Is Bezos’ patience his virtue or his vice? Applications of US antitrust and EU competition law to Amazon.com’s consumer-focused corporate strategy
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My name is Karishma Puri and I am 22 years old. I grew up in Singapore and am currently pursuing a LLM in Intellectual Property Law at UCL.
For my LLB dissertation, I chose to analyse Amazon’s corporate strategy and how the company’s focus on maximising consumer welfare has previously made it difficult for competition law authorities to penalise the way it operates. I wanted to explore the intersection of tech and law — more specifically how the law is shaping the growth of technology and Big Tech — so delving into Amazon’s operations was something I took great interest in researching.
Bezos’ commitment to consumers through low pricing and aggressive investment has bred resourcefulness and innovation, but has also created an unimaginable complexity in Amazon’s business model. My research finds that EU competition law is continuously evolving and acknowledges that online platforms operate differently to traditional brick-and-mortar retail stores. This trait of adaptability is seemingly absent in US antitrust law where strict application of the consumer welfare approach means Amazon can evade antitrust scrutiny while distorting competition.
The discussion of whether competition laws can rein in Big Tech is an exciting one, and I’m thrilled to be able to be a part of it.
- Karishma Puri, Author
Introduction
In 1994, motivated by the idea of ‘an everything store’,[1] Jeff Bezos launched Amazon.com (Amazon). Today, what began as a humble, Seattle-based internet bookstore is an e-commerce giant and cloud computing front-runner. Proactively and unabashedly, Bezos initially registered the URL Relentless.com,[2] inspired by a theory of ‘relentlessly’ low prices to cut competition short. The company’s mission is ‘to be Earth’s most customer-centric company’,[3] ‘to make smart, fast decisions, stay nimble, innovate and invent, and focus on delighting customers’.[4] This consumer-focused corporate strategy has proven to be bountiful; in pursuing it, Amazon has earned a reputation of being ‘one of the most influential economic and cultural forces in the world’.[5] Though Amazon emerged as an online bookstore, it has since prospered to become an online marketplace, a streaming platform, and a provider of cloud computing and fulfilment services. Accordingly, it is not surprising that competition authorities have become sceptical of Amazon’s growth and how its dominance has the potential of disrupting competition. This dissertation hopes to untangle Amazon’s corporate strategy with the United States (US) antitrust and European Union (EU) competition laws, targeting potential predatory pricing, tying, data exploitation, and demoting claims. The argument will assume Amazon’s dominant position in the market of e-commerce, focusing solely on potential claims in its anticompetitive conduct. Due to the contemporaneous nature of this topic, it should be noted that academic literature that targets Amazon’s conduct specifically is scarce. The argument presented has thus predominantly built upon academic and legal opinions relating to the wider principles of competition laws and online platforms, and relevant legal precedent from both jurisdictions.
Bezos’ sphinx-like attitude towards Amazon’s future ambitions makes it hard to predict what market he might aim to pervade next, but the first chapter attempts to emphasise a constant in all of Bezos’ past endeavours: consumer welfare. It will delve into the crux of US antitrust law – consumer welfare – and EU competition law – undistorted competition – and explain Amazon’s successful circumvention of US antitrust scrutiny and its ongoing investigation with the European Commission (EC). The second chapter will outline the legal framework of predatory pricing in both jurisdictions, highlight Amazon’s loss-bearing capacity as a marketplace and profit-making ability through Amazon Web Services (AWS), and conclude that the absence of a recoupment test in EU competition law, unlike in US antitrust law, means that there is a larger possibility of Amazon being held liable for predatory pricing in the EU than in the US. The third chapter will call attention to Amazon’s expansion into delivery and retail. It will first acknowledge the source of Amazon’s expansion and criticism: its ability to leverage its market power from one market to another, therefore focusing each jurisdiction’s laws on leveraging market power through tying. It will call then attention to US antitrust law’s rigidity in dealing with novel forms of anticompetitive behaviour and conclude that legal development is needed in the US for Amazon to even begin to be scrutinised for tying. Ultimately, it will seek to argue that EU competition law’s fluidity and room for reform through case law, as seen in Google Shopping, renders Amazon relatively more vulnerable in the context of tying. On the topic of expansion, the third chapter will also draw light to Amazon’s hybrid role as marketplace and retailer. It will examine the EC’s ability in holding the company liable for the exploitation of merchant data and undercutting competition through algorithmic pricing, if prices are found to fall below an appropriate measure of costs, a concept previously disregarded by antitrust authorities in the US. In the final chapter, it will be argued that Amazon’s Buy Box algorithm has the potential to be held as anticompetitive by virtue of demoting competitors in the EU, unlike in the US where competition authorities seem apprehensive in modifying current antitrust doctrine.
The overarching argument this dissertation hopes to convey is that EU competition law seems to appropriately evolve with the times as it acknowledges that online platforms operate differently to traditional brick-and-mortar retail stores. In contrast, this trait of adaptability is absent in US antitrust law where strict application of the consumer welfare approach means e-commerce giant Amazon can evade antitrust scrutiny while distorting competition.
[1] Brad Stone, The Everything Store: Jeff Bezos And The Age Of Amazon (Transworld Publishers 2013), 24.
[2] Ibid 31.
[3] 'About Amazon' (amazon.jobs) <https://www.amazon.jobs/en/landing_pages/about-amazon> accessed 1 May 2020.
[4] Ibid.
[5] James Jacoby, Amazon Empire: The Rise And Reign Of Jeff Bezos (PBS 2020).
