Economic Liberties Releases New Report on Amazon’s Destructive Monopoly, Offers Solutions to Curb Its Harms

July 24, 2020 Press Release

For Immediate Release: July 24, 2020

Media Contact: Robyn Shapiro, rshapiro@economicliberties.us

Economic Liberties Releases New Report on Amazon’s Destructive Monopoly, Offers Solutions to Curb Its Harms

Washington, D.C. — As the Big Tech CEOs, including Amazon’s Jeff Bezos, prepare to testify before the House Subcommittee on Antitrust, Commercial and Administrative Law, Economic Liberties released “Understanding Amazon: Making the 21st-Century Gatekeeper Safe for Democracy.” Authored by Matt Stoller, Pat Garofalo, and Olivia Webb, the report describes Amazon’s key lines of businesses, demystifies its unfair and abusive behavior, summarizes some of its most pernicious effects, and offers legislative and regulatory proposals to address Amazon’s interlocking harms.

“Amazon’s dominance is not a story of technology or innovation, it is a story of power. Our laws encourage the concentration of power in the hands of a few,” said Matt Stoller, Research Director at the American Economic Liberties Project. “We must change this legal framework so that we the people govern our economy instead of Jeff Bezos.”

Amazon is more than a retail empire; it is now the middleman in several sectors of the economy, setting the terms and conditions by which Americans conduct online commerce. Amazon’s divisions include a movie and television studio, a cloud computing utility, an electronics maker, a supermarket chain, a fashion branch, and divisions in advertising, security, music, books, streaming games, voice assistants, fulfillment and logistics, and pharmaceuticals. These various branches of the corporation offer an endless stream of cash flow that enables Amazon to cross-subsidize other activities and lines of business that are not profitable. As a result, Amazon has become a gatekeeper that continually fortifies its gatekeeping capacity, placing increasingly large swaths of commercial actors into a position of dependency, and then exploiting that dependency to leverage itself into powerful positions in new markets.

“Amazon’s strategy has always been to acquire market power — with the help of Wall Street investors hungry for monopoly profits and policymakers who have been indifferent, at best to bully businesses, workers, and communities and extend its dominance further into society,” said Sarah Miller, Executive Director of the American Economic Liberties Project. This paper demystifies what Amazon’s strategy is, the range of abuses it engages in, and the steps policymakers should take to eliminate its extraordinary and unprecedented gatekeeping power over American commerce.”

Truly curbing Amazon’s dominance will require both structural separation of Amazon’s lines of business, as well as regulation over the resulting markets to ensure fair and open markets and prevent re-consolidation. “UnderstandingAmazon” outlines ten key regulatory recommendations, including:

  • Eliminating Self-Preferencing of Amazon’s Products on Platforms it Controls: Policymakers must prohibit platforms like Amazon from giving preferential treatment to products they already own or control. 
  • Prohibiting Tying: Amazon uses close connections between different parts of its business to extract more money from those who use its platforms. While structural separation would be a preferable way to address the problem, but this practice, known as tying, per se illegal for dominant platforms would provide an alternative path.
  • Restoring Checks on Predatory Pricing: Amazon’s predatory belowcost pricing strategy undermines competition. Reimposing restrictions on the strategy is essential. 
  • Policing Deceptive Search Results: Amazon’s advertising business relies on search displays that contravenes the FTC’s guidance on deceptively formatted search engines. The FTC should enforce and potentially expand its guidance against false and deceptive practices.
  • Protecting Amazon’s Suppliers, Platform Dependents, and Customers: An abusiveness standard should be added to FTC’s Section 5 authority and the Robinson-Patman Act should be enforced. We should also ban arbitration clauses and make it easier to bring class action antitrust lawsuits. 
  • Protecting Businesses from Amazon’s Surveillance and Copycatting: Platforms should not be allowed to use data from their vendors to create similar products for a lower price. 
  • Preventing Amazon from Weaponizing Counterfeit Products: Platforms should be held liable for products sold by third party merchants on their platforms. 
  • Limiting Amazon’s Acquisitions: Amazon’s 25+ year acquisition spree must come to an end. 
  • Protecting Amazon’s Workers from Abuse and Exploitation: Amazon uses noncompete clauses to prevent workers from seeking other jobs, depressing their bargaining power. Noncompete clauses should be made illegal, and stronger labor laws and safety standards must be enacted.
  • Stopping Amazon’s Public Subsidization: Amazon’s ability to extract tax concessions from states and localities must end. 

Read “Understanding Amazon: Making the 21st-Century Gatekeeper Safe for Democracy” here.

Economic Liberties recent report on Facebook and Google, “Addressing Facebook and Google’s Harms Through a Regulated Competition Approach,” is available here

Learn more about Economic Liberties here.

 

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Economic Liberties works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. AELP believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.