US Treasury Secretary Steven Mnuchin Says Amazon Has ‘Destroyed’ Retail, Welcomes Justice Department’s Antitrust Probe
The US Treasury Secretary Steven Mnuchin has endorsed the sweeping antitrust probe announced by Department of Justice against the country's largest tech companies, particularly Amazon, which he said has destroyed retail, CNBC reported.
In an interview to CNBC, Mnuchin said that the retail behemoth has "destroyed the retail industry across the United States" and said there is "no question they have limited competition".
“I think if you look at Amazon, although there are certain benefits to it, they have destroyed the retail industry across the United States so there’s no question they have limited competition,” Mnuchin told CNBC’s “Squawk Box. ”
“I think it’s very good that the attorney general is going to look into this. I think it’s an important issue and I look forward to him reporting back to the president and hearing his recommendations,” said Mnuchin.
The United States Department of Justice (DoJ) on Wednesday announced that it will be launching a comprehensive anti-trust review to establish whether the country’s leading technology behemoths are engaging in practices that have reduced competition, stifled innovation and in the process harming consumer interests.
The DoJ press release signalled that the probe was a response to "widespread concerns that consumers, businesses, and entrepreneurs have expressed about search, social media, and some retail services online".
“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” Assistant Attorney General Makan Delrahim of the Antitrust Division said in a statement.
While the DoJ statement does not explicitly identify any specific companies, the likely targets of probe could include Facebook, Amazon, Google and Apple.
Mnuchin sought to differentiate Amazon's dominance from Walmart claiming that the largely ‘brick and mortar’ retail company has "developed a business where small businesses could continue to compete with them".
Responding to Mnuchin's comment, Amazon stated that small and medium-sized businesses are "thriving" on the platform.
In a statement to CNN Business, the company said that "Today, independent sellers make up more than 58 per cent of physical gross merchandise sales on Amazon, and their sales have grown twice as fast as our own, totalling $160 billion in 2018".
Amazon's retail business competes in the worldwide market for retail sales and represents less than 1 per cent of global retail and less than 4 per cent of US retail.
The vast majority of retail sales - 90 per cent - still occur in brick-and-mortar stores according to the US Census Bureau.
In her paper titled “Amazon’s Antitrust Paradox”, Lina Khan , the US jurist who specialist in competition law, highlighted the two key concerns in the context of online platforms especially Amazon.
First, the economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded. Under these conditions, predatory pricing becomes highly rational-even as existing doctrine treats it as irrational and therefore implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitorsLina Khan in her paper titled “Amazon’s Antitrust Paradox”
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