We Need to Discuss Amazon.com (Premium)

You all know how strongly I feel about the long-overdue need to regulate Big Tech. And that Apple and Google are, to my mind, the worst offenders, the low-hanging fruit whose capricious anti-competitive strategies must be curtailed first. And that, more generally, that each of these Big Tech firms—Amazon, Apple, Google, Microsoft, and Meta—should be closely analyzed by regulators around the world with the explicit goal of reigning in their anticompetitive and anti-consumer ways and ensuring that they conform to the rule of law and the best interests of the market.

And you may or may not agree with any of that. It doesn’t matter. That’s just where I am right now.

I bring that up because I am taking a stance contrary to at least some of these stated beliefs. And not entirely in the Devil’s advocate sense, as I see in this example some nuance that I do not see, say, in Apple’s extortionist App Store policies or in Google selling our personal information to advertisers. There is room for debate here, for sure. Perhaps even room to completely disagree with a process and some opinions that I might normally agree with wholeheartedly. And I am quite conflicted by this.

I am referring, of course, to Amazon.com being sued by the U.S. Federal Trade Commission (FTC) for abusing what it says are two monopolies owned by this online juggernaut.

I should preface this by admitting a certain bias against today’s FTC, which has lost the only two actions it has attempted against Big Tech so far, with Meta and Microsoft, and that I obviously have a major interest in the latter. And that I found the FTC’s arguments against Microsoft’s acquisition of Activision Blizzard to be not just illogical but a complete fantasy. And that I was particularly delighted when the federal judge who oversaw the FTC/Microsoft hearings wrote in her ruling that the FTC had uncovered “no internal documents, emails, or chats contradicting Microsoft’s stated intent not to make Call of Duty exclusive to Xbox consoles. Despite the completion of extensive discovery in the FTC administrative proceeding, including the production of nearly 1 million documents and 30 depositions, the FTC has not identified a single document that contradicts Microsoft’s publicly stated commitment to make Call of Duty available on PlayStation (and Nintendo Switch).” This incredible condemnation of the FTC’s case lined up perfectly with my own beliefs in this matter, for sure.

My issue with the FTC, generally speaking, is that it is engaging in what I think of as a “closing the barn doors after the horses have already escaped” mentality in blindly going against anything that Big Tech is doing now rather than going after the biggest firms that are abusing their established monopolies the most. In other words, what the FTC should be doing is what the EU is doing: regulating Big Tech in a way that directly threatens their entrenched market abuses. It’s almost like the FTC doesn’t understand its role in this world. OK, not almost.

So yes, there is some bias here, though I will argue that it is justified. And I will point out that in this Amazon case, the FTC perhaps finally doing what I’ve been asking for by going after an entrenched monopolist, Amazon, that is clearly abusing its monopoly power. Case closed, right? Clearly, I will support this.

Not so fast. There’s more.

I have been writing about and talking about Corey Doctorow and his concise and perfect term enshittification since March, and won’t stop doing so because it is perfect. It reminds me of the sunglasses that Roddy Piper’s character stumbles upon in the movie They Live, where some underlying force is secretly manipulating mankind into consuming things they don’t need. Once you understand how Big Tech companies in particular are using this enshittification strategy to harm their own customers, you see it everywhere. Literally.

Well, Corey Doctorow has published an editorial about Amazon and enshittification in The New York Times today, though that chaste, old-timey publication didn’t allow him to use or even reference that term, of course. (You gotta think of the children!) And given how much I agree with this guy and this term, and how obvious it is that Amazon is employing this strategy, you are correct to believe that I would normally just agree with all of it.

But I do not. And for so many reasons.

This won’t be a breakdown of the entire editorial, as I did with another New York Times piece recently. (Coincidence? Maybe not. For now, let’s stay on topic here.) But we need to discuss this.

It starts with the headline: Amazon Is the Apex Predator of Our Platform Era. Really. Are they?

As I mentioned above, Google and Apple are the low-hanging fruit in the need to regulate Big Tech. I am arguing that these firms, which are hyper-profitable where Amazon, quite often, is not, are in fact “the apex predators.” And while I know many of you would pick Google if you had to pick just one, Apple is the bigger company by far and I might just disagree with you. But no matter. Google and Apple are at the top. There’s no contest. And so that headline immediately triggered a warning bell in my brain. Uh-oh.

