Amazon is regarded by many as the ‘Titan’ of the web where it controls over 46% of the total online shopping activities in the US. Despite poor performance, Amazon has been managed to keep investors willing to support the company in its growing strategies. Also, the way Amazon has been able to evade legal issues has been one of the significant factors that have led to the curiosity of some of the strategies the company has been to employ in order to operate so safely (Khan, 2017). Majorly, the approach of reducing customer cost by the company has also led to a series of other negative reaction which has to the exploitation of other people such as authors in order to sell cheap products.
According to most market analysts, the idea of antitrust policy can be simply traced to the foundation of the market structure. Monopoly markets are considered to be always in favor large industries where the market dynamics are easily altered to favor the individual existing companies. However, the analysis of Chicago school moves away from structural concept and mainly focuses on antitrust by reflecting on the price theory. The explanation of the concept has been analyzed through major two ways which include predatory pricing method and vertical integration (Khan, 2017).
The predatory pricing method is one of the majorly discussed topics in the US economy where its considered as a tactic used by large firms to bankrupt their competitors and create a monopoly market. The Chicago school also disapproved on the idea that vertical arrangements affected the market competition where it actually provided the incentives which the antitrust policy failed to deliver. One of the main reasons is because the integrated organization pose almost no effect to the unintegrated organization since they don’t have any cost advantages and thus posing no restrictions in the market entry. Therefore, the law of antitrust can be considered as a hindrance in supporting efficiency and fairness.
In accordance with the case of Amazon, the current antitrust policy has miserably failed to account of fair competition in the market and also consumer protection. Prior to the understanding of the antitrust concept which mainly focuses on improving customer welfare, still, most of the important features of this topic are continuously missed out by concentrating on the prices and output aspect of the matter (Khan, 2017).
The application of antitrust law in consumer welfare should focus on the long-term goals of attaining better product and service quality and continuously improved standards. In the promotion of fair competition, the antitrust law should be able to access the diversity of markets and any unfair use of power. Unlike in the current case of antitrust law, it should also focus on the preservation of open markets i.e. providing fair shots to all enterprises. To effectively capture competition in the online market, it’s also very important to the considered market structure and competitive process (Khan, 2017). One of the major reasons for this approach is because the use price method can be ineffective to analyze the competitive dynamics and it can be used investigate various organization strategies.
To effectively understand Amazon operation strategy, the use of structure method is considered as one of the most effective tools for application. The two main strategies that the company has utilized over the years in order to gain dominance include the willingness to accept losses and aggressively investing by plowing back profits and the integration of the company to many sectors. Despite the advantage of being a pioneer in the online commerce, Amazon has over the years concentrated on reducing its product prices and using the available profits and resources to expand its operations. This has majorly been characterized by the use of predatory pricing tactics and in line creating a monopoly market (Khan, 2017).
Another major reason that has led to the Amazon significant growth is the ability to maximize its operations even after reporting a number of huge losses. Apart from being a major retailer, Amazon is also a major hardware manufacturer, book publisher, delivery and logistics network, Credit lender, film producer, and many other activities (Khan, 2017). Through these two elements, Amazon has been able to maximize on its potential to grow and majorly its bargaining power. Also, in other sectors such as the book market, Amazon has been able to capture almost 65% of the entire E-book market. This success has been attributed by number strategies such as the “Gazelle Project” which is considered as highly unethical and the introduction of the Kindle, an e-reading device.
One of the major issues that have landed Amazon in court is the use of predatory pricing in e-books which raised various concerns as for whether the company did this on purpose to push out the e-book sellers since the amount profit was very low. The court decision finalized that Amazon indeed made profits and the act on pricing reflected consumer welfare (Khan, 2017). The declaration by the court has led to the collapse of many e-books companies and therefore leaving Apple as the only possible competitor in the E-book market. Amazon strategies on generating profits have been on e-books has been considered as one of the most unethical approaches which have been missed out by the antitrust law. It’s considered that Amazon charges a lot of fee to publishers in the expense of maintaining the “customer welfare”.
