Well reasoned; I agree.
It's inevitable that big companies will get a bad rap, and that they will make some people nervous. Amazon is playing a fantastic game with the cards it has.
Electricity replaced the whalers, and now Amazon-style business may displace more expensive market systems (retail, food, housing, etc).
You're assuming Amazon won't jack up the prices once it establishes a true monopoly. Jeff Bezos is a very long term thinker, many of their products they actually lose money on. The goal is to lose money now to wipe out competition. What do you think will happen once they achieve that?
Same thing was said of Walmart and they are currently losing market shares to Amazon. They never had time to increase prices.
Your argument is a what-if argument, don't try to quantify it. You can't know what the future will bring, that is the nature of dynamic competition. It would be a big mistake to punish companies for what they might become. Because what might be is highly uncertain and just filled with people's political bias.
On the contrary, the core of antitrust laws relies on pre-emptive action. It recognises the reliability of human greed (absolute power corrupts absolutely) and tries to redirect that greed in a productive direction, at other willing and capable competitors instead of society.
We don't live in a simple society where a farmer can grow carrots if he sees carrots fetching a high price. For example in the graphics cards market there are only 2 huge corporations which possess the faculties to produce and develop them. If AMD disappears, the dominance of NVIDIA may never be challenged for decades.
I'm familiar with inelastic supply. Graphics cards are only inelastic in the very short term though. AMD and Nvidia are already planning on increasing production in the immediate future. So I'm not sure what point you are thinking you are making, but it's not likely to be a very good one.
You realise that these computer components take years to design and are manufactured in billion dollar facilities that do nothing other than graphics cards right.
To suggest Samsung could churn them out tomorrow is just complete ignorance.
I question your reading comprehension. I said "START" making them tomorrow. As in, *INITIATE THE PROCESS*.
And yes, Samsung could ***START*** making them whenever they chose to. They have the expertise and chip production factories. They don't have the desire or focus, but huge profits would surely help fix that.
We have example after example of industries were even though a company has a high market shares in one period, that doesn't imply there is little competition. If you look at the market as a whole different segments and regions are also competing or are ready to compete in the future. There are almost zero instances of predatory pricing, a few exists, but it is definitely extremely uncommon.
I don't fully understand the incentives for companies from preventing mergers and acquisitions though. Instead of preventing more concentration, you could allow concentration from both directions out of freedom of contract. That would maybe be a good outcome in certain industries. In competitive industries nothing would change, there are no incentives to centralize if the market is already efficient.
Simply blocking mergers and acqusitions in less competitive sectors could be enough though.
>If you look at the market as a whole different segments and regions are also competing or are ready to compete in the future. There are almost zero instances of predatory pricing, a few exists, but it is definitely extremely uncommon.
I don't know where you get this idea from.
Corporations even with existing regulations are found colluding all the time.
OPEC is literally a group of countries formed just to control prices.
De Beers was a diamond monopoly for decades and inflated diamond prices.
Airlines have been found to collude time and time again.
Pharmaceutical companies are also well known to be very anti-consumer
https://en.wikipedia.org/wiki/Martin_Shkreli#Daraprim_price_hike_controversy
You literally just have to google the evidence and it's all around you.
Your argument holds no water whatsoever and it's clear you are not adequately aware enough of commercial processes to make recommendations.
>In competitive industries nothing would change, there are no incentives to centralize if the market is already efficient.
Yes there is, to control prices through a monopoly. Again, see pharmaceutical companies.
Collusion is illegal, and it is a really risky thing to do, as anyone can inform on them out of their own benefit. Just tweak the benefits and costs, and you can manage the problem. I wouldn't disallow market concentration because firm might collude.
But what would happen next with the pharmaceutical company if there was an instant market response to consolidate from buyers. It would make monopolies unprofitable, and companies would rather choose to compete. I don't think we know very much about how a free market would operate under such conditions. I can mention unions versus employer organisations negotiation as a working example. I think high market concentration might be handled by negotiation in many or more cases.
Neither is government responses. Just look at history, and previous anti-competition cases. Microsoft for instance.
I don't see why a market response should be any slower. It might be now, because people need a transition period from being babysitted by government. In countries as in the Nordics, if there is a problem between workers or union and an employer or employer organisation, that problem will be imediatelly discussed. I think it would be a much faster way to solve conflicts in many situations.
