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Is big tech a driver of inflation?

This blew my mind from Cory Doctorow’s enshittification book (loc 336-348):

Amazon also crushes its merchants under a mountain of junk fees that are pitched as optional but are actually effectively mandatory. Take Prime: a merchant has to give up a huge share of each sale to be included in Prime, and merchants that don’t use Prime are pushed so far down in the search results that they might as well cease to exist. Same with Fulfillment by Amazon, a “service” in which a merchant sends its items to an Amazon warehouse to be packed and delivered with Amazon’s own inventory. This is far more expensive than comparable (or superior) shipping services from rival logistics companies, and a merchant that ships through one of those rivals is, again, relegated even farther down the search rankings. All told, Amazon makes so much money charging merchants to deliver the wares they sell through the platform that Amazon’s own shipping is fully subsidized. In other words, Amazon gouges its merchants so much that it pays nothing to ship its own goods, which compete directly with those merchants’ goods.*

But Amazon’s fee isn’t 10 percent. Add all the junk fees together, and an Amazon seller is being screwed out of 45 to 51 cents on every dollar it earns on the platform. Even if a merchant wanted to absorb the “Amazon tax” on your behalf, it couldn’t. Merchants just don’t make 51 percent margins. So merchants must jack up prices, which they do. A lot. Now, you may have noticed that Amazon’s prices aren’t any higher than the prices that you pay elsewhere. There’s a good reason for that: when merchants raise their prices on Amazon, they are required to raise their prices everywhere else, even on their own direct-sales stores. This arrangement is called most-favored-nation status, and it’s key to the US Federal Trade Commission’s antitrust lawsuit against Amazon.

It’s such an obvious point but it hadn’t occurred to me before. The combination of monopsony and platform infrastructure maximises the capacity of giant buyers to exercise power over suppliers, creating costs passed throughout the system. Big tech is both inflationary and the opacity of platformised pricing makes it harder to measure the impact it is having on the system.

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