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mostlysignssomeportents
https://mostlysignssomeportents.tumblr.com/post/702184812110315520/how-monopoly-enshittified-amazon
:
In Bezos’s original plan, the company called “Amazon” was called
“Relentless,” due to its ambition to be “Earth’s most customer-centric
company.” Today, Amazon is an enshittified endless scroll of paid results,
where winning depends on ad budgets, not quality.
Writing in Jeff Bezos’s newspaper The Washington Post, veteran tech
reporter Geoffrey Fowler reports on the state of his boss’s “relentless”
commitment to customer service. The state is grim.
https://www.washingtonpost.com/technology/interactive/2022/amazon-shopping-ads/
Search Amazon for “cat beds” and the entire first screen is ads. One of
them is an ad for a dog carrier, which Amazon itself manufactures and
sells, competing with the other sellers who bought that placement.
Scroll down one screen and you get some “organic” results — that is,
results that represent Amazon’s best guess at the best products for your
query. Scroll once more and yup, another entire screen of ads, these ones
labeled “Highly rated.” One more scroll, and another screenful of ads, one
for a dog product.
Keep scrolling, you’ll keep seeing ads, including ads you’ve already
scrolled past. “On these first five screens, more than 50 percent of the
space was dedicated to ads and Amazon touting its own products.” Amazon is
a cesspit of ads: twice as many as Target, four times as many as Walmart.
How did we get here? We always knew that Amazon didn’t care about its
suppliers, but being an Amazon customer has historically been a great
deal — lots of selection, low prices, and a generous returns policy. How
could “Earth’s most customer-centric” company become such a bad place to
shop?
The answer is in Amazon’s $31b “ad” business. Amazon touts this widely, and
analysts repeat it without any critical interrogation, proclaiming that
Amazon is catching up with the Googbook ad-tech duopoly. But nearly all of
that “ad” business isn’t ads at all — it’s payola.
https://pluralistic.net/2022/02/27/not-an-ad/#shakedowns
Amazon charges its sellers billions of dollars a year through a
gladiatorial combat where they compete to outspend each other to see who’ll
get to the top of the search results. May the most margin-immolating,
deep-pocketed spender win!
Why would sellers be willing to light billions of dollars on fire to get to
the top of the Amazon search results?
Prime.
Most of us have Amazon Prime. Seriously — 82% of American households! Prime
users only shop on Amazon. Seriously. More than 90% of Prime members start
their search on Amazon, and if they find what they’re looking for, they
stop there, too.
If you are a seller, you have to be on Amazon, otherwise no one will find
your stuff and that means they won’t buy it. This is called a monopsony,
the obscure inverse of monopoly, where a buyer has power over sellers.
But monopoly and monopsony are closely related phenomena. Monopsonies use
control over buyers — the fact that we all have Prime — to exert control
over sellers. This lets them force unfavorable terms onto sellers, like
deeper discounts. In theory, this is good for use consumers, because prices
go down. In practice, though…
Back in June 2021, DC Attorney General Karl Racine filed an antitrust suit
against Amazon, because the company had used its monopoly over customers to
force such unfavorable terms on sellers that prices were being driven up
everywhere, not just on Amazon:
https://pluralistic.net/2021/06/01/you-are-here/#prime-facie
Here’s how that works: one of the unfavorable terms Amazon forces on
sellers is “most favored nation” status (MFN), which means that Amazon
sellers have to offer their lowest price on Amazon — they can’t sell more
cheaply anywhere else.
Then Amazon hits sellers with fees. Lots of fees:
- Fees to be listed on Prime (without which, your search result is
buried at the bottom of an endless scroll):
- Fees for Amazon warehouse fulfillment (without which, your search
result is buried at the bottom of an endless scroll)
And finally, there’s payola — the “ads” you have to buy to outcompete the
other people who are buying ads to outcompete you.
