The Power of Big Tech Giants
Amazon has become the object of the EU’s scrutiny and investigation after it was suspected of having violated antitrust laws. Specifically, the online retail giant is being investigated for supposedly collecting data from other sellers and lowering their own prices in an effort to push out smaller rivals. These antitrust laws are set in place to prevent such unfair practices from happening, but to many, this seems like a scuffle between some big companies and the EU government. However, with big companies earning more money by the second and swallowing up smaller businesses, it’s an issue everyone should be informed about. In a quote from Margrethe Vestager, the EU Commissioner for Competition Policy, “European consumers are increasingly shopping online. E-commerce has boosted retail competition and brought more choice and better prices. We need to ensure that large online platforms don't eliminate these benefits through anti-competitive behavior.”
In simple terms, Vestager and the EU are trying to figure out if Amazon is abusing its power over smaller companies.
This isn't the first time the EU has brought charges against a tech giant. In the past Apple has come under fire for their treatment of rival apps in the Apple App Store. Similarly, Google and Microsoft have also been accused of violating antitrust laws. It seems like every big tech giant is being suspected of abusing their power. Although many of us rely on these companies for convenient and quality goods, it’s important to analyze why and how these companies get so big and if the power they hold is getting out of hand.
So, how did Amazon get so big? One may think the sale of goods on the Amazon marketplace is responsible for the majority of their income and success. On the contrary, Amazon web services are actually responsible for the majority of their income, a business model that sets it apart from the competition. While a seller has to focus on actually selling products to make a profit, Amazon can focus solely on growth. They don’t actually have to worry about making a big profit off their goods since they have the web services income to support them. This enables them to consistently keep low prices with their own products, which in turn, starves out competition. Antitrust laws look at the sudden decrease and later increase in sales price that businesses typically utilize when overriding their competition. Essentially, Amazon has been able to slip under the radar since products are kept at low, but consistent prices. With much of its focus being on growth, Amazon has quickly been able to take over the online marketplace. According to statistica.com, “In 2019, Amazon achieved 20 percent year-over-year net sales revenue growth.”
Many have drawn parallels between Amazon and other retail chains like Walmart and Target. While they do have similarities, like having both generic and name-brand items, it’s hard to deny Amazon’s significant advantage over the superstores. Amazon is capable of tracking user information, both on and off of the website. For example, if you were searching the internet for a new winter coat, Amazon might just recommend that very item the next time you visit the site. On the other hand, Walmart and Target have no sophisticated way of tracking what a consumer buys and wants.
Amazon has also found itself a niche in the world of online shopping. Sure, there are sites like eBay, Target and Walmart, but the sheer number of items on Amazon are rivaled by no other. This is why, even if the public had suspicions on the ethics of the corporation, many would continue to buy items off the site. It’s much harder to switch to a better online retailer than it is to switch to another grocery store or hair salon.
While it’s easy to pick at the flaws of such a large company, we can’t ignore the good it has done. For example, Amazon took anti-semitic books off the marketplace and thus decreased the amount in circulation. They have also banned police from using their facial recognition technology which is believed to lead to racial bias. Additionally, many smaller businesses rely on the Amazon marketplace to stay afloat.
There's no conclusive answer as to where the line needs to be drawn for big tech companies, but a conversation around the topic needs to spread to places outside the EU. These companies are growing by the minute and so is their power. As consumers it’s our responsibility to keep them in check and take a stand when the power of big tech companies gets out of hand.
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