Amazon dominates the U.S. online retail market, which gives it monopoly power over many small and medium-sized businesses, according to an antitrust report released by a House Judiciary subcommittee. The report accuses Amazon, Facebook, Apple, and Google of "abuses of monopoly power" and calls for restructuring some of the businesses by imposing separations from their dominant online platform.
More:
- The subcommittee released the findings and recommendations after a 16-month inquiry into big tech antitrust practices.
- The committee said Amazon is the dominant online marketplace, as it controls 65-70% of all U.S. online sales depending on the product category. It also added that Amazon acts as the gatekeeper for e-commerce.
- 37% of the 2.3 million third-party sellers on Amazon's marketplace rely on it as their sole source of income, the report found. Sellers are unable to utilize alternative marketplaces even when they're treated poorly. The report accuses Amazon of using its market power to hinder competitors.
- Amazon also collects data from its sales to copy competitors and offer similar products, the committee said. A former employee told investigators: “Amazon is first and foremost a data company, they just happen to use it to sell stuff.”
- The report cites Amazon Web Services as the market leader in cloud computing. It accuses Amazon of mistreating open source developers, whose software is freely shared.
- House investigators also said Prime and other membership programs "lock customers into the Amazon ecosystem." Prime members spend twice as much as non-members, they noted.
- Amazon wrote a blog post in response, stating: "Misguided interventions in the free market would kill off independent retailers and punish consumers."
- The company argued that forcing small businesses out of online stores would deprive them of profits and result in higher prices and fewer choices for consumers.
Other recommendations from the committee:
- Mergers by big tech should be presumed to be anticompetitive, and the merging parties should prove that the deal would not harm competition.
- Dominant platforms should be prohibited from providing preferences for their products and services. Big tech should offer non-discriminatory terms for similar products and services.
- The services offered by big tech should be compatible with various networks to facilitate interoperability and data portability.
- Allowing private individuals to hold big tech companies accountable through the courts can also limit the dominant platform's power. To assist in this, Democrats want to eliminate forced arbitration clauses or limits on class action lawsuits. They also want to create clear standards regarding antitrust standards in this industry, allowing for additional prosecutions.
- Problematic precedents in antitrust cases would be overridden.
Some of this information first appeared in today's Inside Business. You can read the full issue here.
