Is Amazon the Next Antitrust Target After Alibaba?



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As Chinese regulators prepare antitrust measures against internet giant Alibaba, the Judiciary Committee of the US House of Representatives made nearly identical accusations against Amazon.com, the dominant US online retailer and pioneer of the US. electronic commerce in the world. Both companies used their dominant market share to force traders to enter into exclusive deals that exclude competitors, regulators allege.

It is not often that Chinese and US regulators approach the same problem in the same way, but the economics of Internet retail poses the same problem in both countries. There is a blurry line between what economists call “natural monopolies” due to the network effect, which gives enormous advantages to a major player like Amazon, Facebook or Google, and the predatory exercise of monopoly powers to crush competitors. . Tech industry regulators around the world are in the same boat, despite radical differences in regulatory systems.

Some Western commentators claim that a power struggle between China’s communist leadership and businessman Jack Ma, founder of Alibaba, motivated the antitrust crackdown by Alibaba and other Chinese tech giants. Chinese authorities postponed a planned $ 36 billion initial public offering for Ma’s Ant Financial in early October after the billionaire publicly clashed with Chinese Vice President Wang Qishan.

The fiery Mr. Ma dismissed Chinese state banks as “pawnshops”, much to the chagrin of the Chinese authorities. Wang urged Chinese regulators for caution, stating: “We must insist that financial services serve the real economy, we must persist in preventing and dissolving financial risks, we must adhere to both financial innovation and strengthening supervision.”

But whatever the political or personality issues may have been, the underlying economic problem in China is the same one that US and European regulators are trying to address.

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