business news in context, analysis with attitude

The Wall Street Journal this morning has an excellent piece about how Amazon uses its presence in numerous business and channels to exert pressure over vendors - in essence, saying that if you do not acquiesce to our terms here, we're not going to do business with you over there.

"Amazon’s tactic of leveraging dominance in one business to compel partners to accept terms from another is a familiar one, said former Amazon executives and officials at companies on the receiving end. Amazon’s tactics, they said, go beyond typical product bundling and tough negotiating in part because the company threatens punitive action on vital services it offers, such as its retail platform," the Journal writes.

"Partners often acquiesce to Amazon’s demands, the executives and officials said, because of its power in a range of market sectors."

The problem is, "When a company uses its dominance in a market to impose terms on customers, it can raise antitrust concerns," the Journal writes.  "Regulators have long examined whether a dominant company is limiting customer choice by forcing buyers that want one product or service to buy another as well, a tactic sometimes called 'tying.'  Federal authorities have pursued tying allegations as part of antitrust lawsuits against companies ranging from John D. Rockefeller’s Standard Oil Co., broken up in 1911, to Microsoft Corp. , which in 2001 reached a settlement with the Justice Department over several allegations, without admitting wrongdoing, including that it unfairly tied its internet browser to its operating system.":

You can read the piece here.

KC's View:

I know it seems like a lot of Amazon news this morning, but that's just the way the headlines landed.

The thing is, none of these stories is particularly positive … they all reflect the fact that Amazon is an ever-growing target for lawmakers, regulators and journalists … and expose the company's apparent vulnerabilities.  Amazon tends to couch all its responses in an "it-is-all-good-for-the-customer" patina, but there may be a point at which that will no longer be good enough.