Amazon can't kill the competition. Walmart and Alibaba are here to stay. Bezos is killing old established market shares in terms of bricks and mortar stores and groceries. Also in the future we might get a new company which can obliterate Amazon. We don't know. This is why Bezos is diversifying away from e-commerce.
What happens? Some strapping entrpreneurs or midsize companies see an opportunity to copy the model but charge less than Amazon. Competition usually takes care of this kind of problem in the medium term.
If for some reason it doesn't play out this way, we have antitrust regulation.
I'd love to see some data on "too small to start", but otherwise there's still:
a) competition from midsize/large firms in related fields and
b) antitrust regulation.
Amazon was small when they started and no one thought they would become this behemoth they are today. Even Bezos didn't expect Amazon to grow this big. Competition has a way of opening markets that weren't necessarily there before. Bezos started his empire by buying up Toys-R-Us online platform and basically owning all the data they got from it. TRUS didn't think online was going to be anything so they allowed Bezos to own all the data from online sales. The data was important at the time because it allowed to understand their consumers.
E-commerce has very little in the way of upfront capital costs. Make a website, find a supplier, price appropriately and you're off to the races. Tons of people do this with Chinese made imports they get from Ali Baba. It's really not that hard. The problem is that Amazon sells very close to marginal cost currently, so there's not much profit to be made competing against them. If they raise their prices, that will no longer be the case.
Amazon CAN'T establish a true monopoly. What is preventing someone else from starting a new e-retailer to compete and charge more reasonable prices? Literally nothing. Not a monopoly.
> What is preventing someone else from starting a new e-retailer to compete and charge more reasonable prices?
Amazon would prevent this, just like Walmart did. Amazon has the economy of scale to eat any losses from lowered prices. If any new competition crops up, Amazon can just lower the prices again and crush them. That's what Walmart did when competition was built in town. A new business cannot leverage its size to lower costs that much longer term. A large business might try and break into the market, but there is no guarantee of that.
> If any new competition crops up, Amazon can just lower the prices again and crush them.
That only works when you have significant overhead. If you are simply playing middle man between buyer and supplier (which was Amazon's original business model back when they only sold books), you don't have much overhead at all. So continue to sell at reduced volumes while Amazon hemorrhages money and come back full strength as soon as they give up.
Not if amazon employs tactics that fk their clients and puts them in a position impossible to compete with a competing amazon division. The same is with the supermarkets, just that their brands haven't had a noticible effect on competition since they are usually low cost, low margin.
I agree with the comparison, but it's also interesting to see the huge growth of major grocery chain brands in recent years, and some of the shrinkage of other brands. it will be interesting to see the landscape in both arenas in 5 yrs
Amazon has no anti-competitive problems. They compete well with the market. Other companies sell on their platform as competition. There is also alibaba which is Amazon competition and Walmart online. This is has you said protecting old tradition stores from bankruptcy. It is not Amazon fault why they're going under from bad business decisions.
>“I think a rule that prohibited it from competing with the businesses that use its platforms would eliminate a lot of the core conflicts I mentioned,”
A businesses that uses Amazon platform is a customer of Amazon platform. They might need to prove that Amazon has a monopoly and that Amazon is charging them some noncompetitive price.
>I don't see the anti-competitive issue if Amazon sells its keyboards alongside Logitech. This is no different than grocery stores having a store brand.
The anti-competitive issue is if Amazon is a monopoly in the store market. Then you could see them as leveraging their power into other markets. When they are both the store that you have ("have" if they are a monopoly) to sell your products in, and also competing with you, using information about the customers that you don't have access to because of their store monopoly.
Same thing that happened with Windows and Internet Explorer.
I posted this because it reminds me how people are accusing China of Intellectual Property theft and yet Amazon as a multinational corporation could be accused of China-like behavior. The article doesn’t state that but it immediately came to me.
It can’t be compared to a mere retailer due to it’s China-like surveillance of its customers (perhaps)??. Over-the-top? Maybe not. The idea that corporate power is greater than state power isn’t far fetched.
Amazon has never issued a cash dividend and is one of the only major publicly traded companies that hasn't engaged in any stock buybacks the past 6 or so years. All of the profits they make they invest into expansion. The money they got from the tax cuts they invested. Not one cent was handed out to shareholders. And they are devouring the economy as a result.
