These legal processes are far beyond my comprehension, though I understand that monopoly is bad in any business. It is the process of “intermediation” – the way these corporations can amass “technology” to entrench themselves. It is refreshing to see a pushback from the regulators, but I doubt anything will happen overnight. My biggest concern is healthcare (and “wellness” market) that is set in their sights. They know who we are, financial spending, location, habit formation for the products and biometrics. It is a matter of time they step into genomics and healthcare, too.
The FTC isn’t the only regulator focused on Amazon. In response to an antitrust price-fixing investigation by the Washington state attorney general, the company agreed to pay a $2.25 million fine in January and shutter a program in which it agreed on pricing with third-party sellers, rather than compete with them.
Karl Racine, the attorney general for the District of Columbia, sued Amazon last year, alleging the online retailer encourages higher-than-necessary consumer prices through policies that guarantee the tech giant a minimum profit on each item sold, while discouraging merchants on the site from offering their products at lower prices elsewhere.
In an old story from Economist (2019), these companies are making it tougher for early age start-ups to come up with something different. They acquire or introduce similar offerings in their “core”, which can completely eliminate the upstarts. Few examples:
The wariness comes from seeing what happens to startups when they enter the kill-zone, either deliberately or accidentally. Snap is the most prominent example; after Snap rebuffed Facebook’s attempts to buy the firm in 2013, for $3bn, Facebook cloned many of its successful features and has put a damper on its growth. A less known example is Life on Air, which launched Meerkat, a live video-streaming app, in 2015. It was obliterated when Twitter acquired and promoted a competing app, Periscope. Life on Air shut Meerkat down and launched a different app, called Houseparty, which offered group video chats. This briefly gained prominence, but was then copied by Facebook, seizing users and attention away from the startup.Twitter killed periscope; Facebook hasn’t gone too far with “voice calling” either. But they effectively shut them down.
Another example from the enterprise:
Amazon’s cloud service, Amazon Web Services (AWS), has labelled many startups as “partners”, only to copy their functionality and offer them as a cheap or free service. A giant pushing into a startup’s territory, while controlling the platform that startup depends on for distribution, makes life tricky. For example, Elastic, a data-management firm, lost sales after AWS launched a competitor, Elasticsearch, in 2015.
They also remain invested in “early-stage” start-ups if they find anything useful in the new offering, and give away their “cloud-services” at discounted rates. Once they attain some significance, the course of action is then decided. I have seen similar playbook from some enterprises locally through their “non-profits” or “shadow VC-firms” or “family offices”, which obscure the flow of funds or people behind those fronts.
I hope these practices are called out. Accepting VC funding (or a behemoth, this present case) is the kiss of death. I also hope that legal processes achieve their credible aim instead.