Tech giants like Apple, Amazon, and Google have enjoyed monopolistic power in many different ways. However, this has often come at the expense of consumers and small businesses, leading to calls for legislation. With the possibility of antitrust laws being passed in the U.S., it may be worth examining how these laws could affect e-commerce and competition. Antitrust marketing refers to laws that regulate business practices to ensure fair competition and prevent monopolies. Big Tech and Antitrust Economic highlight growing concerns about market dominance and the role of these laws in addressing it.
Corporate entities that exhibit exorbitant power and suppress any competition become monopolies. A monopoly must have the majority of the market share and be able to dictate market forces to be considered as such. Illegal monopolies are formed when the monopoly does not necessarily provide a better product, but rather hinders competition. Similarly, a trust is a series of companies or economic agents that cartelize the market and dictate supply and prices. These entities can exert joint control over the market, causing an unfair strangulation of it.
The obsolescence of traditional capitalist profit
A monopoly can obtain positive benefits because it can stifle the market and create barriers to entry. Although perfect competition is not possible, a certain degree of choice is necessary to offer better options to consumers. The main objective of antitrust legislation is to eliminate the resource hoarding inherent in monopolies. There are various types. Some antitrust laws, such as the Sherman Act, prohibit contracts, combinations, and conspiracies that unjustifiably restrain interstate and foreign commerce. On the other hand, the Clayton Antitrust Act focuses on mergers or acquisitions.
That may reduce competition. Another law, the FTC Act, prohibits unfair methods of competition in interstate commerce Recently, the U.S. announced the implementation of certain antitrust measures against American tech giants. Amazon has been criticized for the harmful effects it has had on the retail sector. Although Amazon claims to have 5% of all retail sales in the United States, a research study by eMarketer shows that 40% of all online retail sales come from the platform. Biden’s antitrust goals may also target the data collection infrastructure of Amazon and Google.
Extreme financialization and decoupling from the real economy
Many states have focused on data collection for various reasons. This could have serious repercussions in the digital marketing and e-commerce sectors, especially regarding the recommendation algorithms of sites like Google and Amazon. The EU has also taken a stand against technological monopolies and unfair practices. In terms of companies like Apple, antitrust laws could affect how they sell, buy, and organize apps in their respective stores. Currently, Apple charges fees for any purchase, forcing companies to raise prices or absorb costs. As a result, companies like Netflix are asking users to purchase their apps elsewhere to avoid the fees.
Another area where antitrust legislation focuses is on hardware standards. Apple, for example, has a monopoly on its auxiliary hardware, such as chargers and cables. Legislation can force companies to comply with universal standards to prevent this type of monopolization. Antitrust measures are an unequivocal net benefit for society. That said, they encounter several problems that make them less effective or even counterproductive. Although they are great in principle, many antitrust cases have little impact. The FTC, for example, does not impose sanctions, and tech companies have been.
The precariousness of work and the erosion of labor rights
Able to evade it without any problems. Similarly, since the current laws are quite old, American companies do not adhere to the exact definitions established by precedents. Facebook, for example, argues that it is not a monopoly because other platforms exist, without taking into account its immense reach and its ability to dictate digital information and advertising trends. However, the enforcement of antitrust measures has also been massively beneficial in the past. The dissolution of Standard Oil in the 1910s by the U.S. government is a great example.
The result was a fairer competition and distribution of resources. The U.S. government also enforced the Sherman Act against Microsoft, paving the way for greater competition within technology in the past. Although antitrust laws have been useful in the past, they have sometimes had less than desirable effects. For example in retrospect, did the Sherman antitrust law always succeed in its stated objectives? No. In fact, it sometimes had the opposite effect, as it also became a means to dismantle unions. These laws can alter the way companies approach marketing and e-commerce management. As already mentioned, Amazon is an important source for all types of businesses.
Conclusion
Depending on the type of regulations imposed on Amazon, the digital marketing strategies that companies apply may require changes. The current system of the platform gives Amazon a competitive advantage in marketing and e-commerce sales, as it places its own products front and center and reduces the space for competitors in the purchase box (which significantly affects visibility). The effect will largely depend on the type of antitrust action taken. If the U.S. Government dissolves Alphabet or Apple, app stores could significantly change their policies.
If they impose rules to foster competition, the changes could be relatively minor (interface modifications to display a wider range of products, algorithm adjustments to reduce favoritism price changes, etc. Breaking up Apple’s operations could be devastating for Apple’s competitive advantage. It might mean that they have to alter their payment scheme, giving other companies a fair place. Regarding hardware, the European Commission has also introduced plans to prevent Apple from altering its charging ports and confining the company to a universal standard.
