Al Jazeera: Is Amazon a true monopoly or does the Bezos behemoth not qualify?

Read on Al Jazeera

Loyal customers love it, business rivals fear it, and public officials increasingly target it.

As a global retailer, cloud services provider, and media production house, Amazon is the largest internet company in the world and the second-biggest employer in the United States.

With Amazon workers’ strikes in the US and Germany coinciding with its two-day Amazon Prime event – which began Monday – the company faces doubts about its policies and whether it has monopolistic power.

How is ‘monopoly’ defined?

According to the Merriam-Webster dictionary, a monopoly is “complete control of the entire supply of goods or of a service in a certain area or market”. The implication is that monopolistic companies are able to destroy competitors and dictate prices.

‘Monopoly’ sounds bad, but is it really?

Economists say too much economic power held by one corporation stifles innovation, drags down wages, gives consumers fewer choices, and makes an economy less competitive. This is why antitrust laws exist.

What is antitrust law?

US antitrust law generally focuses on whether a company harms customers. The core principle is to ensure competition and protect consumers against predatory practices – thus preventing monopolies and strengthening the open-market economy.

Would Amazon qualify as a monopoly?

Despite its explosive growth, Amazon falls short of meeting the US Department of Justice‘s monopoly threshold, defined as a market share of greater than 50 percent. By next year, Amazon says it will have around four percent of all retail sales in the US, and just one percent of the $25bn global market. So its share of the e-commerce market in the US is 37.7 percent, according to eMarketer. But online represents only 10 percent of the entire US retail market – with 90 percent still brick-and-mortar stores.

Is Amazon dominant in specific sectors?

Amazon, based in Seattle in Washington state, is a tremendously large conglomerate, with a valuation that hovers around $1 trillion. The firm’s dominance can and does prevent other companies from competing in certain industries.

Barry Lynn, director of the Open Markets Institute – which studies corporate concentration in the US – told Al Jazeera that he believes Amazon holds a monopoly over the US book market, as well as the market for some types of toys and electronics. He added that this posses a political threat because “a lot of publishers and authors are terrified of speaking out about Amazon’s monopoly”.

Read the full article on Al Jazeera. 

See the rest of Barry C. Lynn's work

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In America today, wealth and political power are more concentrated than at any point in our country’s history.

The Open Markets Institute, formerly the Open Markets program at New America, was founded to protect liberty and democracy from these extreme -- and growing -- concentrations of private power.

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