Amazon, Fb, Google and the query of belief
In the season of Secret Santa and last minute Christmas shopping or New Year gifts, the ability to shop with e-commerce is a godsend. And Amazon is the god of e-commerce in the world outside of China. It has overnight delivery; You almost always get what you’re looking for; and the prices are so low they are incredible. The user interface, even on a tiny mobile screen, is a pleasant experience and even nudges you with suggestions for buying other things. With a wide choice, low prices, overnight home delivery, quality assured quality, and an easy return and refund policy, it’s a customer delight. So what could go wrong?
Well, it looks like the tech giant is getting into rough weather with antitrust authorities around the world. Last month, the European Commission issued a charge sheet in which Amazon abused its dominance and used its muscles to hurt small businesses. Specifically, that it is using huge amounts of data generated by transactions on its platform to kill competitors. European authorities are also investigating whether Amazon’s algorithms are unfairly performing product placement. In other words, if you are looking for a toaster or pan, it will show the vendors who paid extra, giving them an unfair advantage. Of course, Amazon denied the charges. It claims that it actually helped small businesses sell to a wide range of customers by providing the ecommerce platform.
This is going to be a lengthy battle between regulators and Amazon. And this isn’t the first time Amazon has been pulled up. As if to illustrate its fair or unfair tactics, the Wall Street Journal recently published a long piece entitled “How Amazon Wins: By Streamlining Rivals and Partners”. The article recalls many stories – from diapers to furniture – to show how Amazon was able to wipe out competition by selling private label products from well-known brands. There is the story of the Ravelli brand tripods that sold well on the Amazon platform. But soon Amazon began selling a clone made by the same manufacturer as the original company at a lower price than Ravelli. It made it impossible to compete. Finally this company
has stopped selling on Amazon and probably closed it. Ironically, the company that produced the Ravelli brand was dubbed the Pirate Trading Company, accusing Amazon of stealing its intellectual property (i.e., design, etc.), which Amazon rejected. Undercutting a rival on prices and selling an almost identical product – isn’t it about competition in the free market? Or is it an abuse of dominance that is driving a small company out of its country with its deep pockets and clout?
Not only does Amazon have immense data on buyer behavior and preferences that it can use against the merchants who sell it, but it can also act as a gatekeeper and decide who can or cannot sell their goods on its platform. This is the potential for monopoly power and its abuse.
It is this gatekeeper role not only from Amazon, but also from Facebook, Google and Apple that is being examined by the European competition authority. All of these companies act as marketplaces and have their own non-transparent rules about who gets access and who doesn’t, effectively abusing their power over millions of vendors. A US cartel guard is also pursuing his own investigation. At least 10 US states have charged Facebook and Google with anticompetitive and collusive practices regarding the space they have allocated and charged for advertising. As such, Google generates two-thirds of its global advertising revenue after long dwelling on television and newspaper revenues. Events like Facebook Live or those on Twitter make them de facto broadcasters with practically very little regulation of content, in contrast to those that are conventional, licensed broadcasters.
Facebook has already been accused of regulating content that could affect freedom of expression, being too pro-government, and allowing inappropriate and unfair influence over elections. Election output on Facebook and other social media is not under the same spotlight and scrutiny as conventional lobby groups.
Meanwhile, China is also having a hard time with its giant internet companies like Alibaba and Tencent. Last month, the Chinese government abruptly suspended the world’s largest stock offering from Ant Financial, Alibaba’s non-bank financial arm. More than $ 3 trillion in global investors participated in this IPO, which has now been postponed indefinitely. The Indian Competition Commission has also pulled Google and Amazon up on various occasions. So it looks like the social media, e-commerce and fintech giants will have bad weather in 2021 as regulators flex their muscles and curtail monopoly powers. Either there will be fines and severe penalties, or worse, companies too big to fail are being asked to break up into smaller units. And this upcoming showdown will take place on every continent.