The Economist
May 05, 2024 08:00 AM IST
It is too simplistic to portray business as a battle of might versus right
In 2009-10 Amazon went to war over nappies. The e-commerce giant, then worth about $50bn, identified a startup, Diapers.com, that had a devoted following among young mums. First, it stalked it. Then it pounced, reaching out to buy the company on the same day that it slashed the price of its own baby products by 30%. Amazon’s price cuts almost crushed Diapers.com, forcing it to sell itself to its nemesis. Marc Lore, Diapers’ founder, has not forgiven Amazon. He later went on to lead the e-commerce division of Walmart, its biggest rival, partly to get his own back. “It’s still triggering,” he admitted at a recent event attended by your reviewer.
The story of Diapers.com is one of many damning narratives about Amazon that run through “The Everything War”, which relates how other well-known brands have felt its hot breath on their necks, from Allbirds, a shoemaker, to Trader Joe’s, a supermarket chain. At the Wall Street Journal, Dana Mattioli, the author, has doggedly pursued Amazon; her stories on its misuse of sellers’ data have caught Congress’s eye. She is on the antitrust warpath, and the book tries to portray the company’s supposed misuse of power.
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The book starts by quoting an article in the Yale Law Journal in 2017 called “Amazon’s Antitrust Paradox”, written by a 27-year-old law student called Lina Khan. It ends with Ms Khan, now chair of the Federal Trade Commission (FTC), a trustbusting and consumer-welfare agency, throwing the book at Amazon. Last September the FTC and 17 state attorneys-general sued Amazon, accusing it of operating an illegal monopoly by using its power to raise prices and degrade service for shoppers and vendors, while stifling competition. Amazon calls the lawsuit misguided.
Such subject matter and scope, just as Ms Khan is attempting to turn decades of antitrust enforcement on its head, should make for gripping reading. But it does not. For all the shoe leather the author treads in pursuit of Amazon, her story is rambling, and there is no “gotcha” moment. Unexpectedly, Ms Khan has focused the FTC’s case against Amazon on different behaviour than the sort Ms Mattioli chronicles.
To make up for that, Ms Mattioli yells. Her tone is, at times, so one-sided it makes you sympathise with Amazon. Jeff Bezos, its founder, does not just have a rapacious hunger to win, he has a “killer instinct” that he tries to impose on his staff. It leaves rivals’ “corpses in its wake”. It has a “cut-throat culture”. Its customer obsession, which she says is a guiding principle, is cover for “unethical behaviour”.
Sadly, this is a feature of too many books trying to tear down prominent firms or business people. Occasionally, works of investigative reporting are so incisive that they bring down a company. Think “Bad Blood”, by John Carreyrou, which helped expose the fraud of Theranos, a blood-testing startup. But others that lack sufficient incriminatory evidence tend to resort to rabble-rousing rhetoric.
Amazon highlights many of the contradictions of corporate concentration; it is not a simple tale of might versus right. Sometimes crushing rivals is essential for businesses to survive and thrive. Even Warren Buffett, America’s investing guru, likes companies with “moats” to keep the competition at bay. No doubt it has treated some rivals, clients and employees harshly in the course of establishing its empire. But customers and vendors are so loyal, they spring to its defence when it faces any regulatory onslaught that could deprive them of their beloved Prime membership.
Ms Mattioli hints at one of the deepest problems of antitrust in America. Politicians have failed to tighten up competition law to make it fit for an era of entrenched oligopolies, and congressional attempts to hold Amazon and other tech giants to account have fizzled out amid a barrage of lobbying. Probably the wisest description of Amazon in the book comes from Ms Khan herself: “It is as if Bezos charted the company’s growth by first drawing a map of antitrust laws, and then devising routes to smoothly bypass them.”
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© 2023, The Economist Newspaper Limited. All rights reserved. From The Economist, published under licence. The original content can be found on www.economist.com
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