Class 17 Platforms and Networks Spring 2020 Platforms

Class 17 Platforms and Networks Spring 2020 Platforms Today: Amazon Randal C. Picker James Parker Hall Distinguished Service Professor of Law The Law School The University of Chicago Copyright © 2019 -20 Randal C. Picker. All Rights Reserved.

The Focus Today n Key Questions u. The top issue for Amazon right now is its status as both a retailer and a platform u. Can it do both of those rules—be a player and a referee—simultaneously? u. What rules might address this situation? October 7, 2020 2

2018: Sears Ch 11 Filing October 7, 2020 3 WSJ (15 Oct 2018)

Early History of Sears October 7, 2020 4 Sears Online Archive

Product Line Expansion October 7, 2020 5 Sears Online Archive

1920: World’s Largest Retailers October 7, 2020 6 Levinson, The Great A&P

1925: Sears Opens 1 st Retail Store October 7, 2020 7 Fortune (15 Oct 2018)

1927: Sears Private Labels October 7, 2020 8 Fortune (15 Oct 2018)

1928 Retailers October 7, 2020 9 NYT (8 July 1928)

Sears Sales by Channel October 7, 2020 10 Emmet & Jeuck, p 653

Sears Financials 1925 -1947 October 7, 2020 11 Emmet & Jeuck, p 650

Sears v. Walmart v. Amazon October 7, 2020 12 WSJ (13 -14 Oct 2018)

1993: Sears Dumps Catalogues October 7, 2020 13 NYT (26 Jan 1993)

1993: Sears Dumps Catalogues October 7, 2020 14 NYT (26 Jan 1993)

Prodigy October 7, 2020 15 NYT (12 Apr 1988)

Tailored Advertising October 7, 2020 16 NYT (12 Apr 1988)

1997: Amazon Goes Public October 7, 2020 17 Form S-1 (24 Mar 1997)

Amazon’s Business: Books October 7, 2020 18 Form S-1 (24 Mar 1997)

Losses October 7, 2020 Form S-1 (24 Mar 1997) 19

Amazon’s Business October 7, 2020 20 Form S-1 (24 Mar 1997)

Amazon’s Financials 1994 -96 October 7, 2020 21 Form S-1 (24 Mar 1997)

1997 B&N Ann Report October 7, 2020 22

1997 Borders Ann Report October 7, 2020 23

Product Line Expansions October 7, 2020 24 1999 Amazon Ann Report

z. Shops Introduction, Shopping Search Engine October 7, 2020 25 Amazon PR (30 Sept 1999)

Book Prices October 7, 2020 26 2002 Amazon Ann Report

Financials as of 2002 October 7, 2020 27 2002 Amazon Ann Report

New Services: Unbox, Fulfillment by A, Cloud Computing October 7, 2020 28 Amazon PR (24 Oct 2006)

Financials as of 2006 October 7, 2020 29 2006 Amazon Ann Report

Sears v. Walmart v. Amazon October 7, 2020 30 WSJ (13 -14 Oct 2018)

Amazon As a Platform for Third-Party Sales October 7, 2020 31 2018 Amazon Ann Report

Amazon Financials as of 2018 October 7, 2020 32 2018 Amazon Ann Report

Profitability of AWS October 7, 2020 33 2018 Amazon Ann Report

Selling Bestseller (TTYN (1 of 8)) October 7, 2020 34 NYT (15 May 2019)

Amazon Prices (TTYN (2 of 8)) October 7, 2020 35 Amazon (15 May 2019)

Sem. Coop Prices (TTYN (3 of 8)) October 7, 2020 36 Sem. Coop (15 May 2019)

Competing Sellers (TTYN (4 of 8)) October 7, 2020 37 Amazon Search (15 May 2019)

Competing Sellers (TTYN (5 of 8)) October 7, 2020 38 Amazon Search (15 May 2019)

Competing Sellers (TTYN (6 of 8)) October 7, 2020 39 Amazon Search (15 May 2019)

Competing Sellers (TTYN (7 of 8)) October 7, 2020 40 Amazon Search (15 May 2019)

TTYN (8 of 8) Possible Amazon Claims? n Antitrust u. Do we see predatory pricing here? u. Monopsony power? u. What evidence would be required to find that? n Other Areas u. Data October 7, 2020 misappropriation? IP violations? 41

TTYN (1 of 8) Possible Amazon Laws? n Choices? u 1. Inventory. Amazon has to buy inventory from third parties and can sell only that purchased inventory w Meaning cannot vertically integrate into production of goods and create Amazon brands w Can’t establish a platform for sales by third parties October 7, 2020 42

TTYN (2 of 8) Possible Amazon Laws? n Choices? u 2. Platform as Inventory Common Carrier. Online shelf space is unlimited so any ecommerce platform has to carry all items presented by third party merchants w Also can’t prioritize them but has to fill slots at random from all merchants offering the good on the platform October 7, 2020 43

TTYN (3 of 8) Possible Amazon Laws? n Choices? u 3. Only One Business Model. Amazon can run an own-inventory website or a platform for third parties, but not both w Indian October 7, 2020 has passed legislation like this 44

TTYN (4 of 8) Possible Amazon Laws? n Choices? u 4. Nondiscrimination. Amazon can sell its own inventory or act as a platform for third-party inventory but it needs to treat each of those by rules not tied to ownership w Best price? Randomization across merchants? Some sort of algorithm? October 7, 2020 45

TTYN (5 of 8) Possible Amazon Laws? n Choices? u 5. Entry Limits w Amazon cannot sell any item in competition with any third-party seller on the platform. w Amazon cannot enter other businesses other than sales (no video, no AWS and so on) w Amazon can’t use data on the platform to decide which businesses to enter October 7, 2020 46

TTYN (6 of 8) Possible Amazon Laws? n Choices? u 6. Amazon Prime w Force Amazon to unbundle and set separate prices for each item in the bundle w Ban Amazon from selling paid-in-advance bulk shipping as doing so distorts competition for the marginal sale at other websites October 7, 2020 47

TTYN (7 of 8) Possible Amazon Laws? n Choices? u 7. Transaction Neutrality w Amazon can’t remember anything • Have to forget and not record your transaction history • Can’t store payment info, so that you have to enter it each time as you would with a new website October 7, 2020 48

TTYN (8 of 8) Possible Amazon Laws? n Choices? u 8. Labor Policies w Amazon can’t hire independent contractors w Amazon is required to build warehouses in markets with high labor costs (say dense urban areas like NYC and the Bay Area) October 7, 2020 49