business news in context, analysis with attitude

There is a thought-provoking piece in The New Republic to which I was referred by MNB reader Frieda Caplan, about whether or not we need a new definition of the concept of "monopoly" in the age of Amazon.

"Without the constraints of brick and mortar," the story says, Amazon "considers nothing too remote from its core business, so it has grown to sell server space to the CIA, produce original televisions shows about bumbling congressmen, and engineer its own line of mobile phones.
And as it amasses economic power, it also acquires greater influence in the cultural and intellectual life of the nation."

However, "in confronting what to do about Amazon, first we have to realize our own complicity. We’ve all been seduced by the deep discounts, the monthly automatic diaper delivery, the free Prime movies, the gift wrapping, the free two-day shipping, the ability to buy shoes or books or pinto beans or a toilet all from the same place. But it has gone beyond seduction, really. We expect these kinds of conveniences now, as if they were birthrights. They’ve become baked into our ideas about how consumers should be treated.

"These expectations help fuel our collective denial about Amazon. We seem to believe that the Web is far too fluid to fall capture to monopoly. If a site starts to develop the lameness of an AltaVista or Myspace, consumers will unhesitatingly abandon it. But while that meritocratic theory might be true enough for a search engine or social media site, Amazon is different. It has a record of shredding young businesses, like Zappos and, just as they begin to pose a competitive challenge. It uses its riches to undercut opponents on price—Amazon was prepared to lose $100 million in three months in its quest to harm—then once it has exhausted the resources of its foes, it buys them and walks away even stronger."

Maybe too strong, too powerful, and too influential in the business and cultural life of the nation.

This is really worth reading, and you can see it in its entirety

KC's View:
I don't want to push this whole "relevance" theme too far, but in a lot of ways what the story is arguing is that Amazon has managed to avoid examination of its business practices in part because it has made itself so relevant to consumer behavior that one cannot imagine being without it.

It is a fascinating piece, and I'm really grateful to Frieda for forwarding it to me. To be honest, just reading it was like experiencing its arguments first hand. My head kept telling me that the article made a lot of sense, but my heart kept arguing that it's going to be okay, because it is Amazon, and Amazon is different…

But I think what we've learned lately is that Amazon really isn't different. Not really, or at least not in some of the ways that count. And I've been arguing here for some time that I think some of its actions - especially the way it has dealt with Hachette and Disney when they could not come to terms over price - seemed to dare the feds to launch an investigation. I think there is some hubris there, and I worry that Amazon will fly too close to the sun…