The Federal Trade Commission and 17 states filed a lawsuit in September against Amazon, accusing the e-commerce behemoth of anti-competitive practices that inflate prices and stifle competition.
While Amazon has denied these allegations, there is a strong argument that the lawsuit is good for consumers, small businesses and society.
Here’s why:
Amazon’s alleged anti-competitive practices harm consumers in several ways.
First, they lead to higher prices. By using its monopoly power to prevent sellers from offering lower prices on other platforms, Amazon can charge higher prices on its own platform. This hurts consumers who are forced to pay more for the same products.
Second, they limit consumer choice. When Amazon prevents sellers from offering lower prices on other platforms, it reduces the number of options available to consumers. This harms consumers who may prefer to shop on other platforms or looking for a better deal.
Third, they stifle innovation. When Amazon uses its monopoly power to prevent competitors from entering the market, it reduces the incentive for innovation. This harms consumers, who may miss out on new products or services that could have been developed if there was more competition.
Amazon’s alleged anti-competitive practices also harm small businesses as Amazon makes it harder for small businesses to compete.
When Amazon uses its monopoly power to prevent sellers from offering lower prices on other platforms, it makes it harder for small businesses to attract customers. This is because customers are likelier to shop on Amazon, where they can find the lowest prices.
Amazon also limits the access of small businesses to customers. When Amazon uses its monopoly power to prevent competitors from entering the market, it reduces the number of platforms where small businesses can sell their products. This limits their access to customers and reduces their ability to grow.
Amazon’s alleged practices also harm society as Amazon stifles economic growth.
When Amazon uses its monopoly power to prevent competitors from entering the market, it reduces the incentive for innovation. This reduces economic growth, as new products and services are not developed.
Amazon, in its current incarnation, also harms workers. When Amazon uses its monopoly power to prevent competitors from entering the market, it reduces the number of job opportunities available. This hurts workers looking for work or are forced to work for lower wages.
This is the entire point of competition and anti-competitive lawsuits such as this when companies are alleged to have seriously broken the rules. Where there is no competitive landscape, everyone is hurt precisely because of this disparity in power.
So the bigger and more powerful Amazon becomes, the stronger the company’s position becomes in relation to us as consumers, the small businesses who seek even the smallest fragment of Amazon’s market, and society as a whole.
The illusion that Amazon provides is one of choice. We make the easiest possible purchase, knowing that it will be delivered to us as little as a few hours later. We don’t think about the downstream effects of that purchase and how making Amazon stronger is almost certainly not a good thing at this point.
So, even if the new lawsuit against Amazon doesn’t succeed, just the fact that it was filed is good for consumers, small businesses and society. By seeking to address the harms caused by Amazon’s alleged anti-competitive practices, the lawsuit could lead to more competition, lower prices, more innovation and more job opportunities.
