Amazon Plays Rough. So What?
by Joe Nocera, the New York Times, OCT. 13, 2014
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) Walmart, and Foer notes that pushing suppliers has always been the key to Walmart’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 C.I.A., 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 over 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 that 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 that 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.” Walmart’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 Walmart, but Target and Home Depot in the brick-and-mortar world, and Google and Apple in the digital universe.
The truth is that American antitrust law is simply not very concerned with the fate of competitors. What it cares about is whether harm is being done to consumers. Walmart 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 things, 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 losing his mind. As an author himself, he should know better than to defend a mammoth company that routinely suppresses the books of familiar—dare I say important?—authors, as part of its business model of diving to the very bottom of the bottom line. Nocera defends Amazon’s practice of punishing rival publisher Hachette by, in Franklin Foer’s words “putting its books at a disadvantage on its website compared with other publishers’ books.” This blatant censorship of a rival company’s 1st-Amendment-protected products is a clear violation of the freedom of speech of authors who had the audacity to be published by someone other than Amazon. But to Nocera, that constitutional violation doesn’t matter. He defends Amazon on the flimsy pretext that they aren’t, at least technically, well not entirely, “in clear violation of the country’s antitrust laws.” And just because Amazon doesn’t entirely dominate e-commerce sales, he comes to the additional, equally ridiculous conclusion, that the company that commands nearly half of America’s book sales, cannot in any “legitimate” way, “be called a monopoly.” All I can say is, Joe Nocera must be completely addicted to cheap e-book prices to defend Amazon’s predatory tactics. I hope he never gets another book advance.
Joe Nocera must be working on a book deal with Amazon. How else can we explain his defense of the company that doesn’t just sell books but also provides a self-publishing platform for authors whose books aren’t good enough to attract a real publisher? And then, as if publishing their 3rd-rate work weren’t enough of an insult to book readers, cynically promotes those books at the expense of legitimately-published authors who happen to be working with another publishing house? Nocera clearly perceives the quality difference between Amazon’s e-books and those of other publishers. He says himself, “most people turn to Amazon for e-books not because there are no alternatives but because its service is superior.” Apparently that superior service includes telling readers which e-books (and for that matter, which physical paper books) to buy—Amazon’s! Is that what he means when he says “Amazon has redefined customer service”? The comparison to Walmart is obvious. No American company is better at forcing suppliers to lower their prices in return for a chance to be on the selling floor than Sam Walton’s retail behemoth. And Nocera is clearly rooting for Jeff Bezos as the digital competitor to Walton, who in encroaching on Amazon’s core business. “Walmart’s e-commerce sales are growing at least as fast as Amazon’s,” claims Nocera, who uses this observation to excuse Amazon for its heavy-handed tactics against rival publishers. If “Walmart has squashed many more small competitors than Amazon ever will,” maybe Amazon can be excused for squashing Hachette, with “nary a peep from the antitrust police.” After all, even though “Amazon is in clear violation of the country’s antitrust laws,” it’s just good book business, right Joe?
Finally, someone is sticking up for Amazon and Walmart. I didn’t think I’d find it at the New York Times, but I’m grateful to Joe Nocera for his passionate defense of the tactics of America’s two greatest retail giants, one brick-and-mortar, the other entirely digital. Both are masters at driving down costs for the benefit of their customers, which angers suppliers. But the latest cries of unfairness from rival publisher Hachette are truly low blows, accusing Amazon of censorship and constitutional free speech violations just because their books are not heavily promoted at Amazon’s “store.” Nocera admits Amazon is “punishing Hachette by putting its books at a disadvantage on its website” in its ongoing effort to “‘disintermediate’ the book business,” but rightly asks, “How is this ‘darker'” than Walmart’s key tactic of “pushing suppliers” for deeper and deeper discounts in return for floor space? As Nocera—clearly a champion of lower prices for consumers no matter who gets crushed in the process—puts the case: “Does Amazon have a dark side? Yes, it does . . . it is giving people what they want . . . the nature of capitalism.” This is only bad news for smaller publishers or manufacturers too weak to compete. Enemies of capitalism can cry all they want to about being “crushed” by Walmart or Amazon, but the truth is, those companies got big by delivering what consumers want. If to do that Amazon “undercuts competitors . . . ruthlessly and squeezes suppliers . . . brutally,” says Nocera, then we must all be ruthless and brutal because we’re not going to boycott Amazon any time soon.
How to Conduct the Exercise
In a Reply below this post, identify the three summaries as
- Fair and Accurate
Offer comments to support your claims of Inaccuracy and Unfairness. For example:
The author of the paragraph deliberately attributes to Mukherjee statements he did not make. His assertion that Mukherjee would support a total ban on travel from epidemic countries is clearly not supported by the original article.
SUMMARY 2—FAIR AND ACCURATE
No comments required.
The author of the paragraph wrongly reports the meaning of the word “quarantine,” which completely taints the analysis of everything else in his reaction to Mukherjee’s article. He also makes errors of fact regarding the technique of screening for Ebola.
Time Limit: 30 minutes.