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Wednesday

14

December 2011

Amazon Target of Weird Nostalgic Attack

Written by , Posted in Free Markets

Attacks on big business are commonplace. Providing a valuable good or service is, apparently, cause for derision and hatred. The latest example is the completely unhinged reaction to a fairly innocuous Amazon promotion that involved using an application to capture the prices of goods in other stores:

An Amazon.com promotion, which offered customers a discount if they let Amazon know the prices of items for sale in traditional shops, has provoked widespread anger, drawing a rebuke from a senator and seeing it compared to Dr Seuss’s Christmas-stealing Grinch.

The deal, which ran on Saturday, gave customers a 5% discount (up to $5) off Amazon.com’s price on up to three products if they used the retailer’s price check app while shopping in physical stores. Although books were not included – the eligible categories were DVDs, electronics, toys, music and sporting goods – the promotion prompted a furious response from beleaguered independent bookshops and from the American Booksellers Association, as well as from senator Olympia Snowe, who called it “an attack on Main Street businesses [and] anti-competitive behaviour that could shutter the doors of America’s small businesses”.

“Small businesses are fighting everyday to compete with giant retailers, such as Amazon, and incentivising consumers to spy on local shops is a bridge too far,” said Snowe, a Republican and member of the Senate Committee on Small Business and Entrepreneurship, in a statement.

What a ridiculous overreaction. How in the world can this be construed as “anti-competitive”? Olympia Snowe, like a lot of statists who don’t really believe in free markets, conflates being better for being anti-competitive. Being successful is not anti-competitive, it’s just winning the competition.

But how is this different in substance than the very common practice of price-matching? Most major retailers will do it, and they require you to show the price of the good in the other store before they will match it. How is this even “spying” at all? Prices are not hidden; they are public information.

This is a creative use of technology on Amazon’s part to bring greater efficiency to the market. The more pricing information available to participants, the better decisions they will ultimately make. This is not anti-competitive; it is hyper-competitive.

I also don’t understand the weird fetishism for businesses presumed to be uncompetitive. What is the purpose of rhetorically protecting businesses that are losing to a stronger, more innovative competitor? It’s not to protect the consumer, whose collective choices are being fought against. It’s not to protect the economy, which thrives on creative destruction and the triumph of better business models over less efficient ones. It strikes me as little more than a sort of nostalgia, or belief that the world must remain the same as it is in whatever period of time the person found most desirable. In that sense, such anti-free market sentiment is the true form conservatism, and those who believe in a dynamic market place are the real advocates for progress and change.