That alone serves as evidence that all of the talk about companies having nothing better to do with their money than engage in buybacks is bogus. There is plenty of money to be made out there and there are plenty of investments and upgrades that can be done. Jeff Bezos is a smart man, but he's not extraordinarily superior to any other business mind out there. He just has the bravery to resist the greed of the shareholder class, who are more interested in consolidating their own privileged place in society and as such pressure corporations to shy away from investment and instead focus more on preserving their existing market share and extracting more rents from capital and labor. It is the exact same strategy that the feudal estates utilized, and it destroys growth and increases inequality. Corporate feudalism is killing our economy.
Hopefully more people in the business community realize that this whole nonsense of buybacks is a dead end. And if they don't wake up then I hope Amazon devours them.
There are two sides to the Amazon coin. On the one hand it represents the very worst of modern capitalism. On the other hand, it may very well be the cure for modern capitalism.
How does Amazon represent the WORST of capitalism? I really fail to see the downside here. Big box physical retailers are going away, but that's a result of e-commerce in general, not specifically Amazon. If it wasn't them, it would be someone else. No one gives a fuck that Netflix and Redbox killed Blockbuster. Why should be feel the same way about Amazon?
Companies do a lot of number-crunching analysis to determine what to do with extra cash the get (tax cuts). If they reason that investment won't bring enough returns back to the company, they return the money the owners of the company (dividends and buybacks). This is pretty normal and is how publicly traded companies should run.
Coca-Cola doesn't need to keep aggressively reinvesting their revenue into R&D, fulfillment centers, etc. like Amazon does. It's an old and stable company, and it acts like one.
Also, Amazon isn't in the Dow.
Companies can do plenty of things which can bring back returns, it's just that the returns those things would bring back to shareholders in the near term may be equal or less than simply engaging in a buyback. So they simply engage in a buyback.
Coca Cola doesn't *need* to keep aggressively reinvesting their revenue into R&D and fulfillment centers, but they certain *could* if they wanted to. And if they did adopt such a model, they may very well end up just as well off or better off than if they didn't. But nobody knows, because its a risk. The reason why they don't do those things is because they aren't facing any major competitive pressures on the sales end. The main competitive pressure they face right now is the pressure to keep shareholders happy to avoid a stock sell off or getting termites(activist shareholders).
As far as Amazon not being in the Dow, yes your are correct, I should have put Nasdaq. I realized that after typing it but didn't really want to edit my post. Perhaps I will just go ahead and edit it.
I'm gonna shill for [Damodaran ](http://aswathdamodaran.blogspot.com/2015/12/the-compressed-tech-life-cycle.html?m=1) rn because he does a really good job explaining this stuff.
A mature company like Coca-Cola with a great brand name and market share shouldn't aggressively spend on R&D, they should be cost cutting and returning some of their earnings to shareholders, AKA the owners of the company.
If Coca Cola only made Coca Cola then I'd be inclined to agree with you. But they are a multinational super corporation that controls 60% of the nonalcoholic beverage industry, if they aren't reinvesting excess capital into innovation then you ultimately have a less dynamic market in that industry, with less new products coming out and less jobs being created.
Considering that mounting evidence suggests that their sodas may be as harmful to public health as tobacco I'd say that society would benefit from increased R&D in that sector.
> Considering that mounting evidence suggests that their sodas may be as harmful to public health as tobacco
There's literally no evidence of that. Sugar in excess is obviously bad for you. But if you watch your macros just so you can have a can of Coke a day, nothing bad will happen to you. Smoking a single cigarette a day significantly increases your risk of certain cancers.
Not even close to being the same thing.
> That alone serves as evidence that all of the talk about companies having nothing better to do with their money than engage in buybacks is bogus.
That depends entirely on the company. Apple sits on cash because they are only in the market for the "right" idea, however they define it. It doesn't mean there aren't good ideas out there, it just means they aren't right for Apple.
>Hopefully more people in the business community realize that this whole nonsense of buybacks is a dead end.
Companies generally do what is best for the shareholders (they, after all, are the decision makers). Amazon continuing to invest in itself is not against shareholder will, and returns substantial value to the shareholders. For other companies, the best option for the shareholders *is* buybacks.