Through the predatory pricing, Amazon has been to also acquire some of its chief competitors where it focused on reducing of the major commodities which its rival sold. The case of buying Quidsi led to the company losing a lot of money which was later recovered by increasing the price of the same commodities after the acquisition was complete (Khan, 2017). The bargaining power of Amazon is also stretched to delivering services where the company acts as the third party in most of the delivery companies which heavily rely on its dominance in the supply chain and logistics services. Also, in order for Amazon to recoup its customer welfare pricing in delivery and logistics, it has been considered to also demand more than enough to companies involved i.e. FedEx, UPS, and others.
The case of Amazon antitrust agenda is one of the factors that increase the emphasis of reviewing the antitrust law since it seems to easily evade or manipulated to serve on large firm’s interest. The antitrust review should seek to understand the dynamics surrounding the online platform and some of the strategies applied by business to recoup losses. One of the major areas that should be highly analyzed in the control of data and vertical integration. This has been one of the major ways in which Amazon has been able to evade the current antitrust doctrine while it’s destroying the required balance of economy (Khan, 2017).
According to Khan (2017), the two major ways of solving the platform power include controlling dominant platforms as monopolies through regulation and controlling online platforms market through competition. To enhance the performance of antitrust in controlling online market competition, the main factors that should be considered are predatory pricing issues and vertical integration of companies (Khan, 2017). Vertical integration act should also have strict rules to be followed thus to avoid unfair competition in the market. In consideration of political and economic balance, monopoly power should one of the highly regulated methods by encouraging competition in the market. To attain this, the aspect of ‘public utility policy’ should a key guiding tool in creating the required balance.
In summary, it’s evident how the internet world has captured most of the economies today where Amazon has been able to position itself as the world leading online retailer. The main methods used by the company consist of refraining itself from increasing its profits while focusing the generated profits to expand on its operation and gaining control of the entire market. Through the current antitrust policy, Amazon has position itself as a ‘Titan’ in the online platform by being to evade most legal issues while at the same practicing high-level anticompetitive methods such as predatory pricing (Khan, 2017). To regain its lost profits in customer welfare, Amazon imposes other negative measures which are considered to create an imbalance in the market economy.
In the past decade, technology has significantly developed in various ways which have also led to how humans today carry out their day-to-day activities and the perception of most things in their respective lives. On the other hand, technology has also negatively affected most countries’ economies scale where the rise of technology has been considered as a replacement for human capital. This problem has majorly affected developed markets such as the UK and US where more investment has been continuously redirected to the research and implementation of automation in industries (Frey and Osborne, 2015). Therefore, the increase of technology innovation has majorly benefited industries shareholder while at the same time significantly damaged the global labor market.
The increasing gap between pay and productivity has been majorly characterized as the inability of employees to keep up with the continuous change in technology. The rate at which technology is growing, it is making most of the low-level skills redundant by the day an example is the US where 47% of the employee population will be soon expected to be replaced by automated systems (Frey and Osborne, 2015). The control of this issue at the current digital age is one of the hardest challenges yet to be widely known where technology application seems to have a great wide scale of advantages.
As stated earlier, the adaptation of technology in all the major countries has been very high which has also been highly integrated to almost all different sectors of the economy. The integration of technology in industries has over the years referred to as industrial revolution which sets back to almost 1688 where Britain government emphasized on the importance of technology in industries and its role in protecting and promoting more innovations (Frey and Osborne, 2015). The impact of technology development today has been evidently seen through the application of electricity and computers to solve most of the human challenges. With this, it also came with the requirement of high skills in labor.
On the same note, the polarization of wages has continued to occur at almost the same rate of technology growth. Due to the technology adaptation in workplaces, the demand of skilled labor has significantly increased since 1980’s where education has been specified as the only mode of gaining the required knowledge to help in the adaptation of technology change. Currently, most of the developed nations have the majority of its population as either highly skilled or medium skilled (Frey and Osborne, 2015).
