- Nick Hanauer is a wealthy, Seattle-based venture capitalist and progressive political activist.
- He made a fortune as one of Amazon’s earliest investors, but thinks the company has become too large.
- He thinks the competition for Amazon’s upcoming second headquarters is indicative of too much influence, which has become “corrosive.”
- This article is part of Business Insider’s ongoing series on Better Capitalism.
Nick Hanauer invested in Amazon when there were still people who thought Jeff Bezos was a fool for trying to sell books online. That investment helped make Hanauer, a venture capitalist and entrepreneur based in Amazon’s hometown of Seattle, wealthy. But now he thinks the retailer, now valued around $US1 trillion, has gotten too big.
In an interview with Business Insider, Hanauer said a great example of what he considers to be harmful monopolistic influence is the company’s quest to find the site of its upcoming second headquarters, known as HQ2. After announcing its search in late 2017, Amazon received 238 highly detailed, ambitious applications from cities, states, and regions across the United States and Canada.
“That decision, where Amazon puts its HQ2, is incredibly important to cities,” Hanauer said. “And as a consequence, you’ve got this ridiculous race to the bottom contest to find America’s dumbest and most vulnerable mayor.”
Hanauer isn’t the only person who thinks Amazon’s size and influence should be scrutinised. Lina Khan, director of legal policy at the Open Policy Institute, sees Bezos as the John D. Rockefeller of our time, the head of a giant that is stifling competition. As a law student at Yale, she wrote that, “The long-term interests of consumers include product quality, variety and innovation – factors best promoted through both a robust competitive process and open markets.”
Nobel Prize-winning economist Joseph Stiglitz, of Columbia University, has said that America has a monopoly problem, and the economists Marshall Steinbaum and Maurice E. Stuck wrote for the Roosevelt Institute:
“In highly consolidated markets, consumers have limited choice and little power to pick their price, quality, or provider for the goods and services they need; workers are met with massive employers and have little agency to shop around for competitive wages and benefits; and suppliers can’t reach the market without paying powerful intermediaries or succumbing to acquisition.”
And last week, Citi Research said Amazon could avoid antitrust scrutiny if it split into two companies. The debate over whether America needs to update its antitrust laws and use them on giants like Amazon is continuing to gain traction in government, academia, and Wall Street. For Hanauer, the answer is common sense.
“Everything gets worse for most people when you let power consolidate like this, because you just have these asymmetries of power that are very, very corrosive,” he said.
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