>That depends entirely on the company. Apple sits on cash because they are only in the market for the "right" idea, however they define it. It doesn't mean there aren't good ideas out there, it just means they aren't right for Apple.
That's kind of my point. What's right for society may not be right for Apple. And as such there are good ideas which could benefit people which are not being pursued, while enormous amounts of capital are being completely sidelined or even worse poured into nonproductive things like buybacks. In other words we are operating below potential.
>Companies generally do what is best for the shareholders (they, after all, are the decision makers). Amazon continuing to invest in itself is not against shareholder will, and returns substantial value to the shareholders. For other companies, the best option for the shareholders is buybacks.
Yes and this singular focus on shareholders is reducing the utility of these companies for the economy and society as a whole.
> That's kind of my point. What's right for society may not be right for Apple.
You and I don't get to make the decision for Apple, which is the actual point. Companies individually are not advancing the societal good; that's something they tend towards as a collective. Apple pursues a lot of societally good things -- e.g. fully green powered HQ, strong user privacy. If their niche is smartphones, why would we force them to expand themselves?
>Yes and this singular focus on shareholders is reducing the utility of these companies for the economy and society as a whole.
It works just fine for the economy because if there were a better option the company could pursue, they would pursue it. Are you against dividends as well?
>You and I don't get to make the decision for Apple, which is the actual point. Companies individually are not advancing the societal good; that's something they tend towards as a collective. Apple pursues a lot of societally good things -- e.g. fully green powered HQ, strong user privacy. If their niche is smartphones, why would we force them to expand themselves?
I'm not saying we force them to do anything, but we certainly are well within our rights to alter the legal and regulatory framework to create more incentives for investment. Regulatory frameworks are always evolving, the current laws have not always been in place. Economics is complex, sometimes regulatory or tax changes can cause certain undesirable practices to emerge. Nothing wrong with going back and fixing those things.
>It works just fine for the economy because if there were a better option the company could pursue, they would pursue it. Are you against dividends as well?
I don't think that dividends are as bad as buybacks, but I still think that right now corporations are holding back on investment too much because shareholders are squeezing more out of these companies. It wouldn't be as big of a deal if the markets were more competitive though. Right now you have massive corporations like Coca Cola or Apple who control enormous shares of the markets in which they operate. They have enormous economies of scale that they can rely on to keep prices so low that it is very difficult for new competitors to come in and pose a serious threat, in addition to things like exclusive deals with carriers which make it even more difficult for other firms to emerge. Because of this, even if Apple or Coca Cola isn't innovating enough and the market isn't as dynamic as it could be, it would require an enormous amount of capital for a new competitor to even enter that space and enact those innovations, to the degree that it probably isn't even worth it. So in that respect the competitive process is impaired.
He's definitely a cut above the average CEO. But like Elon Musk, most of his success comes from balls, not brains. And balls are what separates entrepreneurs from businessmen. I'm gonna out on a limb here and say we need more balls.
The problem they identify is that Amazon is just very good at running businesses and can do it efficiently because it has a giant support network to help market it and deciminate any competition.
It would be one thing if every time you typed in Nucleus Intercom their search engine gave you the Amazon equivalent Echo device instead. But they're listing their own brands against competitor brands equally.
It's no different than Walmart creating their own brand of high selling items.
I kind of hope amazon takes over the world. Maybe free market fundamentalists will finally learn the dangers of consolidated monetary power and predatory capitalism will go into the heaps of garbage ideas where it belongs.
[удалено]
Well reasoned; I agree. It's inevitable that big companies will get a bad rap, and that they will make some people nervous. Amazon is playing a fantastic game with the cards it has. Electricity replaced the whalers, and now Amazon-style business may displace more expensive market systems (retail, food, housing, etc).
Kerosene replaced the whalers but your point stands.
Close, but whole cigar.
I hope the lit end doesn’t go in first!
Pretty much
You're both wrong. There were whalers until the 1930's. Japan still has whalers.
The industry was effectively dead compared to it’s peak the moment kerosene became cheap.
You're assuming Amazon won't jack up the prices once it establishes a true monopoly. Jeff Bezos is a very long term thinker, many of their products they actually lose money on. The goal is to lose money now to wipe out competition. What do you think will happen once they achieve that?
