Why Is Amazon Not Considered a Monopoly?

HowStuffWorks discusses Amazon with Marc Scribner.

How big is too big? That’s the question that economists and policymakers are asking about Amazon, the $560 billion company that first made its name selling books online, but has rapidly morphed into an “everything store” with its hands in just about every retail sector in America.

The problem with accusing Amazon of being a monopoly is that it doesn’t quite fit with the prevailing definition of monopoly that’s been used by courts and the Federal Trade Commission since the 1970s. The issue isn’t “bigness,” says Marc Scribner of the Competitive Enterprise Institute, a free-market libertarian think tank, but consumer welfare. In general, a company can grow as much as it wants and control as much of the market as it wants as long as prices don’t go up and consumers don’t suffer.

But again, does Amazon’s rapid expansion and increasing market dominance mean that it’s doing anything illegal? Scribner says that there’s no evidence that Amazon is using its market power to engage in anticompetitive practices right now. Instead, Amazon’s critics are always warning about what might happen in the future, like leverage Whole Foods’ 450 locations to push out competition in the grocery delivery business. (Despite its size, Amazon currently makes up only 3.6 percent of annual retail revenue in the U.S. Walmart is still much larger).

“That isn’t how antitrust law works. There isn’t an antitrust ‘pre-crime’,” says Scribner. “There has to be actual anti-competitive conduct that occurred for someone to be convicted.”

Read the full article at HowStuffWorks.