“Nearly all men can stand adversity, but if you want to test a man’s character, give him power.”-Abraham Lincoln
Here at OTFM, we are dedicated to upholding the free market principles of voluntary exchange, competition, innovation and opportunity for all. Over the past year, there have been multiple congressional hearings regarding the misuse of power by 4 major tech companies: Google, Twitter, Facebook and Amazon. Each was accused of abusing their power in their own ways, according to their role on the internet: All of them manipulating or hindering one of the four aforementioned virtues stated at the beginning of this post.
The goal of this writing is to state the importance of research in companies you support and the products you buy, the importance of supporting small business and to shine a light on an example of corporate greed and the power these entities hold. We will be focusing our lens on Amazon, and their influence in the games of innovation and competition. More specifically, their ability to and practice of stifling and crushing out any new or rising competitors.
To clarify: Yes, Amazon is a company whose success is a result of the free market and gaining the most from their buyer/seller relationship with the internet. They have humble beginnings like most companies and corporations and have seemingly good practices. Having been hugely recognized as market innovators, the internet retailers have competed and succeeded in their journey to the top of the retail market. Amazon definitely deserves recognition, and we have given it to them in some of our past content. They do many things for the economy; aside from their plethora of employment opportunities, they introduce new opportunities in a multitude of ways to a variety of small business owners and individuals in partnership with either the selling or commercial process of the items being sold (i.e. storage, packaging, delivery, etc.). However, when any entity has unchecked influence on their market space, especially as much as Amazon holds, the market becomes just that: Their market space.
“They are using market forces in a really Machiavellian way,” said Jeremy Levine, a partner at venture-capital firm Bessemer Venture Partners. “It’s like they are not in any way, shape or form the proverbial wolf in sheep’s clothing. They are a wolf in wolf’s clothing.” This was said in criticism of the tech giant’s practice of investing time, money, or resources into a small business, only to become their competitor, or in some cases: their downfall.
How far does the innovative desire and competitive spirit of Amazon reach? Very far. Seemingly limitless. They’ll even go as far as taking ideas and products from the startups or sellers they see as profitable, says dozens of small businesses which Amazon invested in including a variety which had similar, proceeding technology to some of Amazon’s most “innovative” products such as Alexa and the Echo. They gain access to their technology either through purchasing stake in a business, investing in them, partnering with them, outrightly buying them out, and in a few cases they’re known to meet with a hopeful, innovative and possibly naive entrepreneur, evaluate their product, decline partnership or investment, and put out a similar product to the one they declined on their platform. Not to mention their ability to set their price cheaper for their inhouse products as well as listing their products to be first-viewed on their site. The small guy can’t win in this situation; especially when their perceived opportunity and help is really just a gateway to getting their products and ideas’ profits in the hands of the one who “helped” instead of theirs.
This is one of the reasons that Amazon was called before Congress as a company, being accused of anti-competitive practices amongst other things. Although faced with such accusations from Congress and many individuals and small businesses who either pursued other product lines, suffered profit loss, or were forced to shut down after their encounter with Amazon, the company doesn’t admit to any wrongdoing and implies that their competitive and innovative spirit knows no bounds. They also see that every issue is dealt with under proper legal procedure.
The innovative and competitive drive of Amazon is most certainly admirable. From their start, they’ve changed the game of internet shopping and shopping in its entirety. Now that they’ve come to the top, they seem to have fallen down the slippery slope of greed: using their leverage in the field to stomp out competition and investing most of all they have into growing their company in any direction possible, using any Average Joe’s ideas. With great power comes great responsibility, and like many others, they have used the power they hold for their own gain and growth.
Do these companies really care when they have practices such as these? Are their “opportunities” for us or for them? Check out the stories of the scandal in the links above and give us your thoughts! We take it personally when competition is stifled and opportunities to innovate are in the hands of only a few. Monopolies rise up easier than one might think, and with the internet, a lot faster too. Some food for thought.
Thank you all for the read and look out for more in the days to come. We appreciate your patience as we adjust to the new changes. Share this post on your preferred social media and leave us a comment!