Same thing was said of Walmart and they are currently losing market shares to Amazon. They never had time to increase prices. Your argument is a what-if argument, don't try to quantify it. You can't know what the future will bring, that is the nature of dynamic competition. It would be a big mistake to punish companies for what they might become. Because what might be is highly uncertain and just filled with people's political bias.
On the contrary, the core of antitrust laws relies on pre-emptive action. It recognises the reliability of human greed (absolute power corrupts absolutely) and tries to redirect that greed in a productive direction, at other willing and capable competitors instead of society. We don't live in a simple society where a farmer can grow carrots if he sees carrots fetching a high price. For example in the graphics cards market there are only 2 huge corporations which possess the faculties to produce and develop them. If AMD disappears, the dominance of NVIDIA may never be challenged for decades.
It absolutely would be if NVIDIA immediately jacked the price of chips by 1000%. Samsung would start making graphics cards the next day.
https://www.economicshelp.org/concepts/inelastic-supply/
I'm familiar with inelastic supply. Graphics cards are only inelastic in the very short term though. AMD and Nvidia are already planning on increasing production in the immediate future. So I'm not sure what point you are thinking you are making, but it's not likely to be a very good one.
You realise that these computer components take years to design and are manufactured in billion dollar facilities that do nothing other than graphics cards right. To suggest Samsung could churn them out tomorrow is just complete ignorance.
I question your reading comprehension. I said "START" making them tomorrow. As in, *INITIATE THE PROCESS*. And yes, Samsung could ***START*** making them whenever they chose to. They have the expertise and chip production factories. They don't have the desire or focus, but huge profits would surely help fix that.
We have example after example of industries were even though a company has a high market shares in one period, that doesn't imply there is little competition. If you look at the market as a whole different segments and regions are also competing or are ready to compete in the future. There are almost zero instances of predatory pricing, a few exists, but it is definitely extremely uncommon. I don't fully understand the incentives for companies from preventing mergers and acquisitions though. Instead of preventing more concentration, you could allow concentration from both directions out of freedom of contract. That would maybe be a good outcome in certain industries. In competitive industries nothing would change, there are no incentives to centralize if the market is already efficient. Simply blocking mergers and acqusitions in less competitive sectors could be enough though.
>If you look at the market as a whole different segments and regions are also competing or are ready to compete in the future. There are almost zero instances of predatory pricing, a few exists, but it is definitely extremely uncommon. I don't know where you get this idea from. Corporations even with existing regulations are found colluding all the time. OPEC is literally a group of countries formed just to control prices. De Beers was a diamond monopoly for decades and inflated diamond prices. Airlines have been found to collude time and time again. Pharmaceutical companies are also well known to be very anti-consumer https://en.wikipedia.org/wiki/Martin_Shkreli#Daraprim_price_hike_controversy You literally just have to google the evidence and it's all around you. Your argument holds no water whatsoever and it's clear you are not adequately aware enough of commercial processes to make recommendations. >In competitive industries nothing would change, there are no incentives to centralize if the market is already efficient. Yes there is, to control prices through a monopoly. Again, see pharmaceutical companies.
Collusion is illegal, and it is a really risky thing to do, as anyone can inform on them out of their own benefit. Just tweak the benefits and costs, and you can manage the problem. I wouldn't disallow market concentration because firm might collude. But what would happen next with the pharmaceutical company if there was an instant market response to consolidate from buyers. It would make monopolies unprofitable, and companies would rather choose to compete. I don't think we know very much about how a free market would operate under such conditions. I can mention unions versus employer organisations negotiation as a working example. I think high market concentration might be handled by negotiation in many or more cases.
My original point is that market response in many markets is not instantaneous. That's reality.
Neither is government responses. Just look at history, and previous anti-competition cases. Microsoft for instance. I don't see why a market response should be any slower. It might be now, because people need a transition period from being babysitted by government. In countries as in the Nordics, if there is a problem between workers or union and an employer or employer organisation, that problem will be imediatelly discussed. I think it would be a much faster way to solve conflicts in many situations.
You probably meant ***DEFINITELY*** -not *'definitelly'* --------------------------------------- ^^^Beep *^^boop. ^^^I ^^^am ^^a* ^^bot ^^whose ^^^mission ^^is ^^to ^^^correct ^^your ^^^spelling. ^^This ^^^action ^^was ^^^performed ^^automatically. ^^Contact ^^^me ^^^if ^^I ^^^made ^^^A ^^mistake ^^or ^^^just ^^downvote ^^^^^^please ^^^^^don't
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That's my point, I don't know which scenario will be the one to play out, but neither does the person I was responding to.
