71 seconds of public radio fame: Alex Erickson
Amazon is a company we love to hate. It’s huge, recently surpassing Walmart to become the world’s largest retailer. It’s fierce, using predatory prices to dominate consumer markets with its own line of products. Its lesser-known Web Services division is a behemoth on its own, servicing the streaming giant Netflix as just one client. And not to forget, Amazon founder Jeff Bezos is the world’s richest man.
This was the case made on CBC’s The Sunday Edition in an early June broadcast. Amazon was shown to be a conglomerate of absurd market power, profiting even more because of the pandemic (as a physically-distant way to shop).
While I listened, I recognized these same arguments from MUN102 class with Professor Darius Ornston, where we held the Munk One Debate: “Be it resolved, we should break up Big Tech”. At the time, Elizabeth Warren was a vocal advocate for this; she spoke of Amazon as a “bully,” responsible for destroying small business, violating antitrust laws, and general corporate unfairness.
I’d heard these arguments before, and thought the case sounded convincing, so it seems foolish to have chosen to argue the opposing case. But, I did. And, while defending big tech, I had a chance to really critically evaluate and think about what makes Amazon seem so scary.
From the pro-breakup side, a constant line of argumentation is about competition: Amazon doesn’t play by traditional rules, and this hurts competing businesses. But taken further, I wanted to ask why, and for whom, that is harmful: is lack of competition necessarily and always to the detriment of consumers?
Some markets naturally favour a single provider – a natural monopoly. A common example is the utilities market, where often there is no household choice between water, sewer, and electricity providers. If we were to build infrastructure such that utility companies could compete (multiple connections to every house), it would be more expensive for everyone involved. It is more efficient for one provider to set up all the infrastructure, for less total cost, and then other regulation to ensure consumers aren’t then gauged. But, on the whole, monopoly isn’t always a bad thing for consumers, when the savings from integration are significant enough.
Henry Ford is celebrated for vertically integrating how cars are made, bringing all the assembly stages under one roof. In a way, hasn’t Amazon done the same? By vertically integrating the production, distribution, shipping and delivery of consumer products, they have made the way we shop immensely efficient. They are convenient and reasonably priced enough that people want what they are selling.
Ultimately, it’s not the consumer who is hurt by predatory pricing: it’s just a lower price, after all. Only potential competitors are hurt. In the case that they’re driven out of business, some argue, Amazon would simply raise prices in their newfound monopoly. But that can’t be true: if competition existed previously, it means there aren’t such barriers to entry that it cannot rise again. Retaliatory innovation could reasonably make a comeback.
So – back to what this blog post was supposed to be about: I decided to write to The Sunday Edition, frankly, because why not? I didn’t think they even read much of what they received; so, I was very surprised to hear them read my letter (at 1:38, the next week’s show), challenging Amazon’s inherent threat.
But to put Amazon aside for a second: this kind of thinking is what I really value about debates more generally. Whether in a classroom, club, or competition, being assigned a side of an argument and working backwards to build a case is an excellent exercise. It challenges you to confront what’s important, evaluate what’s true, and in the best cases, come away seeing an issue in new ways.
In my opinion, it’s the best way to engage with a different point of view. It helps you understand the nature of the logic, the assumptions and the value statements coming from the other side. By challenging yourself to argue what you didn’t initially believe, you might even end up changing your mind. And that is a good and important process, to be sure. No matter how you feel about Amazon, I think it’s valuable to think about why we believe what we do, and what would be needed to convince us otherwise.