business news in context, analysis with attitude

With brief, occasional, italicized and sometimes gratuitous commentary…

•  The Seattle Times has a piece about what is a kind of unusual position being taken by Rep. Pramila Jayapal (D-Washington) these days:  her Ending Platform Monopolies Act, introduced this month as part of a broad and bipartisan package of bills aimed at big tech, would have an enormous impact on Amazon - which happens to be the largest private employer in her home state.

"Jayapal’s proposal would allow the federal government to sue to force the Big Four tech firms to sell off lines of business deemed a 'conflict of interest'," the Times reports. "That would mean Amazon could no longer run its marketplace for third-party sellers while also competing against them with its own products. Similar divestments would be required of the other top tech firms, and all could face massive daily fines for noncompliance.

"Jayapal, vice chair of the House’s antitrust subcommittee, said the big tech companies cannot be trusted to police themselves, and that even beefed-up federal regulation may be insufficient, making forced breakups a necessity.

"'Look, this isn’t about Amazon. This is about the monopoly powers of the Big Four tech companies,' Jayapal said in an interview. 'It’s an irresistible urge for companies that are operating on multiple platforms with conflicts of interest and competing business to use power in ways that will suppress competition'."

The Times notes that "while millions of third-party sellers benefit from selling on Amazon’s marketplace platform, some have come to view it as a deal with the devil, saying the company squeezes them — and drives up prices for competitors — by controlling virtually every aspect of e-commerce transactions."

But the Times also writes that "Mark McCarthy, a senior fellow at the Brookings Institution who has tracked the big tech debate, said there are pluses and minuses to the antitrust approaches outlined in the legislation proposed by Jayapal and others. Forcing the separation of Amazon and its third-party marketplace could yield some negative impacts, he said.

"'There are consequences for this that might not be all that good for consumers and merchants,' he said, saying shoppers would have a harder time finding products and sellers might lose out on customers."  A better solution, he said, might be to pass legislation that would strictly prohibit discriminatory behavior by big tech companies.

I continue to worry that in terms of e-commerce, restrictions could be put on companies that are not being put (at least so far) on their bricks-and-mortar brethren.  How many suppliers have been squeezed by Walmart over the years, long before there was e-commerce?  Don't Kroger and Albertsons exert an enormous amount of control over the transactions that take place in their stores?  Doesn't virtually every retailer with a robust private label offerings make choices about how to formulate those lines based on how national and regional brands sell?

I recognize that Amazon does this better than most because it is more sophisticated than most … but I also think that this is the normal course of retailing.  Better and more nuanced regulation and stronger enforcement make sense, but not necessarily the wholesale disruption of the segment.

On the other hand, e-commerce companies dined out for a long time on policies that allowed them to not collect and pay sales taxes to states … and so maybe this is karma.

•  Bloomberg reports this morning that "Uber has agreed to buy the remaining 47 percent stake in Chile’s online grocer Cornershop it doesn’t already own for about $1.4 billion in shares.

"Uber first took a majority stake in Cornershop, the largest home delivery platform in Mexico and Chile, in 2019 in a bid to extend its geographic reach and bolster profits by bundling food delivery with rides."

•  Bloomberg reports that Amazon "has placed an order for 1,000 autonomous driving systems from self-driving truck technology startup Plus and has acquired the option to buy a stake of as much as 20%, Plus said in a regulatory filing."

•  Tesco has announced that it is expanding its Whoosh one-hour delivery service, which was piloted in Wolverhampton, to London and Bristol, adding it to 11 new Tesco Express locations in those communities.

CEO Ken Murphy has said that the pilot gave the company "some very interesting data."

May I just say that "Whoosh" is a great name for a delivery service?

•  "The U.S. online grocery market posted $7.0 billion in sales during May, down 16% versus a year ago," according to the newest Brick Meets Click/Mercatus Grocery Shopping Survey.  "The drop in sales was driven by declines in several key performance indicators including monthly active users, order frequency, and average order value. Despite these reductions, total online sales in May remained 3.5 times higher than pre-COVID levels (2.0 billion in total sales for Aug. 2019 per prior Brick Meets Click research)."