I think Farhad Manjoo gets it right about Amazon: while the company’s sheer size, not to mention its often shady business practices, call out for public intervention, “Amazon is pushing a level of speed, convenience, and selection in shopping that millions of customers are integrating into their daily lives.”
Breaking it up would be wrong, since the essence of what Amazon offers is its potential universality. For me, shopping on Amazon is almost like what I imagine shopping to be like in a socialist society, minus the lack of accountability and the astronomic riches of Jeff Bezos. Let’s fix it. Make Amazon a public utility with proper protections for workers, consumers, and enterprises that use it as a marketing platform. Why not?
Peter:
So you wish to have Amazon under Common Carrier Regulation, 47 U.S. Code Part I?
It does make sense as they are nation wide in shipping and sales coverage.
Size-wise and in range of operations — marketing, web services, etc — Amazon has Alibaba as a competitor. Breaking the company into smaller pieces might make sense on antitrust grounds if Amazon had no creditable rivals and operated only in the US. In the real world, Amazon has competitors, and is constrained by regulators around the globe. Its technical edge might be lost practically overnight, its marketing tools obliterated by well-meant regulation. And in a future world … do policy makers in the US really wish to break up Facebook and Amazon and Google and Apple and Microsoft basically for ideological reasons while leaving Alibaba and Ten Cent and Baidu and half a dozen Indian equivalents to grow without constraint?
I live in a small town with limited shopping, so I buy all sorts of things on Amazon. It’s great having one and two day delivery of the kinds of things that local stores really can’t stock. Despite this, I think Amazon needs to be broken into a number of business units.
For one thing, having someone control both the marketplace and being a seller in that marketplace is a conflict of interest. Anyone who has sold on Amazon knows that one’s business can vanish overnight if Amazon decides to claim it or a change in algorithm makes it impossible for users to find unless one pays heavily for placement. From a user viewpoint, Amazon search has suffered from its pay for placement. I used to be able to type in a book title and find that book among the first few items. Now it is usually in the first ten, but sometimes can only be found if I add the author name. That’s ridiculous.
Having grown up during the antitrust era, which I will note had higher growth and innovation levels than our current era, I’d propose a split into several parts:
– the warehousing and shipping logistics company
– the actual shipping and delivery component, the one that runs trucks, brokers ship space and operates flights
– the marketplace operator with an open API, including a search API, so that the store itself can be open for competition
– Amazon sales, now one of many online sellers
– AWS, the computing services supplier
I’m probably missing some pieces, and arguments could be made for leaving some pieces together. AWS is so successful because it was designed as a cluster of interoperable services and APIs with Amazon as its primary customer. Applying a similar restructuring of the entire company would probably make Amazon more effective and even more valuable, much as breaking up AT&T let the telecommunications business move into the late 20th century.
I think the biggest advantage for the consumer would come from splitting Amazon sales and the Amazon marketplace. This would help customers, sellers, Amazon and IP holders upset at Amazon’s lack of trademark enforcement.
I think the biggest advantage for the overall economy would come from splitting off the logistics. Amazon has been experimenting with this with their Whole Foods purchase, but they would have done better to have opened their logistics to a supermarket chain instead rather than trying to learn a new business from scratch.
P.S. Antitrust has done this kind of thing before. IBM and Kodak were both forced to open their APIs in effect. Xerox effectively had to open its copying logistics, though they were allowed to retain their advantage in image fixing.