All told, these fees add up to 45% of the price you pay Amazon — sometimes
more. Companies just don’t have 45% margins, because they exist in
competitive markets. If I’m selling a bottle of detergent at a 45% markup,
my rival will sell it at 40%, and then I have to drop to 35%, and so on.
But everyone has to sell on Amazon, and Amazon takes their 45% cut, which
means that all these sellers have to raise prices. And, thanks to MFN,
the sellers then have to charge the same price at Walmart, Target, and your
local mom-and-pop shop.
Amazon’s monopoly (control over buyers) gives it a monopsony (control over
sellers), which lets it raise prices everywhere, at Amazon and at every
other retailer, even as it drives the companies that supply it into
bankruptcy.
Amazon is no longer a place where a scrappy independent seller can find an
audience for its products. In order to navigate the minefield Amazon lays
for its sellers (who have no choice but to sell there), these indie
companies are forced to sell out to gators (aggregators), which are now
multi-billion-dollar businesses in their own right:
https://pluralistic.net/2022/02/10/monopoly-begets-monopoly/#gator-ade
This brings me back to the enshittification of Amazon search, AKA
late-stage (platform) capitalism. Amazon’s dominance means that many
products are now solely available on the platform. With the collapse of
both physical and online retail, Prime isn’t so much a choice as a
necessity.
Amazon has produced a planned economy run as capriciously as a Soviet
smelting plant, but Party Secretary Bezos doesn’t even pretend to be a
servant of the people. From his lordly seat aboard his penis-rocket, Bezos
decides which products live and which ones die.
Remember that one of those search-results for a cat-bed was a product for
dogs? Remember that Amazon made that dog product? How did that end up
there? Well, if you’re a seller trying to make a living from cat-beds, your
ad-spending is limited by your profit margin. Guess how much it costs
Amazon to advertise on Amazon? Amazon is playing with its own chips,
and it can always outbid the other players at the table.
Those Amazon own-brand products? They didn’t come out of a vacuum. Amazon
monitors its own sellers’ performance, and creams off the best of them,
cloning them and then putting its knockoffs above of the original product
in search results (Bezos lied to Congress about this, then admitted it was
true):
https://nypost.com/2021/10/18/jeff-bezos-may-have-lied-to-congress-about-amazon-practices-reps/
If you’ve read Chokepoint Capitalism, Rebecca Giblin’s and my new book
about market concentration in the entertainment industry, this story will
be a familiar one. You’ll recall that Amazon actually boasts about this
process, calling it “the flywheel”:
https://twitter.com/rgibli/status/1561761732108107777
Everything that Amazon is doing to platform sellers, other platforms are
doing to creators. You know how Amazon knocks off its sellers’ best
products and then replaces them with its clones? That’s exactly what
Spotify does to the ambient artists in its most popular playlists,
replacing them with work-for-hire soundalikes who aren’t entitled to
royalties.
You can learn more about how Spotify rips off its performers in the
Chokepoint Capitalism chapter on Spotify; we made the audiobook version of
that chapter a Spotify exclusive (it’s the only part of the book you can
get on Spotify):
https://pluralistic.net/2022/09/12/streaming-doesnt-pay/#stunt-publishing
Entertainment and tech companies all want to be the only game in town for
their creative labor force, because that lets them turn the screws to those
workers, moving value from labor to shareholders.
Amazon is also the poster-child for this dynamic. For example, its
Audible audiobook monopoly means that audiobook creators must sell on
Audible, even though the #AudibleGate scandal revealed that the company has
stolen hundreds of millions of dollars from these creators. (Our chapter
on Audiblegate is the only part of our audiobook on Audible!)
https://pluralistic.net/2022/09/07/audible-exclusive/#audiblegate
Then there’s its Twitch division, where the company just admitted that it
had been secretly paying its A-listers 70% of the total take for their
streams. The company declared this to be unfair when the plebs were having
half their wages clawed back by Amazon, so they fixed it by cutting the
A-listers’ pay.
https://pluralistic.net/2022/09/22/amazon-vs-amazon/#pray-i-dont-alter-it-further
Twitch blamed the cut on the high cost of bandwidth for streaming. If that
sounds reasonable to you, remember: Twitch buys its bandwidth from Amazon.
