A couple of days ago, I was playing the board game Monopoly, with my family, as we do sometimes. Everyone starts out with the same amount of opportunity and money, but only one can win. In order to win, I would use the devastating strategy of buying three properties and building hotels at the very beginning. Since everyone else is buying multiple properties, they are out of money. Once the other landed on my property, they were instantly into bankruptcy and had to forfeit. Many companies have used long term investments as I did in my game of monopoly, but the one being the most notable would be Amazon.
Well, maybe Amazon has become the same thing I had become in that game of monopoly; as well as the same thing that the game is named after.
Amazon is a monopoly because they have too much control over many different industries, they can put brick-and-mortar stores out of business, and they exploit data of other companies to drive them out of business or purchase them.
First of all, by looking at similar companies, we can find that Amazon has too much control of different markets. The chart below shows the fourth quarter earnings of Apple and Amazon.com.
Both charts show the Q4 2018 unaudited summary data for both Apple (AAPL) and Amazon.com (AMZN)
Both Apple and Amazon have reached the 1 trillion market cap, making them two similar companies in terms of profits. They both make a significant amount of money compared to other companies. However, Amazon sells a multitude of products compared to Apple, which only sells computers, mobile devices and their accessories. This means that Amazon has the upper hand.
For every product they have is one market they can control.
This isn’t the only way that shows the rise of Amazon as a monopoly. Amazon used a great business tactic to become the biggest company to date, as mentioned before in my strategy for the Monopoly board game.
This can be shown in the 2017 article entitled Here's Why Amazon Isn't A Monopoly where Sizemore states, “Amazon invested billions of dollars in long term Amazon's profitability, or its lack thereof, is the most glaring problem with accusing it of exercising monopoly power. In its first 20 years of existence, the company actually lost money roughly half the time. Even in 2016, despite Amazon's impressive scale and popularity, it earned a measly 1.7 percent profit margin overall.”
While it is true that Amazon did lose money, this was part of a great business tactic. Amazon invested in long term profits instead of short term profits, causing them to gain a lot of money and power and almost make them unstoppable. Using this same tactic over and over again would cause growth to go up and up over a couple of years.
So, they’ve used tactics, and different products to put them in their monopoly position. But, that doesn’t excuse the major problem that Amazon has used to its advantage. They have the ability and have used that to exploit the data or products of other companies to put them out of business. In an interview with Fox titled Break up Amazon as Monopoly? Lina Khan goes in depth to prove that Amazon is a monopoly. In this interview, she says “[Amazon] entered into an aggressive price war, where it lost significant money on diapers, and then ended up squeezing the company, pressuring the company, and then ended up purchasing [Diapers.com]” Amazon knew that they had the money and power to do this. If they lowered their prices on diapers and lost a couple million dollars, it wouldn’t be a problem for a multi-billion dollar company. However, Diapers.com was not the same size at Amazon at the time, so they couldn’t sustain themselves while they lost money. Once they were near bankruptcy, Amazon absorbs Diapers.com and it becomes part of the company.
Causing other companies to go out of business and buying them is a key move in a monopolistic company.
Well, how could we stop Amazon from being the only company out there? Since Amazon makes nearly half of their money from Amazon Web Services, as shown in their Q4 earnings? why don’t we split Amazon Web Services into a separate company? Anti-trust laws (Laws that stop companies from becoming a monopoly) allow this to happen.
To conclude, Amazon is clearly a monopoly based on the fact that they seek to destroy the competition. They’ve used tactics to grow huge, bigger than any company to date, and have control over too many markets. If we split the company, the economy can be safe from their destruction. Do you want Amazon to control all of your technology?
Anthony Samms is the creator of Sprocken and the Sprocken Times, and someone who knows a lot about the internet with too much time on their hands.