According to an article from Business Insider, published shortly after Amazon acquired Whole Foods, the internet shopping giant is far from a monopoly. “Not even close,” it said. It argued that its $150 billion in sales, some of which doesn’t come from online retail, represents only a tiny fraction of the $3.7 billion total for annual retail revenue in the US. It pointed out that Walmart was still the largest retailer in the US, raking in nearly half a trillion dollars in 2016, 3.5 times Amazon’s revenue.
The article explains Amazon’s rise and its eclipse of smaller retailers, in simple terms:
“Those retailers that have embraced technology or found a specialized niche have done well. Those that haven’t, haven’t.”
But does this argument hold up? Is Amazon’s dominance really “not even close” to a monopoly? Is this even the right question to be asking when trying to get at the heart of Amazon’s influence on society?
For one thing, it certainly might be worth noting that Amazon chief Jeff Bezos is a major investor in Business Insider.
Other observers see things quite differently.
By the fall of 2016, the percentage of online shoppers who skip search engines in favor of Amazon itself had risen to 55 percent. As a way to stay on the radar of customers, many small businesses have set up shop as third-party sellers on Amazon. In itself, this might not be problematic. Amazon describes itself as a platform to help entrepreneurs “pursue their dreams.” Yet, researchers from Harvard Business School found that Amazon tracks transactions with third-party sellers, often selling their most successful products themselves, at lower prices.
It also favors either its own products, or third-party sellers that op to pay for warehouse and shipping fees, to be chosen as the default seller for a given product. According to ProPublica, three quarters of default sellers chosen for products were either Amazon itself, or one of these third-party sellers, from which Amazon is able to extract even more revenue.
The relationship to these third-party sellers highlights another important point. Amazon is not aiming to become a large retailer. They are aiming to become a platform for commerce in general. The company produces film and television, publishes books, manufactures electronics, sells an ever-larger portion of the internet’s advertising, handles data from intelligence agencies, produces a vast array of other products, and has even set out into the healthcare market.
In facilitating the marketplace itself, the company is able to maximize revenue, keeping as much as possible for itself while passing on as many costs as possible to smaller companies, workers, and society as a whole. As long as Amazon continues to avoid passing the costs on to consumers, or shouldering their burden itself, it seems its meteoric rise will continue.
In Britain, the GMB trade union announced plans this week to bring Amazon to court over their labor practices. It contends that couriers that work for Amazon, in addition to other companies, should be considered employees instead of independent entrepreneurs. Such a ruling would force the company to pay the minimum wage and to provide sick and holiday pay. The union says that couriers are now paid per package delivered, with wages cut if they fail to meet unreasonable targets. Designating these workers as self-employed means that Amazon doesn’t pay an employer’s tax, and even receives tax credits. They also avoid paying for the national insurance of their workers, as they would need to do if they were considered employees.
In the US, Amazon competes with other retailers in a vast array of sectors, counting everyone from Walmart to Apple to Netflix to grocery stores as competitors. They have purchased the largest online independent shoe store, the largest independent online diaper store, and the largest online independent comics store, all in the past decade. Last year, they accounted for almost a third of all US retail growth, both on and offline.
According to Lina Khan, with the think tank Open Markets team at New America:
“I think of Amazon as serving almost as the essential infrastructure for the American economy at this point, when it comes to commerce. And that affords Amazon a lot of power and control.”
Could it be hard to identify Amazon as a monopoly because it’s reached a whole other echelon of control over the marketplace? Perhaps this transformation is still incomplete. But as more of the retail economy goes online, this dominance is on track to become even more pronounced. It’s time to ask ourselves how this hegemony affects the rest of society.