Monday, February 11, 2019

Jerri-Lynn Scofield — India Forces Amazon to Choose Between Operating e-Commerce Platform and Selling Goods on that Platform

This is equivalent to anti-trust in a platform economy. On the other hand, economic liberals will charge that it is government interference in free markets and free trade.
India’s not exactly breaking new ground here with it restriction. As antitrust expert Lina Khan noted in a February tweet: “[T]his sort of structural separation has been a key principle in US competition policy. For example, Congress in 1906 passed a law prohibiting railroads from transporting goods they owned.”
Khan continued:

We applied a similar rule to TV networks, telecom carriers, banks. There’s good reason to debate whether structural separations should apply to digital monopolies. But framing the rule as highly invasive or exotic misunderstands our own history (& success) applying it.
Khan’s the author of an influential paper in the Yale Law Journal on Amazon, Amazon’s Antitrust Paradox, and has a paper forthcoming in the Columbia Law Review on structural separations, The Separation of Platforms and Commerce.…
This is key in a platform economy, which is now one of the key factors in building out the Digital Age. The obvious danger is increase of market concentration and therefore of monopoly and monopsony power as owners of digital platforms control their markets and supply chains.

Great wealth in the digital age has come not from ownership of land, factories, chains, or financial institutions but rather digital platforms, first hardware and software systems and service provision, and now distribution platforms.

Of course, this is not new. Firms have always attempted to gain market power through horizontal and vertical integration "for efficiency," but this amplifies economies of scale and creates the potential for erecting gateways. Previous anti-trust legislation has eventually been brought forward to address this.

Hopefully, India will set a precedent, but the neoliberal US will oppose it vigorously as a form of protectionism that contradicts the spirit of free markets and free trade.

The US experience is troubling, however. First, retail giants like Walmart devastated small retailers and "mom & pop stores" across the country and then ecommerce, with the proliferation of platforms it brought, made it difficult for smaller sellers to compete with the giants on the Internet.

Secondly, owing to capital intensity, concentration and dominance of a few platforms increased their market power and enabled rent extraction as competition dwindled.

There's a name for this, monopoly capital. And the antidote is anti-trust as a means for decreasing concentration and increasing competition.

Naked Capitalism

No comments: