Elizabeth Warren wants to break up Amazon. But Amazon has slim profits and it mostly cuts prices below competitors’ which boosts consumers’ welfare. What’s the antitrust case?
AUSTIN, TEXAS – MARCH 09: Anand Giridharadas (L) interviews Elizabeth Warren at ‘Conversations About America’s Future: Senator Elizabeth Warren’ at ACL Live at The Moody Theater during the SXSW Conference And Festival on March 9,2019 in Austin, Texas. (Photo by Gary Miller/FilmMagic) Getty
Massachusetts Senator Elizabeth Warren wants to break up Amazon. She thinks that will make things better for its competitors and cost Amazon — in which I have no financial interest — its “monopoly profits.”
But I believe she is wrong about the purpose of antitrust law and the notion that Amazon has monopoly profits.
I have contacted Amazon to request comment and will update this post if I receive a response.
Warren thinks that Amazon’s success means it should be broken up. In her March 8 Medium post, Warren argued that “nearly half of all e-commerce goes through Amazon. Amazon [and others] have used their resources and control over the way we use the Internet to squash small businesses and innovation, and substitute their own financial interests for the broader interests of the American people.”
She argued that Amazon ” used its immense market power to force smaller competitors like Diapers.com to sell at a discounted rate. Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version.”
Her remedy for this alleged harm is to break up what she calls Platform Utilities — “c ompanies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties .”
That would mean Amazon Marketplace and Basics would be “split apart.” And she proposed that federal regulators would u nwind “anti-competitive mergers” which include Amazon’s acquisition of Whole Foods and Zappos.
