Is Amazon a Monopoly in the Eyes of Antitust Enforcement?

There is an ongoing debate as to whether or not Amazon is a monopoly. In the context of antitrust laws, a monopoly can stop a company from forming and dominate the market in such a way that competition is impossible. Antitrust enforcement regulates companies which they suspect are monopolies when they notice consumers are either maying more or have less choice.

Since Amazon offers its customers lower prices it is not considered a monopoly by antitrust laws and is a benefit to consumer welfare. A concept closely tied to monopolies is predatory pricing, which is when a company prices a good below cost to drive out its competitors so that the company is able to enjoy a dominant place in the market. Amazon displays predatory pricing technique with their willingness to sustain sufficient losses in the market. This is why some characterize the company’s business model as a threat to customers. However, it is hard for the government to follow through with predatory pricing investigations due to difficulty in proving cases.

To those who do indeed think Amazon is a monopoly, the government view of predatory pricing is outdated. There is a winner takes all marketplace found with tech companies: they attempt to gain as many users as possible at their earliest stages and once they have a lot, it becomes harder for competitors to attract them. It is in a situation such as this, that predatory pricing becomes more acceptable.

Another factor playing into Amazon’s portrayal of a monopoly is its expansiveness as a business. The company plays several roles in the market: an online retailer, content provider, book publisher, and maintains a vast network service. The company’s involvement in various lines of business is problematic because it can assert its dominance online to benefit its other lines.

While there is still discussion on whether or not Amazon is a monopoly, there is no doubt that the company is flourishing. As a provider service, Amazon has fundamentally managed to use the bargaining leverage of its users to lower costs as much as possible and appease to consumers.