And what I read only confirmed the need for that warning. I disagree with so much of what he writes here. And the bigger issue, perhaps, is that I suspect most of America—maybe not you, who occupies a special place due to your interest in personal technology and how much you know about these markets, but definitely most Americans—will disagree as well.

“Amazon is precisely the kind of company that Congress had in mind in enacting America’s many antitrust laws,” he writes. “Having first subsidized end-users, and then offered favorable terms to business customers, Amazon was able to exploit its digital flexibility to lock both in and raid them for an ever-increasing share of the value they created. This program of redistribution from platform users to shareholders continued until Amazon has become a vestigial place, a retail colossus barely hindered by either competition or regulation, where prices go up as quality goes down, and the undifferentiated slurry of products from obscure brands is wreathed in inauthentic reviews.”

What he is describing there is enshittification, of course. But its enshittification does not impact end users—that is, Amazon’s customers—in the slightest. And so it’s hard as an individual to understand why any of this is a problem. Which I realize in a hypocritical way is exactly the argument that, say, Apple’s fans use when I complain about its 30 percent App Store fees: They’re not being harmed, they believe, so what’s the problem?

I will try to be smarter than that silly argument, because I can draw a distinction between short-term benefits and the long-term negative impact of a single monopolist setting prices, preventing innovation from coming from elsewhere, and maintaining its monopoly in illegal ways that harm competitors and consumers. I’m just not sure Amazon is doing all that. Amazon isn’t worse overall today for me or for other customers than it was 10 or 20 years ago. It’s better. Isn’t it?

Let’s talk about setting prices. Let’s talk about how every big retailer does this. Let’s talk about how Walmart, a retailing supergiant that is responsible for destroying small businesses across our great country, is today bigger and more powerful than it’s ever been and has not been slowed by Amazon’s blistering ascent in the slightest. And yes, let’s talk about how the very existence of Walmart is the perfect retort to the FTC’s charges. If Walmart exists, how is Amazon even a monopoly?

That was rhetorical. Walmart did and does exactly what Amazon does, which is exactly what every retailer does: It gets the best prices it can from suppliers for the products it sells to consumers. It reaches deals, even exclusive deals, with certain suppliers, dictates its needs, and looks elsewhere when a supplier can’t meet them. The central issue with antitrust, as always, is size, and how the rules are different when you are dominant. And Walmart is dominant. So too is Amazon. Perhaps we can view them as we do Google and Apple, companies that compete but also coexist, and that in coexisting, they do what the other does, and can always point to that example as the reason why their behavior is perfectly fine, thank you very much.

In the Washington Post today, Geoffrey Fowler, who I do like, also argues that shopping on Amazon has gotten worse. But has it? He and his publication provide a sadly contorted interactive example of how many ads there really are in Amazon search results, as if no one knew about this, and how Amazon places these ads, sorry, sponsored results, on top of, and intermingled with the “real” (organic) results.

It’s all true. It’s also true that this is common—Google does it in Search results on the web, Apple does it in its App Store, and so—and that “they are also doing it” is no defense because of all the usual monopoly/size reasons. But I think it’s also true that we, as consumers, understand this behavior. And that we have been trained to ignore it. And work around it. That we all know to scroll down “below the fold” to the “real” results. Just as we all know that most billboards on the highway are not informational but are rather ads.

But here’s my real problem with Fowler’s interactive take-down. It never addresses the actual solution that consumers use when searching, and you can see it in the top-left of every single screenshot he provides, unnoticed and unmentioned: Amazon, for all its understandable desire to make a buck, what with it being a publicly held company and all, provides a “Sort by” toggle right there at the top. It’s set to “Featured” by default, where that word means “the results Amazon wants to show you first because this is our store and we’re trying to make money.” And you can change it, as we all do. You can change it to sort by price or, better yet, by average customer review. So you can see the best-reviewed products first. Problem solved, and all it took was two mouse clicks. Oh, the horror.

