Amazon Selling Cashier-less Tech Should Set Off Antitrust Alarms
Amazon is bringing the technology that powers its cashier-less Go convenience stores to other retailers, selling the retail-as-a-service solution to brick-and-mortars looking to juice up the in-store customer experience with some Big Tech magic.
The move will look familiar to anyone acquainted with Amazon’s market-crushing expertise. It’s the same playbook Amazon perfected with cloud computing: Marshal nearly unparalleled financial resources and in-house talent to manufacture a top-notch B2B solution (AWS) outside the company’s core business (retail), and rely on the high margins from the secondary income stream to keep retail prices low, leaving behind retailers that depend on retail margins to turn a profit. Consumers get deliveries and video on the cheap, competitors in retail suffer, and shareholders see the ballooning revenue figures that make analysts salivate. Don’t forget that Amazon’s not just doing this with AWS, either — it’s media group is well on the way to making the digital advertising duopoly of Google and Facebook a triopoly.
It’s well established, then, that Amazon dominates at dominating industries adjacent to retail. But that’s what makes its Just Walk Out solution more suspect. By doubling down on retail as a service, Amazon is courting enterprise customers in the very industry — brick-and-mortar retail — that its main e-commerce business has gutted. The Seattle behemoth is asking retailers to pay it for the chance to keep up.
More strikingly still, Amazon’s move will squeeze startups in the in-store retail tech space such as Standard Cognition, Mercaux, and Leap. In a sense, those companies are following Amazon’s example by raising the bar for retail via technological innovation; indeed, it was Amazon’s Go stores that showed the world cashier-less retail is possible. But now, the 25-year-old company with outsize capital and brand recognition is directly stepping on the youngsters’ turf. Standard Cognition once portrayed itself as complementary to Amazon Go. Now that Amazon is selling cashier-less tech to its potential clients, the startup is looking to distinguish itself.
“We have talked with every major retailer in the U.S., Asia, and Europe,” said Standard Cognition co-founder and CEO Jordan Fisher. “They all want to retrofit existing stores. Very few are willing to build new stores around technology, and that’s what Amazon requires. Standard is the only frictionless checkout technology provider that can retrofit a store.”
On the surface, it’s not a bad thing for consumers if Amazon sells cashier-less technology to other retailers. While the sensor-reliant convenience play raises the same privacy concerns as the proliferation of voice devices like Alexa (i.e., ever more pervasive data collection), that is a familiar trade-off for consumers: potential surveillance for convenience. It’s an exchange some consumers would not willingly make, and mounting privacy legislation could complicate implementation depending on just how much data collection Just Walk Out facilitates. But the bottom line for consumer-focused antitrust action is that Just Walk Out will not necessarily boost prices. That means government antitrust authorities still complying with the norms used to assess the monopoly power of Standard Oil will be slow to act.
In Just Walk Out, I would suggest, another kind of antitrust problem unrelated to prices is at play. It’s the kind that should be familiar to those of us who have watched Facebook copy and crush Snapchat, and Google hold court across two decades of search, scaring venture capital firms away from search startups. The problem Just Walk Out highlights is that, as Stanford law professor Mark Lemley argues, the Big Tech firms have grown so strong that they are thwarting innovation.
Startups struggle to compete in any category Amazon and Facebook choose to enter; they are even less likely to emerge squarely in the categories (search, social, commerce) Big Tech dominates. As Amazon moves into in-store retail solutions, another cutting-edge tech market, the market concentration signal is not the same one (price gouging) that busted last century’s trusts. This century, the antitrust sign that should propel regulators to act is startup erasure, which undermines, at its core, the story of innovation-as-raison-d’être that Silicon Valley likes to tell itself.
This post first appeared on Street Fight.