Sun pushed OpenOffice to cut MS's profits from Office
Google and MS are pushing into the Cloud to reduce Amazon's influence
Amazon is creating its own ad network and offering Twitch to reign in Google
Walmart is slowly creating its own global online shopping platform to compete with Amazon
Should Amazon ever have no competitor, monopoly regulations would kick in. But usually, all the other big players will make sure that Amazon has enough competition to not be invincible. It's not fun for small players, but they obviously don't care enough to organize and take their products off Amazon.
Btw, Amazon does not necessarily have less overhead due to Price's law: [1]
>The square root of the number of people in a domain do 50% of the work.
Should Amazon expand into every business, they would be so huge that all their efficiencies and more would be eaten up by the overhead.
Price's law is of questionable empirical validity, it's more like a useful guideline/urban legend. On the other hand, there is substantial economic research demonstrating the harms of monopolies, including vertical ones.
I'm a bit confused. Are you claiming that because of Price's law, Amazon doesn't actually benefit from it's monopoly position?
Almost. I think that Amazon cannot hold a monopoly position in all markets because its size would be so big that a smaller competitor could compete.
As a consequence, there will be an optimal size where Amazon is serving many markets, most likely the most profitable ones, thus massively benefiting [ * ], but they leave every other market open.
Depending on the future, this is not necessarily a bad position because low interest rates could seed plenty of startups which means that competitors could operate below break even points.
The question is: will Amazon ever reach that position or will its competitors make sure that all its profitable markets will dry up and its growth will be limited?
[*] Actually, not Amazon is profiting because the value of that dominant position would be priced into Amazon shares in advance. Amazon would just execute its dominant position that its investors had foreseen.
We run a DTC automotive retail website that has both white-label products and vendor products and have product development and manufacturing capability in house. We also sell through multiple channels like wholesale customers, marketplaces, (including Amazon when it makes sense), and a 2 retail stores.
Are you saying that we need to dramatically change our business model and can only either be a manufacturer or sell other peoples products because this model is unethical?
Vertical monopolisation is a mixed bag actually. Vertically integrated companies profit more with lower prices in the downstream market than a purely downstream product company because they make profit at both stages. Antitrust law is far kinder to vertical mergers than horizontal mergers.
Or a competing product emerges with a lower price and/or better quality. Step 6 would only happen if competing products are not allowed to be sold on Amazon. And even if Amazon does that, I would assume that if the delta in price and quality is big enough people would switch to buying the product on Shopify, eBay, or any other platform the manufacturer can use to sell.
The fallacy in this all too pervasive argument is assuming that once a competitor dies or is bought out, there is no more competition from now until judgement day.
This is flat out silly and has never been observed. Monopolies cannot significantly raise their prices, or competitors instantly appear.
Why wouldn't 7. be: a competitor easily enters the market because they can just make the good and charge a markup that's somewhere between what amazon is charging and 0 and still make a profit and get all the business?
If what you said about amazon having less overhead prevents the above hypothetical from happening, then what's the problem? It's apparently more efficient for Amazon to supply this good and that's what an omnipotent benevolent economic dictator would choose anyways.
1. Amazon clones independent manufacturer's product.
2. Amazon strangles manufacturer because they can promote their own product more and have lower overhead because they control the entire chain.
3. Competitor dies.
4. Amazon has no competition on this product.
5. They raise prices and/or lower quality.
6. Consumers pay more for a shittier product.