(We all have our own strategies here. My wife believes that the most important review types, on any service, are the five-star and one-star reviews. Just look at those, see which reviewers are nuts and complaining about issues unrelated to the topic, and make your decision. This seems to work pretty well.)

I know what you’re thinking.

But Paul, what about all the bots and fake reviews? And there, you have a point. That is exactly the kind of behavior the FTC and other regulators should be going after. (And, who knows? Maybe they are. I haven’t had time yet to read its full complaint.) Battling fake reviews, as with fake news and other misinformation, is one of the biggest issues of this day. But, again, low-hanging fruit. Compared to the possible election-altering impact of an unscrupulous company like Facebook, I will argue that fake product reviews on Amazon are a relatively minor issue. And will point to Amazon’s very liberal return policies as the answer for those who are misled.

Back to Doctorow.

“It’s hard to remember that the internet was originally supposed to connect producers and shoppers, artists, and audiences, and members of communities with one another without permission or control by third parties,” he continues.

I heard a record scratch. Did you hear it? No? Because that is not why the Internet was created.

The Internet was created to establish a distributed communications network that would survive the severing of communications links in a nuclear war. The idea is that communications would be endlessly rerouted until the connection was made. And when this brilliant idea was spread out into the world, it started with academia before being finally commercialized. And the only goal there, literally, was financial gain. The Internet was commercialized to amplify the making of money. Period.

Knowing this, Doctorow’s high-minded, idealist, and non-factual statement colored the rest of the editorial for me. And so when he gets to the enshittification argument (again, without using the term), I’m already defensive. And … In this case, not sure I agree.

“In its early years, Amazon was good to its users. It sold products affordably, and shipped them swiftly and reliably. It attended closely to the authenticity of the reviews that appeared on its site and operated an ‘honest search’ that populated results pages with the best matches for each query.  Then Amazon started locking everyone in.”

A couple of points here. Amazon is inarguably better for its users now than ever. Items arrive faster than ever. The choices we have are exponentially more vast. The authenticity of reviews, as noted, is an issue, but also as noted, we are acclimated to work around the “honest search” issues, using tools that Amazon provides on every search results page. And that lock-in? Prime is a better deal now than ever, thanks to the multitudes of services we get.

Two specific callouts here. Amazon Photos has unlimited “free” online storage if you’re a Prime member, my God, use it. And I know everyone is going to point to the recent example of Prime Video charging an additional $3 per month for an ad-free experience, which is an obvious example of enshittification. It’s just not a good example. Almost none of you like or rely on Amazon Prime Video anyway. This new pricing model is in line with what it does elsewhere, including with Amazon Music. This switch to an ad-based model is in line with what we see elsewhere in the industry (Spotify, etc.). And while I agree it’s not ideal or even “good,” it’s part of a broader subscription services issue we are all dealing with this year. In the scheme of things, Prime Video is a minor concern at best, the type of thing people are outraged over even though it doesn’t impact them. Undeserved rage is so 2023.

Let’s continue.

“Amazon’s seemingly bottomless coffers meant that it could sell goods below cost and extinguish any upstart that dared to compete with it. This created another form of lock-in for Amazon: It became progressively harder not to shop there. The more locked in we were, the less Amazon needed to offer us.”

Um.

No, it didn’t. It offers more today than ever before. A lot more. Amazon is almost certainly abusing its partners, its suppliers, and its own warehouse employees. It can see what people search for, and it creates internal businesses, or enters into partnerships, to supply those needs even more cheaply. Illegal? Honestly, probably. But let’s at least admit that in doing this, it is helping its customers. It is improving things for … us. Getting a jury of average Americans to agree to disadvantage themselves, with higher prices, slower deliveries, or whatever, is going to be a tough sell. We are all very comfortable with this convenience economy we’ve created for ourselves, for better or worse. And in so many ways, a decision against Amazon goes against our best interests.

Or at least our perceived best interests. As noted above in my App Store example, many people who stick up for Big Tech just aren’t educated enough on the issues to understand the wider ramifications of behaviors that they believe either benefit them directly or don’t impact them in the slightest. And I want to be clear here that I am cognizant of this and am trying to apply that thinking to Amazon. And I gotta tell you, I’m coming up short.

