New Republic Urges Government Action to Stop Amazon

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    In an October 9 cover story, the New Republic editor Franklin Foer likens Amazon to the monopolies of the late 19th and early 20th centuries, but says it’s a newer “species” of monopoly, one that needs to be addressed by a “robust regulatory state.”

    In the article “Amazon Must Be Stopped,” Foer contends that the new reality of monopoly must be engaged with a spirit of argumentation and experimentation to curb the “drift toward an unsustainable future, where one company holds intolerable economic and cultural sway.”

    In looking for reasons why Amazon has enjoyed such untethered growth, Foer notes that we are in part to blame. “We’re all enjoying the benefits of these corporations far too much to think hard about distant dangers,” he writes, and adds that the “Internet Age” has made it more difficult to pin down what exactly is, and isn’t, a monopoly.

    Internet-age monopolies, he contends, “flummox our conventional ways of thinking about corporate concentration and have proved especially elusive to those who ponder questions of antitrust, the discipline of law that aims to curb threats to the competitive marketplace.” The laws that exist are outdated and meant to oversee business in an industrial economy, Foer says. Over time they have “evolved to focus on a specific set of narrow questions that have little to do with the core problem at hand.”

    In its pursuit of constant growth, “Amazon has left a trail of destruction — competitors undercut, suppliers squeezed — some of it necessary, and some of it highly worrisome,” Foer writes. “And in its confrontation with the publisher Hachette, it has entered a phase of heightened aggression unseen even when it tried to crush Zappos by offering a $5 rebate on all its shoes or when it gave employees phony business cards to avoid paying sales taxes in various states.

    “In effect, we’ve been thrust back 100 years to a time when the law was not up to the task of protecting the threats to democracy posed by monopoly; a time when the new nature of the corporation demanded a significant revision of government.”

    Amazon currently commands 67 percent of the e-book market, and in terms of all new books, it accounts for 41 percent, according to a recent survey by the Codex Group. “So even though the five major publishing houses have political connections and economic power of their own, they simply can’t compete” with a company that “continually finds new schemes for exacting tribute,” says Foer.

    “So,” he warns, “no matter how large they grow, publishers will continue to strip away costs to satisfy Amazon.” Unchecked, this will lead to lower and lower book prices and “the culture will pay the inevitable consequences of monopoly — less variety of products and lower quality of the remaining ones.”

    Foer contends that it is time for the government to act as President Roosevelt did in 1940, when he “waged all-out war on monopoly” and in turn “implanted antitrust more securely in government, a technocratic tool for managing the health of the economy.”