Experts explain 'What is the problem & how is Amazon's market monopoly?'
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Amazon has the world's largest online mail order platform and is used by users around the world. Amazon's platform where you can do various shopping while at home is very convenient, but it has been pointed out that `` Amazon may violate antitrust law (antitrust law) '', American judicial The ministry's antitrust station has begun to investigate. Meanwhile, Mr. Sally Hubbard , an expert on antitrust law and a director of the Department of Justice Department of Antitrust in New York, USA, is answering an interview about Amazon's monopoly.
Amazon Is a Monopoly, an Interview With Sally Hubbard-Marketplace Pulse
https://www.marketplacepulse.com/articles/amazon-is-a-monopoly-an-interview-with-sally-hubbard
In response to the interviewer's question, 'Is Amazon an Exclusive Company?' The monopoly power of a company is defined as the ability to control prices and eliminate natural competition in the market, and Amazon has both. However, Hubbard said, “The monopoly itself does not violate the Antimonopoly Act,” and “a company with monopoly power strengthens, maintains, and acquires monopoly power through exclusive actions. Explained that this is the antitrust law.
As an exclusive act that a company performs, `` to reduce the price to a level below the manufacturing cost to exclude other companies (predatory pricing) '' `` exclusive contract with business partners '' `` with other companies Such as “rejecting the transaction”, “assuring that one of the contracted companies is committed to the most advantageous terms in the transaction (MFN clause)”, “product / service design in a way that eliminates market competition”, etc. . There is no problem if these acts are executed by companies without monopoly power, but if companies with monopoly power like Amazon do it, it will be a violation of the Antimonopoly Act.
In addition, some people argue that 'the market where Amazon competes is the entire retail market, and Amazon has no more than a few percent of the retail market as a whole,' Hubbard said He points out that Amazon's related market will not be certified as “all retail”. Since the market is defined by a specific product and its alternatives, the “retail industry as a whole” cannot be considered a market. Thus, if Amazon is recognized as the exclusive platform for a particular product area, it can be said that Amazon has exclusive power.
In response to the question 'What kind of anti-competitive behavior is Amazon actually doing?' Hubbard points out that there is a category called 'Platform Privilege' as one of Amazon's anti-competitive behaviors . Just as technology companies prioritize their products over other companies, Amazon sells its own products on the Amazon platform, giving them preferential treatment in terms of algorithm ranking, advertising, marketing, customer reviews, etc. . “Amazon controls and plays the game,” commented Hubbard.
Amazon is also pushing out third-party sellers from the platform by signing exclusive contracts with certain brands. Amazon, for example, has banned Apple product resellers from the marketplace, but this exclusive contract is the central law of antitrust law, the Sherman law , “all contracts, combinations and collusions that restrict transactions. There is a possibility of violating the item 'Forbidden'.
Amazon has an exclusive contract with not only Apple but also major brands such as Nike, and it has locked out resellers on the Amazon marketplace. Amazon says `` To reduce fake brand products '' about this move, but Mr. Hubbard is a pretext for the problem of fake brand goods, the purpose is to let the brand agree to sell products directly on Amazon I think it was. Hubbard pointed out that Amazon would be able to control the price by making an exclusive contract with the brand.
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In addition, Amazon is suspected of predatory pricing, and there are also facts that have imposed MFN provisions against many vendors. As a practical matter, Amazon is an exclusive mail-order platform for many merchants, and it is very difficult for merchants to negotiate transaction details with Amazon, so it is easy for Amazon to make anti-competitive contracts. Hubbard insisted.
Amazon's most powerful feedback loop is Amazon Prime , a paid membership program. By increasing the number of Prime members and increasing sales of products that support the Prime service, many vendors join Fulfillment by Amazon (FBA) to make their products compatible with the Prime service. In FBA, merchants deposit goods at Amazon's logistics base to enable quick shipping and inventory management, but Mr. Hubbard is a problem that many merchants are almost deprived of the option of not participating in FBA Pointed out. There is a danger that this is considered a kind of exclusive act.
In response to this stance, “Amazon made a huge capital investment in the infrastructure including the warehouse when other vendors did not act, and as a result, we kept the inventory that other mail order vendors could not hold. There is also a claim that Amazon's superiority is a legitimate result of a global investment, isn't there a current situation that can be managed? ' However, Mr. Hubbard said, “As explained earlier, just dominating the market does not violate the antitrust law, and investing in the warehouse does not violate the antitrust law. `` It is a problem to strengthen, maintain, and acquire monopoly power through general acts, '' he admits that Amazon has built a competitive advantage through capital investment, but it is allowed to take action to eliminate competition and strengthen monopoly I countered that.
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When Amazon monopolizes the market, it means that things like competition between companies, open markets, and uncentralized economies are lost. Hubbard argues that these elements are the fundamental principles of capitalism and the American economy, and consumers can benefit greatly from intense free competition. It is not desirable to control which consumer products and brands will be dominant by a single large company, and antitrust laws will bring benefits to consumers.
Already in the United States, antitrust agencies and others have started to investigate Amazon, but according to Mr. Hubbard, the investigation of the Antimonopoly Act requires a period of one to two years or more. Also, if Amazon and the judicial authorities reach a settlement, business practices are expected to improve in a few years, but if developed into a lawsuit, it may take 5 or 10 years. However, Hubbard pointed out that there is a “government regulation” that could lead to faster improvements. Elizabeth Warren who is running for the presidential election in 2020 has proposed an intervention in Amazon, and it seems that politics can quickly improve Amazon's monopoly system.
Mr. Hubbard admits that Amazon's monopoly will not collapse right now, but due to the accumulation of actions by the judicial authorities and the government, Amazon's monopoly will not last forever. Mr. Hubbard said that it is difficult to determine how long it will take, but Amazon's market monopoly is 'destined to eventually collapse'.
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