Amazon Doesn't Have an Antitrust Problem: An Antitrust Analysis of Amazon's Business Practices

By Myers, Ashlyn | Houston Journal of International Law, Spring 2019 | Go to article overview

Amazon Doesn't Have an Antitrust Problem: An Antitrust Analysis of Amazon's Business Practices


Myers, Ashlyn, Houston Journal of International Law


I.      INTRODUCTION II.     CURRENT EVENTS III.    THE PURPOSE OF ANTITRUST LAWS IV.     EVALUATING MARKET POWER         A.   Product Market         B.   Geographic Market V.      MONOPOLIES VI.     ANTICOMPETITIVE BEHAVIORS         A.   Prices         B.   Consumer Choice VII.    CONSUMER WELFARE VIII.   CONCLUSION 

I. INTRODUCTION

Amazon is the world's largest online retailer. (1) Its credentials do not stop there: Amazon is also the world's third largest retailer, the third largest streaming media company, and the largest cloud-computing provider. (2) While Amazon started as an online book seller, it has quickly become a one-stop shop for a wide variety of items, such as clothes, movies, and deer-repelling wolf urine. (3) Consequentially, Amazon now captures nearly one out of every two dollars Americans spend online. (4) The Amazon Empire has continued to grow through a variety of acquisitions to expand its sales online and off. (5) Amazon's rising significance in the world economy has led to growing antitrust concerns from consumers, businesses, and economists. (6) Despite the public outcry, when evaluating Amazon under United States antitrust laws, it is difficult to find a problem.

This note explores whether Amazon has engaged in anticompetitive behavior that would violate antitrust regulations, the purpose of American antitrust law compared to EU law, how market power is defined, and whether Amazon's practices harm consumer welfare. Ultimately, Amazon does not have an antitrust problem.

II. CURRENT EVENTS

Amazon's size has become a political debate. Donald Trump claimed in 2016 that Amazon has a "huge antitrust problem." (7) He is not the only one concerned with Amazon's size. An article from The New Republic proclaimed that Amazon had become a monopoly and "must be stopped." (8) Congress now has an Antitrust Caucus, which in December 2017 introduced a bill sponsored by democrat Keith Ellison that would require the Department of Justice and the Federal Trade Commission to conduct annual retrospective studies of how approved mergers impacted prices, jobs, wages, and local economies. (9) From both sides of the aisle, concern grows over whether Amazon and other companies are violating antitrust laws. (10)

Amazon has been acquiring businesses since 1998. (11) Amazon purchased IMDb (less known by its full name the Internet Movie Database), Quidsi, and Zappos, an online shoe and apparel retailer. (12) Amazon has purchased websites that help drive consumers to their products, such as Goodreads, a book review website, and Twitch, a streaming platform where people watch others play video games. (13) In June 2017, Amazon acquired Whole Foods, marking its first reach into brick-and-mortar commerce. (14) Gene Munster, an analyst at Loup Ventures, predicted Amazon would next acquire Target in 2018. (15) He theorized Target would be an attractive choice to continue Amazon's move into physical stores and capture more parents as customers. (16) This theory reflects how analysts have come to regard Amazon: as a giant that will only continue to grow.

E-commerce is not the only industry with an increasing concentration of wealth in one or more companies. In 2000, the U.S. beer market had twenty-two players. (17) In 2012, the number had reduced to four. (18) Together, they controlled three-fourths of all sales in the U.S., and almost half of beer sales globally. (19) Other industries are just as concentrated. In 2016, 90% of new online ad dollars went to Google and Facebook. (20) Eighty percent of airplane seats are sold by only four airlines. (21) Oxfam, an international confederation of twenty NGOs, released a report with an infographic showing that after a series of acquisitions, ten companies own almost every large food and beverage brand in the world. (22) To understand why nothing is being done in response, we have to understand the purpose and limits of antitrust.

III. THE PURPOSE OF ANTITRUST LAWS

Antitrust laws are the "Magna Carta of free enterprise. …

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