How Amazon Protects its Online Marketplace Dominance by@linakhantakesamazon

How Amazon Protects its Online Marketplace Dominance

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Amazon's supremacy in the online marketplace services market is fortified by substantial barriers to entry. These barriers include scale economies, switching costs, and network effects, which foster an ecosystem where more sellers attract more sellers. Amazon's alleged illegal actions further intensify these barriers. The online marketplace's ability to offer valuable sales data to sellers enhances its appeal and encourages the growth of complementary product offerings, further securing its dominance.

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FTC v. Amazon Court Filing, retrieved on Sep 26, 2023, is part of HackerNoon’s Legal PDF Series. You can jump to any part in this filing here. This is part 27 of 80.

3. Amazon’s dominant position in the online marketplace services market is protected by significant barriers to entry

206. The online marketplace services market exhibits significant barriers to entry, including, for example, scale economies, switching costs, and network effects. Network effects between the online marketplace services and online superstore markets also present a unique barrier, as discussed in Part V.C, below. Moreover, Amazon’s illegal course of conduct has made entry artificially and significantly more difficult than it would otherwise be, as discussed in Part VI, below.

207. The market for online marketplace services is also characterized by network effects. For example, as an online marketplace serves more sellers, it can collect, analyze, and offer robust aggregated sales data to its sellers, who can use the data to inform their business decisions. A marketplace’s increased ability to offer useful sales data to sellers helps it attract more sellers, which allows the marketplace to collect more data, and so on.

208. As an online marketplace gains sellers, it also becomes more appealing to sellers who offer products that are complements to the products already offered on the marketplace. For example, a seller of cell phone cases may be more interested in selling on a marketplace on which cell phones are also sold.

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This court case 2:23-cv-01495 retrieved on October 2, 2023, from is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction.