(Drivebycuriosity) - The Federal Trade Commission (FTC), America´s mighty antitrust agency, filed a massive law suit against Amazon (172 pages ). The authority claims that Amazon is a monopoly and stifles emerging competition ( ftc.gov vox.com).
The word "monopoly" combines the Greek terms "mónos", meaning "single" or "alone" with the word "pōleîn", meaning "to sell" (wikipedia ). Economists use the term "monopoly" when there is just one seller (the monopolist) and there are no competitors.
Here are the facts: In the third quarter 2023 Amazon`s online stores advanced just 7% Y-o-Y , while Walmart`s e-commerce segment expanded 24% in the US and 15% worldwide, obviously eating Amazon`s market share, at least part of it (amazon cnbc digitalcommerce). The E-commerce platform Shopify boosted her gross merchandise volume (the total volume of merchandise sold on the platform) by 22%, rebutting the claim that "Amazon stifles emerging competition" ( cnbc).
The FTC law suit also ignores innovative newcomers ("emerging competition") who are aggressively entering the highly competitive market. In September the Chinese online service TikTok launched its e-commerce shop, called TikTok Shop, in the U.S. "in an effort to translate the app’s cultural relevance among young consumers to sales" ( apnews). More than 200,000 sellers have already registered for the TikTok Shop!
And the Chinese shopping app Temu is rapidly gaining ground (retailbrew ). CNBC reports: Since the Chinese shopping app launched in the U.S. in September 2022, it has become the number one e-commerce app in the country, with downloads skyrocketing 50x from 600,000 to 30 million in just one quarter, according to Bernstein analysts. In contrast, Amazon’s downloads have dropped off a cliff, falling 40% in a year. Known for wild discounts and dirt-cheap prices that severely undercut Amazon’s, Temu has ratcheted up its ad spend to infiltrate the American consumer, set to spend an estimate $2 billion in marketing in 2023" ( cnbc). Temu’s parent company PDD Group said revenue rose by 94% to 68.84 billion yuan ($9.62 billion) in the quarter ended Sept. 30 from a year ago ( cnbc).
FTC chair Lina Khan lives apparently in a parallel universe where only Amazon sells online. The rapid growth of Amazon challengers indicates a healthy competition. Amazon is far away from becoming a monopoly. The FTC does not understand that Amazon`s success is inspiring competition - not stifling.
In the year 1995, when Jeff Bezos started Amazon, the company was the only one who sold online. Amazon was a monopoly - for a very short time. Soon copy cats appeared - animated by Amazon´s success. They all want a piece of Amazon`s pie.
Over the years the number of other online sellers, the competitors, has been swiftly climbing. Amazon survived - and could continue her growth - because the management has been been obsessed with efficiency, cost cutting and delivering goods cheap, fast & reliably.
Amazon`s success story inspired myriads of copycats to offer similar services, a gain for the consumers. Amazon and their competitors have been constructing networks of huge fulfillment centers which are very efficient and save a lot of costs. The competition with Amazon inspired Walmart, Target and many other retailers to be more efficient and to curb their prices as well. The tough competition with Amazon forces other retailers to sell at relatively low prices.
If the Khan wins "Amazon could be subject to penalties up to being forced to break up into smaller companies to handle its separate lines of business" (vox.com ).
Based On Ideology
The FTC Amazon law suit is not based on facts but on ideology ( drivebycuriosity). The FTC, lead by chair Khan, Commissioners Alvaro Bedoya & Rebecca Slaughter, represents a Marxist ideology, explained former FTC-Commissioner & Khan colleague Christine S. Wilson (ftc.gov ). According to Wilson the FTC leadership tries to replace the market process of supply and demand by a continuously regulated environment. Wilson calls the FTC´s antitrust enforcement "a politicized exercise that serves as a tool of oppression".
Joe Biden - and his protege Khan - hate Amazon because it is big and successful - and more popular than the President. I can buy an incredible array of goods through Amazon at low prices, delivered to my door within two days or less. The Khan wants to stop this.
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