After many decades in which antitrust enforcement adhered to the principle of consumer welfare, regulators have begun to explore new options for reining in Big Tech. But, judging by Italy’s recent fine imposed on Amazon, more dominant players may soon find themselves being punished for their success.
MILAN – This month, Italy’s antitrust regulator, the Autorità Garante della Concorrenza e del Mercato (AGCM), fined Amazon €1.13 billion ($1.28 billion) for abusing its market dominance and forcing third-party sellers to use its in-house logistics service. The penalty is notably large, even for a company as huge as Amazon, which had global revenues of $386 billion in 2020 but net income of $21.3 billion.
The AGCM decision is bound to be popular, given a broad consensus that something should be done about the exploitation by Big Tech companies of people’s data and their concomitant power to wipe out other business models. Since the browser wars of the 1990s, the market implications of new technologies have been considered an antitrust matter. Under US President Bill Clinton, antitrust authorities targeted Microsoft because it was trying to leverage its position as the dominant provider of desktop operating systems to secure dominance for its Explorer internet browser. In fact, we now know that, although Netscape’s browser did not survive, Microsoft’s dominance was about to end – just when regulators and the public feared it the most.
Back then, zealous trustbusters were opposed by Chicago School economists and legal scholars who argued that antitrust regulators should be guided by the concept of consumer welfare, rather than by some abstruse calculation of the optimal number of competitors in an industry. But consumer-welfare considerations make no appearance in the recent Italian ruling.
Amazon is both a retailer and a platform, because it provides a marketplace where consumers can compare options and buy whichever product they prefer, and where small businesses can reach more consumers than they ever would have before. The AGCM fined Amazon as a marketplace, on the grounds that it requires sellers who want to benefit from its Prime service also to enroll in its own logistics service, Fulfillment …….