Amazon plays rough, but what will we do about it?

By Joe Nocera

Sunday, Oct. 19, 2014 | 2:01 a.m.

Is Amazon a monopoly?

That certainly is what Franklin Foer, the editor of The New Republic, thinks. In the magazine’s current issue, he has written a lengthy polemic denouncing the company for all manner of sins. The headline reads: “Amazon Must Be Stopped.”

“Shopping on Amazon,” he writes, “has so ingrained itself in modern American life that it has become something close to our unthinking habit, and the company has achieved a level of dominance that merits the application of a very old label: monopoly.”

Foer’s brief is that Amazon undercuts competitors so ruthlessly and squeezes suppliers so brutally — “in its pursuit of bigness” — that it has become “highly worrisome.” Its founder and chief executive, Jeff Bezos, “borrowed his personal style from the parsimonious Sam Walton,” the founder of (shudder) Wal-Mart, and Foer notes that pushing suppliers has always been the key to Wal-Mart’s low prices, just as it is for Amazon’s.

But, he says, when Amazon does it, the effect is somehow “darker.” Why? Because “without the constraints of brick and mortar, it considers nothing too remote from its core business, so it has grown to sell server space to the CIA, produce original television shows about bumbling congressmen, and engineer its own line of mobile phones.” What, precisely, is darker about making TV shows about bumbling congressmen is left unsaid.

And then, of course, there is the book business, which Amazon most certainly dominates, with 67 percent of the e-book market and 41 percent of the overall book market, by some estimates. Foer devotes a big chunk of his essay to Amazon’s ongoing efforts to “disintermediate” the book business, most vividly on display in its current battle about e-book pricing with Hachette, in which it is punishing Hachette by putting its books at a disadvantage on its website compared with other publishers’ books. Foer worries about what Amazon’s tactics will ultimately mean for book advances. And he fears books will become commoditized — “deflating Salman Rushdie and Jennifer Egan novels to the price of a Diet Coke.”

What he doesn’t say — because he can’t — is Amazon is in clear violation of the country’s antitrust laws. As Annie Lowrey and Matthew Yglesias both pointed out in blog posts (at New York magazine and Vox respectively), there is no possible way Amazon can legitimately be called a monopoly. Lowrey notes that Amazon’s sales amount to only “about 15 percent of total e-commerce sales.” Wal-Mart’s e-commerce sales are growing at least as fast as Amazon’s. Meanwhile, as Yglesias points out, Amazon has to compete with far larger rivals, including not just Wal-Mart, but Target and Home Depot in the brick-and-mortar world, and Google and Apple in the digital universe.

The truth is American antitrust law is simply not terribly concerned with the fate of competitors. What it cares about is whether harm is being done to consumers. Wal-Mart has squashed many more small competitors than Amazon ever will, with nary a peep from the antitrust police. Even in the one business Amazon does dominate — books — it earned its market share fair and square, by, among other means, inventing the first truly commercially successful e-reader. Even now, most people turn to Amazon for e-books not because there are no alternatives but because its service is superior.

“In confronting what to do about Amazon,” Foer writes as his essay nears its conclusion, “first we have to realize our own complicity. We’ve all been seduced by the deep discounts, the monthly automatic diaper delivery, the free Prime movies, the gift wrapping, the free two-day shipping, the ability to buy shoes or books or pinto beans or a toilet all from the same place.”

Our complicity? In fact, in its two decades of life, Amazon has redefined customer service in a way that has delighted people and caused them to return to the site again and again. Does Amazon have a dark side? Yes, it does — primarily in the way it has historically treated its warehouse workers. But to say that Amazon has to be stopped because it is giving people what they want is to misunderstand the nature of capitalism.

Let’s be honest here: The intelligentsia is focused on Amazon not because it sells pinto beans or toilets, but because it sells books. That’s their business. Amazon is changing the book industry in ways that threaten to diminish the role of publishers and traditional ways of publishing. Its battle with Hachette is a battle over control. It’s not terribly different from the forces that ultimately disintermediated the music business.

As an author, I’m rooting for Hachette. The old system — in which the writer gets an advance, and the publisher markets the final product — works for me, as it does for most writers of serious nonfiction.

But, am I going to stop using Amazon? No way. I’m betting you won’t either.

Joe Nocera is a columnist for The New York Times.