Wednesday, August 10, 2022
Business TechMnuchin versus Bezos in the Heavyweight Retail Bout

Mnuchin versus Bezos in the Heavyweight Retail Bout


The Amazon honeymoon was long and profitable for small retailers for the past decade or so. A supply chain opened up like never seen before, allowing mom and pop to secure, sell, and capitalize on the largest retail platform in the history of the world. This, of course, is why Amazon founder Jeff Bezos is also the richest person in the history of the world. What could go wrong?

While Bezos was off in space, rumblings back on earth were starting to grow. Stories of entrepreneurs being thrown off the Amazon platform for no rhyme or reason. Has anyone ever actually talked to a live person at their customer support? It was not just those selling that were hot and bothered, but it was Amazon’s warehouse workers, who spoke of intolerable working conditions and slave wages.

This is starting to feel like something that might perhaps be a tad monopolistic. Sure, Amazon has created wealth for almost all involved, even if it does the unspeakable of controlling market prices. It’s clear a new regulatory vision of large retail is necessary.

In remarks made on CNBC, Treasury Secretary Steven Mnuchin said that, “Amazon destroyed the retail industry.” The dichotomy is that the company also created some 2 million small businesses around the world. Look, Amazon didn’t invent e-commerce, it just perfected it. The Treasury Secretary uses a Walmart tale when the new retail behemoth was allegedly putting mom and pop out of business. He also said that “no question they’ve limited competition. People had those concerns about Walmart, but Walmart developed a business where small business could continue to compete with them.”

Amazon pushed back against Mnuchin by stating their case as a job creator and platform provider to businesses around the world. The company added that independent sellers account for 58% of physical gross merchandise on the Amazon site, and rebutted accusations that it uses its size to stifle competition, as Amazon’s retail business competes in a worldwide market for retail sales and represents less than 1% of global retail and less than 4% of U.S. retail. Those retail sales numbers are interested and are far from monopolistic. The anti-trust question in the past has been put in the context of price control. Can one control a market with 4% saturation? Look, we’ve heard the argument on both sides, and both have points. It will ultimately come down to the Justice Department and the Federal Trade Commission to make a ruling.

We know that the Justice Department is opening an antitrust review into companies such as Alphabet, Facebook, and Amazon, alleging that their business model may have “reduced competition, stifled innovation, or otherwise harmed consumers.” It can be said that with the help of the government through patent and copyright laws, fewer companies are allowed access to markets by this de facto decree. Hence, it has allowed larger companies to get larger. At the end of the day, companies like Amazon might be big and powerful, but they are far from monopolies, even with all the help they get from the government.

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