
Amazon's Japanese headquarters raided by nation's regulator - jonbaer
https://www.theguardian.com/technology/2018/mar/15/amazon-japanese-headquarters-raided-regulator-antitrust-fair-trade-commission
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mfoy_
So it sounds like the issue is that Amazon is using its weight to force
suppliers into eating their platform fees rather than pass it on to the
consumer.

I'm not sure of the exact numbers, but imagine Amazon takes a 10% cut of any
sale on its platform. If a supplier sells a widget for $100, they'd only get
$90 from an Amazon sale. Amazon is unfairly preventing them from marking up
their offerings on Amazon... i.e. preventing the suppliers from selling their
widgets for $100 on their direct website, and $111.1 on Amazon (so that a sale
is a sale and always gets them $100 in revenue).

If a suppliers margins are razor thin this could cause them to _lose_ money on
Amazon sales... so they'd either have to mark up their product _everywhere_
and risk losing their competitive edge, or eat the loss on Amazon... or just
not "collaborate" at all with Amazon.

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xixi77
I don't really see why this is necessarily unfair, unless there is literally
no other way to reach consumers other than through Amazon: shouldn't their own
product pages show up in Google search results, for one, not to mention other
online stores?

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xbryanx
It's not really about whether it's unfair. It's about whether it's against
Japan's democratically defined laws.

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xixi77
Of course; I know very little about Japan's antitrust laws, it's really beside
the point whether they are democratically defined or not. It's on Amazon to
argue about their interpretation through Japanese courts or by whatever is the
mechanism of redress they have in this case, if any.

I was responding to the parent comment calling the arrangement as described in
article unfair.

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mfoy_
Actually, I never said it was unfair, I just elaborated on what Amazon had
allegedly done to warrant a raid from the antitrust regulators.

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williamscales
> Japan’s antitrust law prohibits a firm from abusing a superior bargaining
> position to illicitly make a business partner accept unprofitable trade
> conditions

If the trade conditions are really so unprofitable, why would the partner do
business with you? This seems like ridiculously broad regulatory overreach. It
sounds like it's illegal to be good at business in Japan.

~~~
CPLX
> If the trade conditions are really so unprofitable, why would the partner do
> business with you?

Because you have no choice. Because they are a monopoly. Which is the basic
point of antitrust law.

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positr0n
Probably lack of business imagination on my part, so can you explain a
situation where a company would be forced to do something that would lose it
money?

If you agree to a deal you must be getting _some_ benefit out of it, right?

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CPLX
Sure. Suppose you live on a sunny carribean island and own a banana plantation
and sell bananas for export profitably every year and live a normal life and
raise a family.

Then someone comes along and creates a shipping trust and corners the market
on boats leaving the island and says sell your bananas to me at a loss or
leave them on the docks to rot.

Option A is to sell them at less than the cost it took for you to pay your
workers to harvest them, option B is to watch them rot in a matter of days.

Yeah sure the free market says that this will cause someone else to come along
and create a shipping alternative. But the shipping trust knows this too. So
they say if anyone tries to compete with us we'll drop the cost of shipping
off the island to free temporarily until your new shipping business fails, and
then go back to high rates.

Nobody will finance the new shipping company given this predicament, so they
can't even get enough money together to buy a boat.

Meanwhile, the trust is making a total killing selling bananas at premium
prices while buying them below cost, rapidly building a war chest to
permanently be able to outlast even a well funded upstart shipping competitor
in a price war.

Yes the "free market" _should_ solve this problem but the whole point is that
trusts and monopolies subvert the free market and prevent market forces from
functioning. Thus the role of government in stopping them.

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icebraining
That sounds plausible in a world without contracts. But with them, the upstart
will lock-in a few customers at a decent rate, which they will have to pay
even when the big company drops theirs.

A more plausible explanation here, in my humble opinion, is that it's only
unprofitable for _some_ of the suppliers. By squeezing the margins in the
market, Amazon forces everyone except the leanest out.

~~~
CPLX
Not only is it plausible it's completely common. It's just a textbook
description of how trusts work.

The upstart can't lock in contracts when another well-funded monopoly company
is engaging in predatory activities. The monopoly has _market power_ which it
can use to put competitors out of business and extort profits from suppliers.

It's really just econ 101 and a pretty settled concept. Now there is certainly
an argument to be made about the degree to which Amazon is actually doing
this, but from a theoretical standpoint none of this is confusing at all, and
there are numerous real world examples of this in action.

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icebraining
I admit my ignorance. Can you give me one of those examples?

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beamatronic
Wouldn’t they keep everything important in the cloud?

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sdrothrock
Given that it's Japan, it's very likely that a good deal of it is stored in
paper, especially faxed copies and hard contracts.

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gumby
Title should point out this is the _antitrust_ regulator, not tax or
securities regulators.

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Analemma_
Does it have to? I sort of assumed it would be the antitrust regulator. Amazon
is too big and smart to engage in outright tax or securities fraud.

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spyspy
Yes? It could've been their environmental regulator for all we know.

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mfoy_
Or labour, if they had illegal working conditions, or anything at all,
really...