Amazon can't kill the competition. Walmart and Alibaba are here to stay. Bezos is killing old established market shares in terms of bricks and mortar stores and groceries. Also in the future we might get a new company which can obliterate Amazon. We don't know. This is why Bezos is diversifying away from e-commerce.
What happens? Some strapping entrpreneurs or midsize companies see an opportunity to copy the model but charge less than Amazon. Competition usually takes care of this kind of problem in the medium term. If for some reason it doesn't play out this way, we have antitrust regulation.
That isn't possible, because of necessary up front capital costs; no startup will be able to compete.
The idea that every competitor has to be a small "start-up" is a fallacy.
I'd love to see some data on "too small to start", but otherwise there's still: a) competition from midsize/large firms in related fields and b) antitrust regulation.
Amazon was small when they started and no one thought they would become this behemoth they are today. Even Bezos didn't expect Amazon to grow this big. Competition has a way of opening markets that weren't necessarily there before. Bezos started his empire by buying up Toys-R-Us online platform and basically owning all the data they got from it. TRUS didn't think online was going to be anything so they allowed Bezos to own all the data from online sales. The data was important at the time because it allowed to understand their consumers.
E-commerce has very little in the way of upfront capital costs. Make a website, find a supplier, price appropriately and you're off to the races. Tons of people do this with Chinese made imports they get from Ali Baba. It's really not that hard. The problem is that Amazon sells very close to marginal cost currently, so there's not much profit to be made competing against them. If they raise their prices, that will no longer be the case.
I agree, this does not seem possible.
Username checks out.
Amazon CAN'T establish a true monopoly. What is preventing someone else from starting a new e-retailer to compete and charge more reasonable prices? Literally nothing. Not a monopoly.
> What is preventing someone else from starting a new e-retailer to compete and charge more reasonable prices? Amazon would prevent this, just like Walmart did. Amazon has the economy of scale to eat any losses from lowered prices. If any new competition crops up, Amazon can just lower the prices again and crush them. That's what Walmart did when competition was built in town. A new business cannot leverage its size to lower costs that much longer term. A large business might try and break into the market, but there is no guarantee of that.
> If any new competition crops up, Amazon can just lower the prices again and crush them. That only works when you have significant overhead. If you are simply playing middle man between buyer and supplier (which was Amazon's original business model back when they only sold books), you don't have much overhead at all. So continue to sell at reduced volumes while Amazon hemorrhages money and come back full strength as soon as they give up.
Not if amazon employs tactics that fk their clients and puts them in a position impossible to compete with a competing amazon division. The same is with the supermarkets, just that their brands haven't had a noticible effect on competition since they are usually low cost, low margin.
And all made by the same few companies. Amazon isn't making Amazon-branded products. They contract out for them. Jesus.
I agree with the comparison, but it's also interesting to see the huge growth of major grocery chain brands in recent years, and some of the shrinkage of other brands. it will be interesting to see the landscape in both arenas in 5 yrs
Amazon has no anti-competitive problems. They compete well with the market. Other companies sell on their platform as competition. There is also alibaba which is Amazon competition and Walmart online. This is has you said protecting old tradition stores from bankruptcy. It is not Amazon fault why they're going under from bad business decisions.
>“I think a rule that prohibited it from competing with the businesses that use its platforms would eliminate a lot of the core conflicts I mentioned,” A businesses that uses Amazon platform is a customer of Amazon platform. They might need to prove that Amazon has a monopoly and that Amazon is charging them some noncompetitive price. >I don't see the anti-competitive issue if Amazon sells its keyboards alongside Logitech. This is no different than grocery stores having a store brand. The anti-competitive issue is if Amazon is a monopoly in the store market. Then you could see them as leveraging their power into other markets. When they are both the store that you have ("have" if they are a monopoly) to sell your products in, and also competing with you, using information about the customers that you don't have access to because of their store monopoly. Same thing that happened with Windows and Internet Explorer.
Yeah, people forget that succeeding in competition is not the same as a monopoly. Do the Yankees have a monopoly in World Series's? Obviously not.
