The price of practicing online business

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Amazon has become the most convenient online shopping service in the world, and makes $11.5 million every hour, according to SEC filings. This year, 50 percent of all online shopping began at Amazon, and Forbes shows that the CEO, Jeff Bezos, is the richest man on Earth. However, along with all this success, there needs to be accountability for how the company conducts its business.

Amazon has invested in Whole Foods, Twitch, Audible, and IMDB. They started off as a book store and now they sell whatever they want. Statistics from Emarketer, a market research company, stated that 40 percent of all United States e-commerce happens on Amazon, and the next company that comes closest to them is E-bay, at 6.6 percent. Amazon is a powerhouse when it comes to streaming, retail, digital ad spending, and music streaming. However, all this success comes at the cost of the workers and market competition. Amazon has promised a $15 minimum wage for its workers, but in 2018, CNBC reported that Amazon cut its monthly bonuses and stock awards to employees.

The company also tends to stretch antitrust laws, and is beginning to show more signs of a modern day monopoly. Monopolies can hurt the economy because they control prices, fix markets, and destroy competition. Having a monopoly means there are no rules, and companies begin to lack incentive to become more  competitive, because they know companies like Amazon will always beat them in the end.

The Sherman Antitrust Law and the Clayton Act were the first antitrust laws, and they broke up large oil and railroad companies. However, with the invention of the internet and e-commerce, it is difficult to enact antitrust laws towards technology companies. Unfortunately, based off of last year’s hearing with Facebook CEO Mark Zuckerberg, Congress does not fully understand how technology companies work, so some members may have difficulty comprehending how Amazon is bypassing these types of laws.

One way they do it is by losing money to gain market share. CNN Business has done research on Amazon’s methods, the company bleeds itself of hundreds of millions of dollars in order to retaliate against a competitive market. They use predatory pricing in order to lower their prices so smaller companies cannot keep up. Now those smaller companies have to further expand their business by selling through Amazon, but Amazon will buy out products that manufacturers are trying to sell through them, and simply cut out the third party. By undercutting their competitors, Amazon is able to take out the competition, and by defending consumer welfare, antitrust laws do not apply to them since the consumers are benefiting.

According to Gartner Inc, the world’s leading IT research firm, Amazon also offers “Amazon Web Service,” which is a cloud computing service. They are responsible for 51.8 percent of the market share, the second closest is Google at 13.3 percent. The DOW Jones, Adobe, Pinterest, the State Department, and the Central Intelligence Agency, all have used, or are using Amazon Web Services as a cloud provider. With Amazon having this much reign over the internet and personal data, they are more powerful than ever. They know about their consumers and, on top of selling clothing, technology, and groceries, they now can sell personal data without being held accountable.

The antitrust laws were made in the late 1800s and early 1900s, and should not be expected to regulate large tech companies in 2019. There should be new action taken to regulate these companies. For example, the European Union has already put in place laws that make markets more competitive so that one company is not controlling everything online. If America were to put in place some types of laws derived from the EU’s stance on modern antitrust laws, American E-commerce would only benefit from the change.

 

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