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ABA Applauds Major Report on Amazon’s Grip on the Economy

December 1, 2016
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Report documents lessened competition, curtailed opportunities for small businesses, reduced jobs and wages, limited choices for consumers, and harm on communities

The American Booksellers Association applauds the release of a major new report from the Institute for Local Self-Reliance (ILSR), Amazon’s Stranglehold: How the Company’s Tightening Grip is Stifling Competition, Eroding Jobs, and Threatening Communities. This comprehensive report presents compelling new data and analysis about Amazon’s expanding market power and the harmful effects on the U.S. of its unbridled growth.

“We commend ILSR for this in-depth and very thorough examination of Amazon’s growing dominance in the retail sector — and beyond — and of the widespread deleterious effects its business practices are having across a broad range of American society,” said Oren Teicher, CEO of the American Booksellers Association (ABA). “Following up on ABA and Civic Economics’ ‘Empty Storefronts’ study— which documented the severe losses in Main Street storefronts and jobs due to the massive shift of retail spending to Amazon — the ILSR report is further proof that the American public needs decisive action from all levels of government, including the new administration and Congress, to counter Amazon’s market dominance and dubious practices, which are affecting the entire economy.”

Authored by Stacy Mitchell, co-director of ILSR, and Olivia LaVecchia, a researcher with ILSR’s Community-Scaled Economy Initiative, the report notes that Amazon is now capturing nearly $1 in every $2 that Americans spend online. The company sells more books, toys, and, by next year, apparel and consumer electronics than any retailer online or off. “Amazon increasingly controls the underlying infrastructure of the economy,” the authors write. “Its Marketplace for third-party sellers has become the dominant platform for digital commerce.”

Amazon’s market dominance “comes with significant consequences,” the report stresses. Amazon, the report notes, is “eroding opportunity and fueling inequality, and it’s concentrating power in ways that endanger competition, community life, and democracy. And yet these consequences have gone largely unnoticed thanks to Amazon’s remarkable invisibility and the way its tentacles have quietly extended their reach.”

Noting that Amazon Web Services provides the cloud computing technology for much of the country (including Netflix and the CIA), and how Amazon has warehouses and delivery stations in nearly every major U.S. city, the study points out that by “controlling … critical infrastructure, Amazon both competes with other companies and sets the terms by which these same rivals can reach the market.”

Importantly, the report notes, Amazon has upset the “longstanding relationship between commerce and place, changing the way that our communities feel and threatening the revenue streams and social capital that they depend on to function.”

The report concludes with an analysis on how Amazon has taken advantage of billions of dollars in tax subsidies to fuel its growth and how government should respond, steps that include beefing up enforcement of America’s long-standing anti-monopoly laws, protecting the rights of workers in the digital economy, and better accounting for the economic and community benefits of small businesses.

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