Comment Re:Proof that there is inadequate competition (Score 1) 40
The real problem is why is a "free shipping" subscription (that's what Prime is for most people) tied to a streaming service? Tying may or may not be illegal. Essentially, they are forcing you to buy their video subscription service if you want to have their delivery service. On the other hand, you don't need Amazon Prime at all, you can just pay for extra shipping when you need it (which may be the cheaper way), that's why I don't think you can make a case.
It's unclear, but they are using their extreme market power in one market to gain power in another market, which is definitely pushing against the bounds of being an antitrust concern.
And that decision to add $3 for ad-free streaming is actually a step in the right direction (as opposed to a flat fee increase). At least, those who don't care about Prime Video won't have to pay extra.
I'm not sure it is a clear step in the right direction. Yes, the fact that they're shifting at least some portion of the price increase onto people who actually use the Prime Video service could be considered an improvement, but as long as you can't get shipping without getting the "free but not free" tier (if it were really free, you wouldn't need a Prime membership at all), it's still a huge problem.
And I'm not certain that they actually pushed all of the Prime Video cost increase onto actual Prime Video users, either. From 2022 to 2023, their sales revenue increased by 11.8%, and I *think* the number of packages shipped increased by 13%, while money spent on shipping increased by only 7.2%. So if those numbers are correct and include all Amazon shipments rather than just the ones they did themselves, then it likely means that their average cost of shipping decreased, both in terms of cost per package and in terms of cost per dollar of revenue. However, I'm not confident in those numbers, so take them with a grain of salt.
Higher prices for Prime in the face of reduced shipping costs would imply that part of the basic Prime cost is going into either higher profit margins or into bailing out the Prime Video division's overspending (or both).