According to the continuous adaptation and application of technology, significant changes have also occurred in many other sectors. The main example of the impact of technology in the 21st century is the communication system. Globalization changes are considered to be mainly contributed by the continuously enhanced communication strategies and improved transportation. For example, through Google translation communication barrier has been widely eliminated. Another sector that has enjoyed the growth and adaptation of technology is the health sector where multiple advances have been made to improve on the diagnosis of various chronic illnesses.
Digitization of the banking system is considered as one of the most influenced economic sectors by an increase in the adaptation of technology in the 21st century. Through the introduction of electronic banking, certain banks have reported a decline of about 30% on the number of activities conducted in various branches. In the past 5 years, technology has also changed the marketing aspects of major businesses due to the continuous growth of the online world. Through this, some of the biggest firms in the world such as Facebook, Google, Tweeter, Instagram, and Amazon, have been ‘born’ due to the growth of the online world. Today, most of the tasks performed by technology are considered to be almost impossible for any human. An example in the automation process done in BMW where the weight of installation is severely high to be handled by humans and to the task, almost 1000 robotics are required (Frey and Osborne, 2015).
Apart from 20th century not exhibiting an effect in labor due to the growth in technology, there major risk awaiting to occur in the 21st century where the significantly large number of the employee is expected to be replaced by automated systems. This has been led by the increase in technology intelligence where it has greatly surpassed humans in almost every possible angle in both efficiency and quality of work output. The most expected industries to be affected by the automation wave include food and accommodation industries where 87% of the worker’s population is expected to be replaced by the automation process. The second industry that is expected at a rate of 62% in the manufacturing industry. Industries with low automation expectation include enterprises and management (Frey and Osborne, 2015).
Majorly, most of the developed countries are at higher risk of automation than most of the developing markets. The impact of technology in various cities has also enhanced the living standards and in order to control the influx of people, the cost of survival has greatly affected the poor population in this cities. In order to minimize the impact of automation in industries, the main emphasized approach is to encourage entrepreneurship programs and self-employment.
One of the major risked expected to occur due digital transformation includes an increase in inequality, Macroeconomic stability risk, secular implication, and macro policy implication. The issue of inequality is set to occur in the loss of jobs thus widening the gap between the rich and the poor. The risk of macroeconomic stability is characterized as a financial crisis which majorly occurs with an increase in income inequality. The secular implication is caused by the increase in the automation in industries which thereby also led to a decrease in investment opportunities (Frey and Osborne, 2015). With the occurrence of secular implication, most of the nation’s GDP will also be affected where the revenue income rate will decline with the decrease in the wage distribution and investment goods.
The potential opportunities that will exist due to the increase in digital transformation include an increase in productivity, economy sharing, and the world of leisure. The use of technology is designed to offer more efficiency in the production process and at the same time minimize the cost of production (Frey and Osborne, 2015). The aspect of sharing the economy is majorly characterized by the use of an online market where despite the location of the user, one can be able to access various items and product more easily and cheaper rate. With the main the idea of introducing technology to reduce work, the digital transformation will enhance the leisure activities in the workplace although it’s also considered it may be involuntary where low-skilled may lose their occupations.
As stated earlier, education can be regarded as the main tool that should be utilized in order to have an efficient adaptation of technology change. In regards to learning about technological change and innovation, the education system should create more effective learning that will increase current self-employment rate and other incentives of reducing the impact of disruption by the automation of industries. Taxation reform is also a key aspect that should be considered. The elements of taxation should shift in accordance with technology displacement. For example, with the reduction of income rate and increase in consumption rate due to the decrease in product prices, the tax burden should be shifted towards consumption cost (Frey and Osborne, 2015).
References
Frey, C.B., and Osborne, M., 2015. Technology at work: The future of innovation and employment. Citi GPS.
Khan, L.M., Amazon’s Antitrust Paradox’ (2017). Yale Law Journal, 126, pp.710-796.
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