
When Does Amazon Become a Monopoly? - RestlessMind
https://www.theatlantic.com/technology/archive/2017/06/when-exactly-does-amazon-become-a-monopoly/530616/?single_page=true
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RijilV
> In the near term, the Whole Foods purchase worries some analysts most
> because it immediately gives Amazon another infrastructural advantage: more
> than 400 small warehouses, spread out across some of the most affluent (and
> Amazon-using) neighborhoods in the United States. They fret that Amazon’s
> logistical advantages—its network of warehouses, delivery routes, and cargo
> jets across North America—have given it an unbeatable advantage over other
> firms.

Super disagree with that one. WF stores pay a premium for location and are
full of, you know, food. Amazon has opened up a in-city distribution center in
my city - not surprisingly in a closed down Sears location. Its in a crappy
part of town, by railroad tracks and the home depot. They use it for some
limited pickups and uber-style delivery drivers. There's no reason they'd need
the kind of setup WF has in our area - either ultra urban locations or
suburban with tons of parking when they can just pickup closing brink and
mortars in undesirable locations.

Grocery is hard for a bunch of reason, one of key ones being location. Why
you'd give up that location to use to dispatch items out of it beyond me, and
I suspect not what Amazon is intending here.

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jnordwick
There is no such thing as a vertical monopoly. That is the dumbest idea I've
heard this month probably from somebody who should know better.

Monopoly by definition is a single (or overwhelming) supplier. Vertical
integration is about the exact opposite since it opens the business up to
competition all along the supply chain. Amazon now competes with almost
everybody.

We've had larger firms in retail and other industries in the past that died of
natural causes. There is no reason to think different of modern tech
companies. These are just the people who are getting the transition we have in
the marketplace. Others will see and pick up on it to. You can't judge a
monopoly over just a 10 year period of time.

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meditationapp
I was under the impression that using your dominance in one market to secure
dominance in another is considered monopolistic behavior—for instance,
shipping IE with windows.

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maxharris
So how does a successful company continue adding things their customers want,
but avoid getting accused of being a monopoly?

From what you're saying, it seems as though the company is damned either way.
If you have earned a lot of market share, it doesn't matter whether you charge
a high price or the lowest price ($0). Or is the answer just that when you
reach a certain size, you should just be killed, never mind the cost to
everyone else (including customers that depend on the products being offered
as well as employees who have built careers working to make the company
successful)?

Large companies don't do everything well, to be sure. But who is going to go
out on a limb and fund the big bets, like Xerox PARC, Bell Labs, MSR, etc. if
we keep cutting down the tall poppies? Academics have a place, but there are
structural organizational and social reasons why they were not able to invent
everything we enjoy today.

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Nomentatus
Bell was forced to spend a large amount on research and not keep the patents
to themselves, or charge much for them, by the govt, because it was a natural
monopoly. Ever heard of the transistor?

~~~
ebcode
Thank you for this comment. Most people aren't aware of the relationship that
Bell was in with the gov't because of its status as a monopoly. Before the
gov't broke up Bell, it agreed to let Bell have the monopoly on the telephone
system, and in exchange, Bell "gave back" to the public in the form of new,
"public domain" technology. Not just the transistor, but also Unix and the C
programming language. Sometimes I wonder how farther we might be in our
technological development if Bell had never been broken up.

Folks wanting to know more about Bell Labs can check out "The Idea Factory" by
Jon Gertner.

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tzs
> Amazon basically bought the country’s sixth-largest grocery store for free.

For the curios, the five bigger seem to be, in descending order: Kroger,
Albertsons, Ahold USA, Publix, and H-E-B Grocery. (Walmart is #7).

Ahold owns Giant, Martin's, Stop & Shop.

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rgbrenner
where did the walmart number come from? By several sources, they are the
largest grocery retailer in the US.

In 2012, this article puts grocery revenue at $255b (over twice krogers
revenue): [http://money.cnn.com/2013/01/31/news/companies/walmart-
groce...](http://money.cnn.com/2013/01/31/news/companies/walmart-
grocery/index.html)

And this article says they have 25% of the 700b grocery market:
[http://www.salon.com/2013/03/28/will_wal_mart_replace_the_su...](http://www.salon.com/2013/03/28/will_wal_mart_replace_the_supermarket_partner/)

And this article says "Wal-Mart's biggest revenue driver is food (55%)".. and
walmart has 485b in total revenue:
[https://www.fool.com/investing/general/2014/07/16/kroger-
wal...](https://www.fool.com/investing/general/2014/07/16/kroger-wal-mart-
likely-to-enjoy-market-share-gains.aspx)

~~~
tzs
[https://www.statista.com/statistics/197899/2010-sales-of-
sup...](https://www.statista.com/statistics/197899/2010-sales-of-supermarket-
chains-in-the-us/)

Different sources give different rankings, often very different. I picked that
one because it was the only one I found at the time that put Whole Foods at
#6, so at least might be the ordering the article author was thinking of.

It's also not clear how largeness should be measured. Some lists seem to be by
sales. Some seem to be by number of stores. Some seem to be by number of
employees. It's not always clear which a given list is using.

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rgbrenner
that site displays a lot of statistics, but has no references. its anyones
guess where that data came from (and how long ago)

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dclaw
Last decade when they killed all the brick and mortar stores they are now
forced to replace to remain competitive.

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rgbrenner
this article is, at best, years too early. Walmart is the worlds largest
retailer, and largest grocery retailer in the US. 55% of their 480b in revenue
comes from food, and their revenue from food is over twice that of Kroger (the
#2 grocer).

Acquiring the #6 grocer doesnt change that.. And Amazon, even if you include
3rd party sellers, still has not reached 480b in revenue.

You cannot be the number two player and have a monopoly. That's not the way
that works.

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AznHisoka
What about internet retailers? Amazon is practically the leader there with
90%? of all ecommerce sales.

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rgbrenner
43%: [http://www.businessinsider.com/amazon-accounts-for-43-of-
us-...](http://www.businessinsider.com/amazon-accounts-for-43-of-us-online-
retail-sales-2017-2)

Which is a lot, but it would be hard to argue that consumers dont have
choices, when the same goods are available in hundreds of other stores, both
online and off.

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Entangled
Never as long as anybody can freely compete. Once you can't compete, no matter
how big or small, a monopoly is born.

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mark_l_watson
I was also perplexed as to why Amazon would buy WF.

The only rationale that I can think of is that Amazon wants to run experiments
in having physical stores in upscale areas, use AI for running the logistics
of grocery stores, and perhaps as a test ground for in-store robotics.

This seems like a long term play.

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kbutler
big does not imply monopoly

Monopoly means control of the supply or trade of a good or service. Very
little that Amazon sells is not available elsewhere at comparable prices
(maybe exclusive digital content? kindles?), so it cannot be a monopoly.

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horsecaptin
When Walmart declares bankruptcy.

