Facing a new slate of regulators and legislators calling for new principles of antitrust scrutiny, Amazon CEO Andy Jassy made a familiar case in his first television interview since taking the reins from founder Jeff Bezos two months ago.
“When you look at whether a company is a monopoly or not, the first thing you look at is what kind of market segment share they have,” Jassy said in an interview recorded at Amazon headquarters with CNBC’s Jon Fortt, which aired Tuesday morning. “Our retail business is just about 1% of the worldwide retail market segment. It’s nowhere close to a majority share.”
He said monopoly power is defined by the ability to “increase prices in an unconstrained way,” due to lack of competition.
“We compete with very large companies,” Jassy said. “These are companies like Walmart and Target and Kroger and some very successful digital companies like eBay and Etsy and Wayfair, and we don’t have the ability to raise prices in any kind of unfettered way. In fact, if you look at what we normally do, we’re constantly taking prices down because there’s a lot of competition in these markets.
"Over the course of 30 minutes, we covered a lot — including thorny questions on antitrust, warehouse injuries, hybrid work, race and artificial intelligence, the debt ceiling, and Amazon’s new televisions." @CNBCTechCheck $AMZNhttps://t.co/ja0maLs5qK
— Jon Fortt (@jonfortt) September 14, 2021
He added, “Sometimes the rhetoric sounds good, but you’ve got to look at what reality is, and at 1% of worldwide retail, it’s hard to argue that’s a monopoly.”
His comments suggest that Amazon plans to stick to its longtime defense despite the shifting landscape in Washington, D.C. The company has long argued that it doesn’t have monopoly power if the market is defined as all of retail globally.
However, widely followed research from eMarketer projects that Amazon’s share of the U.S. e-commerce market will grow from 39.8% in 2020 to 40.4% in 2021.
Separately, a recent report from FactSet says consumers are now spending more on Amazon than on Walmart, taking into account third-party sales.
Lina Khan, the new chair of the Federal Trade Commission, gained national attention while still in law school when Yale Law Review published her article, “Amazon’s Antitrust Paradox.” She argued that the so-called “consumer welfare standard” — in which regulators look narrowly at prices — is insufficient for the digital economy. Khan believes that a company like Amazon can abuse its market power, even if it uses that power to lower prices for consumers, rather than raising them.
On the issue of prices, a lawsuit against Amazon by the Washington, D.C., Attorney General Karl Racine alleges that Amazon illegally manipulates the e-commerce market to its own advantage by penalizing third-party sellers that offer products at lower prices on other platforms.
Amazon said at the time that Racine “has it exactly backwards,” and that his remedies “would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.”
Watch an excerpt from the CNBC interview above.