With one exception, and it’s that old chestnut about legal business behaviors that become illegal when you establish a monopoly. What’s OK for the tiny upstart is often not OK for the entrenched monopolist. And we need to think that way when it comes to Amazon. And I’m trying.

Discussing the Times editorial with my wife this morning, she too complained about all the sponsored results in search results, though she also told me about her strategies for dealing with that (noted above) and agreed that you don’t have to be all that savvy to see through it and then ignore it. But where she disagreed with me was my contention that what Amazon is doing is no different than what every single business does, regardless of size.

So I used an example she would relate to. Every Friday, we eat at a favorite restaurant. And every Friday, they hand us a menu and a specials menu for that day. The specials menu is delivered on top of the real menu. And it, I argued, is full of items that they either got very cheaply or need to get rid of because food is perishable. And they very clearly are trying to steer customers to these items because it benefits them. The specials are to this restaurants what the sponsored items are to Amazon.

She did not like this. But I pointed out that in an ideal world, this transaction would be a win-win. That in selling us, say, a fish special, the restaurant achieved its aims, and that in choosing a special, I received an item I didn’t know I wanted until I saw it, and maybe it would be fantastic. She argued that this restaurant wasn’t putting a fishmonger out of business. But I replied that this restaurant was doing what all merchants do, getting the lowest price, and that by choosing one fishmonger over another they were, in fact, favoring one and hurting another, and that this behavior is business and that it only happens at a much larger scale with Amazon. This restaurant’s ability to abuse or hurt others is minor. Amazon’s is incredible.

Anyway, Doctorow. He writes that, after all its terrible behaviors (none of those he detailed, again, impacted customers), “Now we are at the final stage of monopolistic decay.”

Ah boy.

Look. Amazon isn’t a charity. It wasn’t put on earth to save mankind, it was created to make money. And it’s hard to argue about its success, just as it’s hard to argue with the fact that, overall, the whole thing has been a win-win. We as consumers do benefit from this thing. We are lazier as a result, for sure. But we’re not regulating that.

So what are we regulating here? Am I really falling on the side of a belligerent monopolist that wields massive market power and only wants to maintain that monopoly at all costs? No, not really. But I see holes in this argument that I do not see with other Big Tech firms, and I think most consumers would have those concerns too. And this troubles me. If anything, I may be airing this only so that someone, someone smart, can point out my errors.

But the Walmart thing bothers me.

Walmart is not the Burger King to Amazon’s McDonalds. It’s an example of a company that didn’t just survive but thrived in the face of competition from Amazon. Walmart is the world’s 15th biggest company by market cap and is valued at $434 billion. Amazon, by comparison, is the world’s 5th largest company, with a market cap of $1.29 trillion. This isn’t Apple vs. Epic or Google vs. Sonos, something huge trying to destroy something much smaller. These are two behemoths. And we need to factor in that more level playing field. Does it obviate the standard monopoly complaints? I really don’t know.

The reality of consumer harm also bothers me. And does the possibility of future consumer harm. Is there a “consumer welfare” issue here that I’m not seeing?

Again, I don’t know. I do see the Amazon warehouses that have popped up all over the Lehigh Valley where I live, and that they are replacing farmland because they are more lucrative. I see the truck traffic that clogs not just our interstate highways but also our local roads, and I constantly complain about the 18-wheel trucks that we see, every single day, on little country roads that were literally designed for horse-drawn buggies. And the damage these trucks do to roads big and small, and that Amazon isn’t, but should be, paying for that damage. I see all kinds of things, I guess.

But that’s not this complaint.

And in the end, I just don’t know. But for the first time, confronted by a concerted regulatory effort to take down a Big Tech firm to stop its abuses, I just don’t know. I’m not sure I see it.

But I will keep looking. I will read the full FTC complaint, and I’m curious how you all view these charges. I already know where people stand on Apple and apps stores and all that nonsense, so let’s keep the discussion to Amazon. I think it’s a monopolist that is clearly abusing that monopoly in some ways. But is it hurting us overall? Will it hurt us? Is there a middle ground, some interplay between good and bad? Or is it just … bad?

I don’t know.