Profile picture
, 13 tweets, 2 min read Read on Twitter
Let me explain what's going on with this story, because it's quite remarkable. inthesetimes.com/article/21850/…
Amazon has long been accused of predatory pricing: selling below cost to attract market share, only to turn it around when it became a monopoly. But this is extremely difficult to prove in court.
Especially because Robert Bork's forces have ruled predatory pricing "implausible" and "irrational". And nobody collects the unit cost data you would need to prove it.
So this law student, @ShaoulSussman, came up with a unique theory. Here goes:
First, Amazon uses accounting tricks to hide expenses, making it look like it's cash flow positive when it's not.
That could be a way to survive to discovery on a predatory pricing case, so Amazon will have to give up its unit cost figures.
Just the fact that Amazon is selling what they call "CRaP" products, which stands for "Can't Realize a Profit," suggests they sell at least some things below cost.
But that's not the only thing you have to prove, you have to prove a high likelihood of Amazon recouping losses. Sussman theorizes that Amazon can do this without raising consumer prices, by squeezing its sellers.
3rd party sellers account for 58% of sales on Amazon. Amazon has been loading more and more costs on them, including shipping. And it's been converting wholesalers to 3P sellers, so they're responsible for those costs as well.
"The reason they lured everyone onto the platform is they were subsidizing activity," Sussman says. Now they've turned the dial, and are recouping the losses. Classic predatory pricing activity.
Amazon can discipline sellers so they don't pass on costs to customers, like by down-rating them in search, or only allowing brands Amazon can sell at a profit to get advertising privileges (which they're now doing)
This seller squeeze, with Amazon taking the profits through its cut, denies benefits to consumers, which you have to prove under current antitrust law.
It will be very interesting to see whether any company harmed by Amazon picks up these ideas and brings a case. /Fin
Missing some Tweet in this thread?
You can try to force a refresh.

Like this thread? Get email updates or save it to PDF!

Subscribe to David Dayen
Profile picture

Get real-time email alerts when new unrolls are available from this author!

This content may be removed anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

Follow Us on Twitter!

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just three indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3.00/month or $30.00/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!