Amazon, by all accounts, has been a financial and business success that has exceeded all expectations. However this success is leading to claims that the business is reaching monopoly status and needs to be regulated in order to make the industry more consumer friendly.
The recent acquisition by Amazon of Whole Foods has led to concerns that Amazon will enter into the grocery market and dominate it, or use its clout in the online retail market to further dominate their competition and lead to the closure of more businesses, leading to the subsequent job loss. Amazon has not only dominated the onlineretail market where they have over a third of total sales business, but also other markets such as Amazon Web Services (AWS) which offers cloud services to customers, the development of electronic book readers, smartphones, and tablet devices, and the development of the prime membership with its access to music and video libraries as well as faster shipping options.
Since amazon doesn’t break out all of their sales in their financial statements, by product line, it can be challenging to see just how successful the brand as been. Some products like the Amazon smartphone has fizzled out, while the other amazon products like Prime and the Kulindle have proved to be uber successfull. In the business world, AWS is very successful in its own regard and attracts a near dominant following, along with other brands like Apple.
Financial success is not the only, of even the primary, determinate of whether or not a company is guilty of being a monopoly or using monopoly like power to inhibit free trade, thus leading to the need for additional regulations to limit their power and protect both their competitors and those in the market to buy their products.
Often monopolistic companies operate by lowering prices to limit the ability for competing businessss to coexist in the industry, and once they depart, to raise prices and earn outsized profits. For years, amazon was the low cost seller of products when compared to retail stores due to their significantly lower cost structure and the fact that they weren’t required to collect sales tax from customers for many years. Now that Amazon has been able to build up Their business, they are no longer the cheapest solution out there, though there constantly fluctuating product prices make it hard to assess this and monitor them.
Despite this, amazon still offers lower prices than many retailers out there and a prosecutor will be hard pressed to label them as a monopoly with alterior motives. While they hold a big portion of the online retail market, there are many competing companies out there like Walmart which owns Jet.com and Target which have big online marketplaces, in addition to other major and minor market players. Further, Amazon has lowered prices for many and set standards in quality and delivery.
Still selling over a billion dollars a day in online sales, as they did during prime day is likely to attract continued attention.
It is hard to not see the appeal of Amazon and they have, to date, offered a set of quality products and services to their customers and changed the internet. Still regulators will likely be keeping close eye on their success and onto fears that one online retailer will dominate and control the online market for years to come.