Jeff Bezos knows there are powerful Washington politicians who consider his digital commerce platform a monopoly.
One is sitting in the Oval Office. Another is Sen. Elizabeth Warren, the Massachusetts Democrat seeking to move in to the presidential mansion who wants to break up the Seattle-based company because it unfairly competes with the merchants who are also its customers.
[Related: Warren proposes new $1T tax on profits of big companies like Amazon]
The 55-year-old Bezos has some news for both of them: Amazon is losing that competition. Third-party vendors accounted for 58 percent of goods sold on the digital platform in 2018, up from 3 percent 20 years earlier, the founder and CEO told the $907 billion firm’s investors in his annual letter.
“To put it bluntly,” Bezos wrote, “third-party sellers are kicking our first-party butt. Badly.”
The shift has occurred despite a surge in Amazon’s own merchandise sales, which grew from $1.6 billion in 1999 to $117 billion last year. The numbers undercut, to a degree, the criticism from Warren, President Trump, and antitrust activists who argue that Amazon and other tech giants have created monopolies by building and controlling platforms on which they vie for business with their users.
“You’ve got to pick one business or the other,” Warren said in a September forum at the Newseum in Washington. “You want to be a competitor, be a competitor. That’s great. You want to be a platform provider; that is a different function.”
As it is, she argued, the e-commerce giant derives an unfair edge by gathering information on the merchants who use its platform, including where and how big their markets are, then using that data to compete.
“You’re getting a huge comparative advantage,” Warren said. “Then, we no longer have competition going on.”
Such concerns are also pivotal to the Open Markets Institute, which is fighting what it views as a growing trend toward monopolization in corporate America, and views Amazon’s rivalry with merchant customers and Facebook’s competition with news organizations as conflicts of interest.
President Trump himself has accused Amazon of monopolistic behavior and said his administration is looking into such practices. He has also griped about Bezos’ ownership of the Washington Post, criticizing the newspaper’s coverage of him and his policies as unfair and describing it as a lobbyist for Amazon, which garnered $232.9 billion in sales in 2018.
Bezos, who divorced his former wife, Mackenzie, when the Trump-friendly National Enquirer reported that he was having an affair, maintains that Amazon is committed to assisting third-party vendors, in part by delivery services like Fulfillment by Amazon and membership-discount program Prime.
“We helped independent sellers compete against our first-party business by investing in and offering them the very best selling tools we could imagine and build,” he wrote. “There are many such tools, including tools that help sellers manage inventory, process payments, track shipments, create reports, and sell across borders — and we’re inventing more every year.”
