Business: Should We Be Worried About Amazon?

As I was walking through the library the cover of a magazine caught my attention. It was The New Republic and their feature story was “Amazon Must Be Stopped.” ‘Oh my,’ I thought to myself. ‘This seems quite serious. Instead of studying accounting I must read this article.’

The author, Franklin Foer, said that Amazon is a monopoly that must be stopped before we “drift toward an unsustainable future, where one company holds intolerable economic and cultural sway.” He cites the company’s tactics in crushing the competition of other companies, such as Zappos and Diapers.com, as well as its influence and power in the publishing industry as reasons for waging a war against Amazon. He calls for legislation and other governmental action to save the complacent consumer from being seduced by Amazon’s low prices, express shipping, and overall awesomeness at the cost of allowing a monopoly to be established which will hurt us all in the future.

Now, I really like Amazon because it is, at the moment, a huge benefit to consumers. I love Prime, renting textbooks, and knowing I’m getting the best price when I’m doing my Christmas shopping. However, it is unsettling to see how Amazon is willing to have a negative profit margin (currently -2.12%) in its quest to be everyone’s one stop for shopping. This leads me to believe that once it grows big enough, Amazon will raise its prices to finally find out what turning a profit is like. And then how will we consumers feel when we don’t have another retailer to turn to?

In August I wrote a post questioning who could compete with Amazon. This remains unanswered and I have not fully decided if this is an all bad thing? As a supporter of a free market I am always weary when governmental intervention is proposed, but now I am wondering if perhaps this situation calls for it.

What do you think? Does Amazon needed to be stopped (or at least restricted/slowed down)?