Economics

Senator Elizabeth Warren is advocating anti-trust action against some giant technology companies including Amazon, Google, and Facebook. Select one of these companies and analyze at least one cost or benefit of her proposal.

ANSWER

Antitrust Action

Antitrust actions against technology companies aim at protecting competition through advocating for a freely competitive market and economic fairness. Over the years, Amazon has dominated the online market through anti-competitive practices such as product promotion and third-party selling (Pankratz, 2020). The antitrust actions aim at ensuring that no one business becomes as powerful to be able to fix prices and prevent competition. However, Amazon relies on anti-competitive tactics to maintain its dominance, and it is time that the law caught up. Therefore, the company is likely to suffer some major setbacks as the antitrust actions stabilize competition and business practices in the online market.

The antitrust action will protect competition as well as reduce monopoly power that impacts competitors and consumers. The antitrust actions will focus on alternative business practices that will impact the dominance of Amazon. For instance, Amazon uses predatory pricing to discourage its competitors for new products from entering a market (Kellachan, 2018). They do this by selling a product at a loss until the competitor exits the market or sells themselves. Then they raise prices to capture more of that market share and make up their losses. With these low prices, Amazon has been able to outsell other online sellers since they do not need overhead as large as traditional stores and have lower distribution costs due to their many warehouses around the country for faster delivery (Khan, 2018).

The antitrust actions will prevent the company from getting so big as to put such unfair conditions on its suppliers and consumers. Therefore, Amazon stands at risk of being broken up or pressured into changing some of its business practices. For instance, antitrust actions will restrict how Amazon as an e-commerce giant can promote its products, such as Amazon basics. The antitrust actions will make it difficult for Amazon to rely on data from other vendors to develop competing items. Advocating antitrust actions will influence the monopoly power of Amazon in the online market and facilitate fair competition in e-commerce.

References

Kellachan, D. (2018). Should Amazon Be Broken Up? An Analysis of Valuations and US Antitrust Laws in the 21st Century Economy.

Khan, L. M. (2018). Its Challenge to Current Antitrust Law. Digital Dominance: The Power of Google, Amazon, Facebook, and Apple, 710, 805.

Pankratz, R. (2020). Duty to Disclose: Amazon’s E-Commerce Platform, Private-Label, and the Need for Disclosure. Kan. JL & Pub. Pol’y, 30, 162.