Amazon is taking advantage of homebound Americans’ reliance on e-commerce during the COVID-19 pandemic. As small businesses struggle to stay afloat, Amazon’s monopoly keeps on growing. During the week of April 19th, 2020 alone, Amazon saw 93 percent more consumer spending than it did during the same week in 2019; meanwhile, 100,000 small American businesses are estimated to have permanently closed since the pandemic started.
Even before the pandemic, half of all U.S. online purchases were made on Amazon, giving the company access to information that no other competitor has. Amazon analyzes your online habits and shopping patterns—what kinds of items you browse, the point at which you stop scrolling and look at an item more closely, the price threshold at which you are most likely to make a purchase—to keep you coming back for more.
Amazon’s practice of scooping up data is more than just an invasion of privacy; it is a manipulative tactic that hurts the global economy by impeding competition. Amazon uses data about its customers’ online behavior to hurt the third-party vendors that sell products on its online marketplace, producing in-house copycat versions of popular items at prices just low enough to woo customers away from the original third-party versions. In July 2019, Amazon swore before the House Judiciary Committee’s Subcommittee on Antitrust that it did not use proprietary data from third-party vendors to develop its own in-house products. A recent investigative report from the Wall Street Journal, however, uncovered that Amazon lied to Congress; Amazon indeed uses seller data to determine how to best place and price its own imitator products.
Amazon also purposefully operated at a $2.8 billion loss for its first four years as a public company in order to increase its market share of e-commerce customers. It continues to willingly incur losses on its e-commerce business in order to accumulate troves of data on its growing customer base, which it then uses to create barriers to entry for its competitors and clear pathways for Amazon to use its massive wealth to expand its reach into other markets. Even Amazon’s first employee, who no longer works for the company, now laments that Amazon is a “huge and unstoppable force” and a “ruthless competitor.”
For example, Amazon loses money on its Prime subscription service offering free two-day delivery, but it offsets those losses with revenue from Amazon Web Services, its massive cloud computing arm that generates almost all of Amazon’s annual operating income. Having a loyal Prime customer base is priceless to Amazon; in PBS’s recent documentary “Amazon Empire” examining the dangerous rise of Amazon, a former Amazon senior manager explains that “when you go on and look to buy a product, and it’s available in two days, delivered to your door that Amazon Prime program becomes a mechanism that keeps bringing you back” to the company. Amazon was able to leverage its dominance in the e-commerce market to give its Prime Video streaming service an unfair advantage when Amazon entered the entertainment industry. No other cable or streaming company can match Amazon’s built-in captive audience of Prime customers. Now, Amazon is using its power in the entertainment market to try to acquire AMC Theatres, the biggest movie theater chain in the U.S.
The fact that Amazon is profiting so much from a global pandemic that has taken more than 100,000 American lives and cost more than 41 U.S. million jobs makes it more important than ever to investigate the company’s antitrust violations. State attorneys general have the unique power to hold companies accountable for anticompetitive behavior, and they have already opened antitrust investigations into Google and Facebook.
As a leader on both investigations, North Carolina's own Attorney General Josh Stein clearly understands the danger of letting Big Tech go unchecked. He can help protect North Carolina consumers and small businesses from Amazon’s predatory behavior by opening an antitrust investigation into Amazon.
As the pandemic continues to unravel the U.S. economy and benefit Amazon, we cannot afford to put off action against the Amazon monopoly any longer. It’s time for state attorneys general to open an antitrust investigation into Amazon and we need Attorney General Stein to lead it.