How big is too big in ecommerce? A lawmaker in the US echoed the concerns growing in Europe that a small number of high-tech firms, including Amazon, are wielding too much power, and on Friday, the Senator called for legislation to break up those companies.
The concern is not new, and as recently as December, Germany's competition watchdog opened an investigation into Amazon to examine whether it was abusing its market position to the detriment of sellers active on its marketplace.
What does Amazon CEO Jeff Bezos think? As antitrust pressure was heating up last year, he was asked by a German journalist about speculation that President Trump might call for a breakup of Amazon. Bezos said he welcomed scrutiny from the media and government.
"I think all large institutions should be scrutinized and examined. It's reasonable," he said.
He noted that Amazon has only recently grown so large, growing from 30,000 employees (2010) to 560,000 employees in 8 years. "When you look at the large tech companies, they have gotten large enough that they need, they're going to be "inspected."" You can watch the video here via YouTube
(owned by Google!).
In its early history, eBay ruled ecommerce, making it a like-it-or-leave-it marketplace for small sellers who found few viable alternatives. Some sellers and retailers may feel the same about Amazon's market power today.
Senator Warren unveiled a plan
on Friday to rein in power wielded by Amazon, Google, and Facebook. She said nearly half of ecommerce goes through Amazon, and over 70% of all Internet traffic goes through sites owned or operated by Google or Facebook. She accused the companies of using their resources and control to squash small businesses and stifle innovation.
"To restore the balance of power in our democracy, to promote competition, and to ensure that the next generation of technology innovation is as vibrant as the last, it's time to break up our biggest tech companies," she said.
Here is the part of her plan that might have Bezos squirming:
"Using Proprietary Marketplaces to Limit Competition. Many big tech companies own a marketplace - where buyers and sellers transact - while also participating on the marketplace. This can create a conflict of interest that undermines competition.
"Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version. Google allegedly snuffed out a competing small search engine by demoting its content on its search algorithm, and it has favored its own restaurant ratings over those of Yelp."
Many sellers and those in ecommerce would agree with the characterization that Amazon "crushes" small businesses - we've reported on concerns and claims that Amazon uses seller sales data to turn around and compete with those sellers.
Successful entrepreneur and consultant Scott Galloway, now a marketing professor at NYU, laid out a case for breaking up Amazon, Apple, Facebook and Google in the landmark article
in Esquire, "Silicon Valley's Tax-Avoiding, Job-Killing, Soul-Sucking Machine."
We're betting Senator Warren is familiar with his work.
She advocates legislation that would make large tech platforms "platform utilities" that would be prohibited from owning both the platform and the platform participants. And she advocates unwinding what she called anti-competitive mergers, including Amazon's acquisitions of Whole Foods and Zappos.
"You'll still be able to go on Amazon and find 30 different coffee machines that you can get delivered to your house in two days," she explained.
But here's what would change, she wrote: "Small businesses would have a fair shot to sell their products on Amazon without the fear of Amazon pushing them out of business."
As sellers, what do you think of Amazon competing with the sellers that sell on its platform? And if you think it's a problem, what do you think can and should be done about it?