retail news in context, analysis with attitude

The New York Times reports that "Wal-Mart’s $3.3 billion acquisition of Jet.com can be expected to sail through antitrust review, eliciting barely a peep of objection from the federal government," and suggests that the deal "will probably end up being another example of an upstart internet company being swallowed up to preserve the stranglehold of a giant."

The Times analysis says that "this happens because antitrust regulators are stuck in an outdated view of the world, while the internet giants are more attuned to their nascent competitive threats. The deal for Jet.com is just the latest defensive internet acquisition of an emerging startup that will preserve the hegemony of a select few."

The Times goes on to suggest that "Wal-Mart will now have a more dynamic management and brand to buttress its own internet sales operation, which trails Amazon by quite a distance. This will allow it to better compete against Amazon. The likely result is that competition in online retailing will eventually be a slugfest between Amazon and Wal-Mart, with everyone else thrown by the wayside."

But, the Times writes, this is not necessarily a good thing: "This misses the point that domination is all about users and views. Those companies with users and page views can dominate, and accumulating those users is everything, something only an infinitesimally small number of companies can find the key to doing.

"The antitrust system results in the increasing oligopoly that we have, where a few companies dominate major industries, accruing wealth and power as potential disrupters are swallowed at birth, the way Cronus, the titan in Greek mythology, ate his young to prevent their uprising. If antitrust authorities do not adapt and emerging competitors continue to be bought up, we should not be surprised by the continued dominance of a very few companies like Facebook, Google, Amazon and Wal-Mart."
KC's View:
I've written here before that traditional definitions about competitive fairness need to be reconsidered for the new ways in which the business world works. I'm not sure there are legitimate reasons to stop a Walmart-Jet deal, especially because of Amazon's increasing dominance. And I'm not sure it is anti-competitive to create an entity that can be more competitive with Amazon.

But we can't be applying decades-old definitions to today's business models. It just doesn't make sense.