To the Editor:
Recently, Rep. David Cicilline, D-R.I., chair of a House antitrust subcommittee, took on the brave and bold task of holding hearings to investigate whether Amazon.com Inc., Alphabet Inc., Apple Inc. and Facebook Inc. are guilty of antitrust violations. Like most small-business owners, I have been negatively impacted by one, if not all, of these companies’ monopoly power, and I applaud these hearings. I believe they will show that the enormous power these tech giants wield has hurt small businesses in Rhode Island, and nationally. Of them all, I believe Amazon is the biggest threat to the health and viability of our neighborhoods and local communities – and the facts make clear that it should be formally investigated for antitrust violations.
As the owner of an independent bookstore, my biggest competition is Amazon, a company that has used its market dominance to bully communities, third-party marketplace sellers, publishers and independent retailers into concessions that, in the long-term, benefit only Amazon. Amazon works hard to spread the message that it is a boon for small-business owners. The facts tell a far different story.
According to the study “Prime Numbers: Amazon and American Communities,” conducted by the firm Civic Economics on behalf of the American Booksellers Association, “The growth of online sales in general and Amazon in particular has had a visible impact in American communities, exhibited by the much-discussed ‘retail apocalypse,’ as retail activity increasingly moves from commercial districts to industrial parks.”
Prime Numbers estimates that, in 2018 alone, Amazon’s retail sales displaced 62,000 storefronts [an increase of 41% since 2016] employing 900,000 retail workers. Even considering Amazon’s massive distribution network, the net result is a loss of more than 703,000 jobs nationwide. In Rhode Island alone in 2018, Amazon sales helped displace 206 storefronts and nearly 3,000 retail jobs. It has also resulted in over $14 million in uncollected sales tax for R.I. from transactions through its marketplace.
Does that sound like a company that’s good for small businesses? Not to me. Or a company that’s good for communities, since it is sapping them of much-needed revenue for schools, first responders and infrastructure? I don’t think so.
At the recent House hearing, Amazon focused on its Amazon Marketplace as [its] key example of how it is good for small businesses. But there is a difference between offering a service small businesses want to use and a service small businesses are forced to use.
As noted in the study, “Amazon’s Stranglehold: How the Company’s Tightening Grip Is Stifling Competition, Eroding Jobs, and Threatening Communities,” published by the Institute for Local Self-Reliance, by using Amazon Prime to corral an ever-larger share of online shoppers, Amazon has left rival retailers and manufacturers with little choice but to become third-party sellers on its platform.
In effect, Amazon is replacing an open market with a privately controlled one, giving it the power to dictate the terms by which its competitors can operate, and to effectively levy a kind of tax on their revenue.
The end result is Amazon slowly draining the life out of its sellers. As Amazon extracts more fees from suppliers, it reduces their ability to invent and develop new products. Meanwhile, Amazon is rapidly expanding its own product lines, using the trove of data it gathers from its platform to understand its suppliers’ industries and compete directly against them. Many of these Amazon products appear at the top of its search listings.
The way Amazon abuses its market share at the expense of small businesses and the communities in which they reside is significant, but because of the efforts of lawmakers [such as] Rep. Cicilline, these abuses are no longer flying under the radar.
Make no mistake. Chairman Cicilline is helping the small-business community by questioning the tactics of Big Tech – and independent booksellers like me are very grateful. Thank you, Rep. Cicilline!
Judy Crosby
Owner, Island Books, Middletown