As Sam Biddle wrote, “Amazon is charging Amazon so much money to run the
business via Amazon that it has no choice but to take more money from
streamers.”
https://twitter.com/samfbiddle/status/1572667269284777984
As Bezos suns himself aboard his yacht-so-big-it-has-a-smaller-yacht, we
ask him to referee a game where he also owns one of the teams. Over and
over again, he proves that he is not up to the task. Either his
“relentless” customer focus was a sham, or the benefits of cheating are too
tempting to ignore.
Historically, we understood that businesses couldn’t be trusted to be on
both sides of a transaction. The “structural separation” doctrine is one of
the vital pieces of policy we’ve lost over 40 years of antitrust neglect.
It says that important platforms can’t compete with their users.
https://locusmag.com/2022/03/cory-doctorow-vertically-challenged/
For example, banks couldn’t own businesses that competed with their
commercial borrowers. If you own Joe’s Pizza and your competitor is
Citibank Pizza and you both have a hard month and can’t make your payment,
will you trust that Citi called in your loan but not Citibank Pizza’s
because they had a more promising business?
Today, all kinds of businesses have been credibly accused of
self-preferencing: Google and Apple via their App Stores, Spotify via its
playlists, consoles via their game stores, etc. Legislators have decided
that the best way to fix this isn’t structural separation, but rather,
rules against self-preferencing.
Under these rules, companies will have to put “the best” results at the top
of their listings. This is doomed. When Apple says it put its own ebook
store ahead of Bookshop.org’s app because it sincerely believes Apple Books
is “better,” how will we argue with this? Maybe Apple really does believe
that. Maybe it doesn’t. Maybe it does, but only because of motivated
reasoning (“It is difficult to get a product manager to understand
something, when their bonus depends on them not understanding it”).
The irony here is that these companies’ own lawyers know that a sincere
promise of fairness is no assurance that your counterparty will act
honorably. If the judge in Apple v. Epic was a major shareholder in Epic,
or the brother-in-law of Epic’s CEO, Apple’s lawyers would bring down the
roof demanding a new judge — even if the judge promised really sincerely
to be neutral.
https://marker.medium.com/moral-hazard-and-monopoly-42e30eb159a8
Ultimately, it doesn’t matter if Amazon’s enshittification is because Bezos
was a cynic or because he sold out. Once Amazon could make more money by
screwing its customers, that screw-job became a fait accompli. That’s why
it’s so important that the FTC win its bid to block the
Activision-Microsoft merger:
https://www.politico.com/news/2022/11/23/exclusive-feds-likely-to-challenge-microsofts-69-billion-activision-takeover-00070787
The best time to prevent monopoly formation was 40 years ago. The second
best time is now.
Anti-monopoly measures are slow and ponderous tools, but when it comes to
tech companies, we have faster, more nimble ones. If we want to make it
easy to compete with Amazon, we could — for example — use Adversarial
Interoperability to turn it into a dumb pipe:
https://pluralistic.net/2022/08/01/dumb-pipes/#original-asin
That is, we could let local merchants use Amazon’s ASIN system to tag their
own inventory and produce a realtime database. Customers could browse
Amazon to find the things they wanted, with a browser plugin that turned
“Buy It Now” into “Buy It Now at Joe’s Hardware”:
https://doctorow.medium.com/view-a-sku-32721d623aee
But this only works to the extent that Amazon’s search isn’t totally
enshittified. To that end, Fowler has a few modest proposals of his own,
like requiring that at least 50% of the first six screens be given over to
real results, not ads.
“Perhaps 50 percent sounds like a lot to you? But even that rule would
force Amazon to show us at least some of the most-relevant results on the
first screen of our device…Amazon wouldn’t comment on this suggestion.”
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