The Case Against Destroying Small Businesses

Amazon has frequently bankrupted small businesses and start-ups by meeting with them under the pretense of collaboration, while actually using their plans to eliminate them directly or adjust their practices until they could no longer compete (BusinessInsider). One way they do so is by using data collected from small businesses to develop their own private products (WSJ). For example, Amazon invested in a 30% stake of a company LivingSocial and then started requesting large amounts of data from the company, hiring away their employees, and contacting LivingSocial clients to offer better deals at Amazon. A similar situation occured when Amazon released their Echo Show, an Alexa device with video communication features, shortly after purchasing a stake in a startup called Nucleus, which had their own home video communication product.

Amazon employs several tactics to entice small businesses into partnership, easing their ability to collect data and funds. Small businesses can pay to join Fulfillment By Amazon (FBA), which allows them to store, ship, and have customer service taken care of through Amazon. However, in the 2020 Congressional hearings regarding big tech, Bezos admitted that Amazon's algorithm favors sellers who use FBA, essentially forcing sellers to pay for the service in order for proper exposure (Vox). While this is a common tactic amongst online retailers, Amazon's monopolization/monopsonization of the digital marketplace [link to monopoly page] enables them to control much larger cash streams. Another strategy frequently employed by Amazon is the extreme lowering of prices on a specific product, incurring large but short-term losses, in order to undermine competitors until they are forced to "partner" with the Amazon marketplace. With these tools, Amazon is able to maximize profit and eliminate competition both within and outside of their partner network.