(2022-11-28) Doctorow How Monopoly Enshittified Amazon

Cory Doctorow: 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. (enshittification)

Search Amazon for "cat beds" and the entire first screen is ads.

How could "Earth's most customer-centric" company become such a bad place to shop?

The answer is in Amazon's $31b "ad" business.

nearly all of that "ad" business isn't ads at all – it's payola.

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.

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:

Amazon hits sellers with fees

All told, these fees add up to 45% of the price you pay Amazon – sometimes more. Companies just don't have 45% margins

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.

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

Amazon actually boasts about this process, calling it "the flywheel"

Everything that Amazon is doing to platform sellers, other platforms are doing to creators.

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

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

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.

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.

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.

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.