reaching the conclusion that they are the same? This is obviously nonsense and goes against the most basic of economic principles.

[1] https://www.cnbc.com/2019/03/19/heres-why-retailers-should-b...

[AnthonyMouse]

> unlike the coffee shop, there are not hundreds of Amazon competitors that you can sell your product through

There are though. Not only major ones like Walmart, eBay, Esty, Target, Craigslist, etc., but the fact that anyone can create their own website and then get customers through price comparison sites by having the most competitive prices. On top of which, brick and mortar retailers can reach the same customers for most products, and there are a zillion of those you can sell through, or a slew of wholesaling companies that will do the retail distribution work for you.

That's assuming you're manufacturing the products; if you are the wholesaler then what did you think your job was? It's to negotiate with lots of retailers to buy through you. "I want Amazon to provide 100% of the value but I still make money and never get cut out" is not a sound business model.

> the loss in exposure means there a significant costs associated with suppliers moving to another platform/store - the very definition of market power

You can set up with eBay in like an hour, probably the same for most others. It would be more if you have a lot of different SKUs, but that implies you're doing more volume and it's still a small fraction of your total costs.

[headsoup]

You appear to be only referring to the retail side of Amazon, not the platform side where the article mentions Amazon has numerous restrictive practices in place and set the price through these by excluding competition and competing through their own retail lines, regardless of other (uncompetitive) options

[cryptica]

Amazon could drive companies within entire product sectors to bankruptcy simply by lowering the price of that product category on Amazon. The problem is that they can afford to do this in a sustainable way because they have so many other product lines.

When other big chains like Walmart do similar things, it does not have the same effect because people don't go to Walmart to buy just one item. Amazon is different; if they lower the price of an item, consumers react quickly and that can put other websites which specialize in that item out of business. Then when all major competitors within the item category are out of business, Amazon can increase the price to any amount it wants and use the extra proceeds to continue the process with different item categories.

[AnthonyMouse]

> Amazon could drive companies within entire product sectors to bankruptcy simply by lowering the price of that product category on Amazon. The problem is that they can afford to do this in a sustainable way because they have so many other product lines.

Selling below cost can be illegal dumping. But do you have any evidence that they're actually doing that, rather than them merely negotiating a better price for it than you and then selling it with thin (rather than negative) margins?

> Then when all major competitors within the item category are out of business, Amazon can increase the price to any amount it wants

Notice that this only works if nobody is willing to reenter the market when the price increases, which is rarely the case. Otherwise they have to maintain the lower prices forever.

[AnthonyMouse]

Choosing how much you're willing to pay for something isn't what "control prices" means. What it means is that if you offer to sell for more or buy for less by a significant amount, that won't cause your customers or suppliers to switch to a competitor. But that is what it would do with Amazon. People would go buy and sell using Walmart or a hundred other competitors instead.