Big Tech is Like a Department Store

When Sears Roebuck introduced Kenmore appliances and Craftsman tools in the 1920s and 1930s, it used its position as a retailer to compete directly with the independent brands it also stocked. Since it had access to sales data, it knew which products were most profitable, and could price its own versions aggressively because it paid no distribution markup to itself. Amazon has dialed this practice up to eleven: it aggregates sales data from third-party sellers to identify profitable categories, launches competing Amazon Basics versions, and uses control over search ranking and fulfillment priority to favor its own products. Information asymmetry is central to this model. No independent third-party seller has access to market-wide data like Amazon, so Amazon-owned products benefit at every stage of the system. They are priced without the referral fee that third-party sellers pay on each transaction, they receive default eligibility for the Buy Box, and they are ranked by their owner’s…