Good Question: Is Amazon Getting Too Big?

click to expand

MINNEAPOLIS (WCCO) -- Tuesday was Amazon Prime Day, which is the busiest day of the year for the giant online retailer.

According to the Institute for Local Self-Reliance, one of every two households in the United States has a Prime Membership, and 43 percent of all online sales went through Amazon last year.

So, is Amazon getting too big?

"From the standpoint of U.S. antitrust law, probably no," said Tom Cotter, a professor of antitrust law at the University of Minnesota. "It's not really an offense simply to be a big company. It's not really an offense simply to be a monopoly."

Cotter says antitrust law in the U.S. focuses on the consumer, rather than competitors. For an antitrust violation to occur, government regulators would have to prove a company had a monopoly and was engaging in practices that harm consumers.

(credit: CBS)

For example, if the company used predatory pricing, where it would lower its prices to push out competitors and then raise those prices once the competitors were eliminated.

Cotter says that's often difficult to prove.

"If you can't prove that consumers aren't harmed at the end of the day, then there's not an antitrust violation," he said.

According to an article from USA Today, Americans buy six percent of clothes, 16 percent of electronics and 52 percent of all books through Amazon.

Cotter says a big and contentious issue in antitrust law is how to define a market. For example, is Amazon's market books, electronics, grocery or all of online retail?

In some cases, regulators can try to prevent a company from getting too big before it happens, but Cotter says they generally don't want to go down that path.

European antitrust laws are more aggressive. Europeans are more concerned about protecting competitors and any potential harm to consumers.

So legal issues aside, should people be concerned about Amazon getting too big?

"That's a philosophical issue, and there are lots of different views on that," Cotter said.