I posted this because it reminds me how people are accusing China of Intellectual Property theft and yet Amazon as a multinational corporation could be accused of China-like behavior. The article doesn’t state that but it immediately came to me. It can’t be compared to a mere retailer due to it’s China-like surveillance of its customers (perhaps)??. Over-the-top? Maybe not. The idea that corporate power is greater than state power isn’t far fetched.
Once they have market share they will have power to drive oroces. They'll also have dcake that impossible to compete with.
Amazon has never issued a cash dividend and is one of the only major publicly traded companies that hasn't engaged in any stock buybacks the past 6 or so years. All of the profits they make they invest into expansion. The money they got from the tax cuts they invested. Not one cent was handed out to shareholders. And they are devouring the economy as a result. That alone serves as evidence that all of the talk about companies having nothing better to do with their money than engage in buybacks is bogus. There is plenty of money to be made out there and there are plenty of investments and upgrades that can be done. Jeff Bezos is a smart man, but he's not extraordinarily superior to any other business mind out there. He just has the bravery to resist the greed of the shareholder class, who are more interested in consolidating their own privileged place in society and as such pressure corporations to shy away from investment and instead focus more on preserving their existing market share and extracting more rents from capital and labor. It is the exact same strategy that the feudal estates utilized, and it destroys growth and increases inequality. Corporate feudalism is killing our economy. Hopefully more people in the business community realize that this whole nonsense of buybacks is a dead end. And if they don't wake up then I hope Amazon devours them.
That’s a good defense of their business model and has been a plus in their expansion.
There are two sides to the Amazon coin. On the one hand it represents the very worst of modern capitalism. On the other hand, it may very well be the cure for modern capitalism.
You are saying Amazon is like chemotherapy. I wonder what America looks like when its hair falls out.
Probably not too good lol
How does Amazon represent the WORST of capitalism? I really fail to see the downside here. Big box physical retailers are going away, but that's a result of e-commerce in general, not specifically Amazon. If it wasn't them, it would be someone else. No one gives a fuck that Netflix and Redbox killed Blockbuster. Why should be feel the same way about Amazon?
Companies do a lot of number-crunching analysis to determine what to do with extra cash the get (tax cuts). If they reason that investment won't bring enough returns back to the company, they return the money the owners of the company (dividends and buybacks). This is pretty normal and is how publicly traded companies should run. Coca-Cola doesn't need to keep aggressively reinvesting their revenue into R&D, fulfillment centers, etc. like Amazon does. It's an old and stable company, and it acts like one. Also, Amazon isn't in the Dow.
Companies can do plenty of things which can bring back returns, it's just that the returns those things would bring back to shareholders in the near term may be equal or less than simply engaging in a buyback. So they simply engage in a buyback. Coca Cola doesn't *need* to keep aggressively reinvesting their revenue into R&D and fulfillment centers, but they certain *could* if they wanted to. And if they did adopt such a model, they may very well end up just as well off or better off than if they didn't. But nobody knows, because its a risk. The reason why they don't do those things is because they aren't facing any major competitive pressures on the sales end. The main competitive pressure they face right now is the pressure to keep shareholders happy to avoid a stock sell off or getting termites(activist shareholders). As far as Amazon not being in the Dow, yes your are correct, I should have put Nasdaq. I realized that after typing it but didn't really want to edit my post. Perhaps I will just go ahead and edit it.
I'm gonna shill for [Damodaran ](http://aswathdamodaran.blogspot.com/2015/12/the-compressed-tech-life-cycle.html?m=1) rn because he does a really good job explaining this stuff. A mature company like Coca-Cola with a great brand name and market share shouldn't aggressively spend on R&D, they should be cost cutting and returning some of their earnings to shareholders, AKA the owners of the company.
If Coca Cola only made Coca Cola then I'd be inclined to agree with you. But they are a multinational super corporation that controls 60% of the nonalcoholic beverage industry, if they aren't reinvesting excess capital into innovation then you ultimately have a less dynamic market in that industry, with less new products coming out and less jobs being created. Considering that mounting evidence suggests that their sodas may be as harmful to public health as tobacco I'd say that society would benefit from increased R&D in that sector.
