“iRobot, the creator of Roomba, filed for bankruptcy on Sunday. If Amazon had been allowed to acquire the company in 2022, consumers likely would have enjoyed improved quality and lower prices. Now, thanks to antitrust regulators, iRobot will be acquired by a massive Chinese robot vacuum manufacturer, Shenzhen Picea Robotics, instead of American-owned Amazon.”
“President Donald Trump’s tariff regime is making everything from American-made steel weights, imported yarn, and Amazon’s “everyday essentials” more expensive while his immigration crackdown is causing worker shortages in key industries. These policies will work in tandem to slow down already expensive deliveries of your favorite goods.
“There’s nothing “hostile and political” about informing the public of the negative consequences of poor economic policy. Were Amazon actually to go through with such a plan, they would be doing America a public service, not serving “a Chinese propaganda arm.””
“In a newly-released research paper, Evan Cunningham, a Ph.D candidate in Economics at the University of Minnesota, studied the effects of Amazon’s continued spread across the country—growing from just a handful of warehouses, or “fulfillment centers,” in 2010, to more than 1,300 today in the U.S. alone. On balance, it turns out that Amazon warehouses provide a net positive to local economies.
“I find Amazon’s entry in a metro [area] increases the total employment rate by 1.0 percentage points and average wages by 0.7 percent,” Cunningham writes. “The composition of employment shifts from retail and wholesale trade to warehousing and tradeable services, primarily driven by younger workers. Employment gains are concentrated among non-college workers.”
There are also some drawbacks, though it largely depends on your perspective. “Amazon’s entry increases rents by 1.1 percent and the cost of utilities by 6.0 percent,” while “average home values increase by 5.6 percent.” Higher rents and utility rates may not sound particularly appealing, but Cunningham notes that this is a result of higher housing demand: “The average worker is willing to pay $329 per year to live in a large U.S. city after Amazon’s entry, relative to a counterfactual U.S. economy where Amazon did not expand. This increase was primarily driven by rising home values, implying the benefits accrued to home owners.””
“Today, Amazon terminated its planned acquisition of iRobot, manufacturer of Roomba robot vacuums, as the companies saw “no path to regulatory approval.” iRobot then announced that it would be cutting nearly one-third of its work force.
While the companies blamed regulators in the European Union for the termination, meddlesome U.S. lawmakers played their own part in souring the deal.”
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“as the companies waited on regulators, iRobot was losing money: The company took out a $200 million bridge loan in July 2023 to tie it over until the deal closed (at which point Amazon lowered its offer to account for the new debt). With the deal scuttled, Amazon will now pay a $94 million termination fee, but iRobot expects to report an operating loss of as much as $285 million for 2023.
It’s worth wondering, then, if this is what lawmakers like Warren had in mind. The FTC letter worried the merger “could harm consumers and reduce competition and innovation in the home robotics market.” But without the merger, iRobot could very well face insolvency, and nearly one-third of its work force will lose their jobs—and considering the company is based in Massachusetts, a substantial number of them may very well be Warren’s constituents.”
“The largest tropical forest on Earth, the Amazon stores more than 120 billion tons of carbon, which — if unleashed into the atmosphere — would supercharge climate change. It’s also home to a mind-boggling number of plant and animal species, many of which have served as the basis for medicines to fight ailments like cancer and hypertension.
That’s what makes this so alarming: The Amazon forest is dying. Decades of deforestation, wildfires, and rising temperatures are pushing the forest toward a critical threshold of destruction beyond which large parts of the rainforest will dry out and turn into a savanna, releasing massive quantities of carbon in the process.”
“Much of the lawsuit centers around how Amazon essentially forces third-party sellers who use its Marketplace platform — which accounts for about 60 percent of Amazon’s sales — to purchase additional services from Amazon. Amazon’s critics say the company has gotten greedier over the years, resulting in sellers having to cut their profit margins or raise prices to consumers to account for Amazon’s ever-increasing charges and fees. The FTC says that many sellers pay nearly 50 percent of their revenue to Amazon when all of the fees are combined, and those costs can be passed on to the consumer.
One way it does this, the suit says, is through search ads, which allow sellers to have their products placed prominently in customer searches, above products that organically earned a top spot. The lawsuit alleges that Amazon has increased the number of ads in search results over the years, making sellers feel that the only way potential customers will see their products at all is if they pay Amazon for ads. This makes the shopping experience worse for consumers who have to wade through them to find organic results.
“These ads have been enormously lucrative for Amazon, but shoppers face less relevant results and are steered toward more expensive products, while sellers face an additional set of fees,” Khan said.
The lawsuit also addresses Amazon’s “buy box.” When several sellers offer the same product, Amazon picks which one gets the sale when a customer clicks to make a purchase — whether “add to cart” or “buy now.” That’s the buy box. Everyone else is relegated to an “other sellers” section, which is farther down the page. Most customers don’t bother or even know to check it, which makes that buy box placement crucial for sellers.
But Amazon has certain conditions that make it more likely that the seller will get that buy box — or, if they don’t comply with them, make it impossible to get it at all. Those conditions often mean giving Amazon more money.
Qualifying for Prime is one of them, but sellers pretty much have to use Amazon’s “Fulfilled by Amazon” logistics and shipping service in order to be eligible for it. Amazon has technically allowed sellers to use other fulfillment services, but it’s exceedingly difficult for any third-party fulfillment service to meet Amazon’s requirements, and Amazon closed off enrollment to the Seller Fulfilled Prime option years ago.
A few months ago, however, Amazon announced it would re-open enrollment “later this year.” Notably, it has also changed some of these practices in the European Union recently as part of a settlement to end an antitrust case there, including adding a second buy box and allowing seller-fulfilled Prime.”
“The FTC’s complaint revolves around mundane moves by Amazon, like conspicuously asking non-Prime customers if they want to sign up or requiring Prime subscribers to click through several screens to unsubscribe.
Patrick Hedger, executive director of the Taxpayers Protection Alliance, noted that it took him under a minute and required just six clicks to cancel his Prime account—fewer clicks than it takes to submit a public comment on the FTC website.
Like many major companies, Amazon has some flaws. But the argument that it’s broadly harmful to consumers—let alone so harmful that it requires the intervention of the federal government—is so far removed from reality that only government bureaucrats with an ax to grind could make it with straight faces. (In fact, Amazon routinely garners extremely high favorability ratings in consumer polls.)”
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“During the checkout process, in some cases, “the option to purchase items on Amazon without subscribing to Prime was more difficult for consumers to locate,” states the FTC press release—as if it’s Amazon’s fault that some consumers might be a little less observant or tech-savvy. The option is not hidden, mind you; plenty of non-Prime members find it and purchase items without joining Prime. But they may have to spend an extra second or two looking—and the government is making a federal case out of it.”