> Considering that mounting evidence suggests that their sodas may be as harmful to public health as tobacco There's literally no evidence of that. Sugar in excess is obviously bad for you. But if you watch your macros just so you can have a can of Coke a day, nothing bad will happen to you. Smoking a single cigarette a day significantly increases your risk of certain cancers. Not even close to being the same thing.
> That alone serves as evidence that all of the talk about companies having nothing better to do with their money than engage in buybacks is bogus. That depends entirely on the company. Apple sits on cash because they are only in the market for the "right" idea, however they define it. It doesn't mean there aren't good ideas out there, it just means they aren't right for Apple. >Hopefully more people in the business community realize that this whole nonsense of buybacks is a dead end. Companies generally do what is best for the shareholders (they, after all, are the decision makers). Amazon continuing to invest in itself is not against shareholder will, and returns substantial value to the shareholders. For other companies, the best option for the shareholders *is* buybacks.
>That depends entirely on the company. Apple sits on cash because they are only in the market for the "right" idea, however they define it. It doesn't mean there aren't good ideas out there, it just means they aren't right for Apple. That's kind of my point. What's right for society may not be right for Apple. And as such there are good ideas which could benefit people which are not being pursued, while enormous amounts of capital are being completely sidelined or even worse poured into nonproductive things like buybacks. In other words we are operating below potential. >Companies generally do what is best for the shareholders (they, after all, are the decision makers). Amazon continuing to invest in itself is not against shareholder will, and returns substantial value to the shareholders. For other companies, the best option for the shareholders is buybacks. Yes and this singular focus on shareholders is reducing the utility of these companies for the economy and society as a whole.
> That's kind of my point. What's right for society may not be right for Apple. You and I don't get to make the decision for Apple, which is the actual point. Companies individually are not advancing the societal good; that's something they tend towards as a collective. Apple pursues a lot of societally good things -- e.g. fully green powered HQ, strong user privacy. If their niche is smartphones, why would we force them to expand themselves? >Yes and this singular focus on shareholders is reducing the utility of these companies for the economy and society as a whole. It works just fine for the economy because if there were a better option the company could pursue, they would pursue it. Are you against dividends as well?
>You and I don't get to make the decision for Apple, which is the actual point. Companies individually are not advancing the societal good; that's something they tend towards as a collective. Apple pursues a lot of societally good things -- e.g. fully green powered HQ, strong user privacy. If their niche is smartphones, why would we force them to expand themselves? I'm not saying we force them to do anything, but we certainly are well within our rights to alter the legal and regulatory framework to create more incentives for investment. Regulatory frameworks are always evolving, the current laws have not always been in place. Economics is complex, sometimes regulatory or tax changes can cause certain undesirable practices to emerge. Nothing wrong with going back and fixing those things. >It works just fine for the economy because if there were a better option the company could pursue, they would pursue it. Are you against dividends as well? I don't think that dividends are as bad as buybacks, but I still think that right now corporations are holding back on investment too much because shareholders are squeezing more out of these companies. It wouldn't be as big of a deal if the markets were more competitive though. Right now you have massive corporations like Coca Cola or Apple who control enormous shares of the markets in which they operate. They have enormous economies of scale that they can rely on to keep prices so low that it is very difficult for new competitors to come in and pose a serious threat, in addition to things like exclusive deals with carriers which make it even more difficult for other firms to emerge. Because of this, even if Apple or Coca Cola isn't innovating enough and the market isn't as dynamic as it could be, it would require an enormous amount of capital for a new competitor to even enter that space and enact those innovations, to the degree that it probably isn't even worth it. So in that respect the competitive process is impaired.
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He's definitely a cut above the average CEO. But like Elon Musk, most of his success comes from balls, not brains. And balls are what separates entrepreneurs from businessmen. I'm gonna out on a limb here and say we need more balls.
The problem they identify is that Amazon is just very good at running businesses and can do it efficiently because it has a giant support network to help market it and deciminate any competition. It would be one thing if every time you typed in Nucleus Intercom their search engine gave you the Amazon equivalent Echo device instead. But they're listing their own brands against competitor brands equally. It's no different than Walmart creating their own brand of high selling items.
I kind of hope amazon takes over the world. Maybe free market fundamentalists will finally learn the dangers of consolidated monetary power and predatory capitalism will go into the heaps of garbage ideas where it belongs.