Steven Davidoff Solomon indicated in yesterday’s New York Times that, “Walmart’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.
“Like Facebook’s acquisition of WhatsApp, the Walmart deal will probably end up being another example of an upstart internet company being swallowed up to preserve the stranglehold of a giant.
“This happens because antitrust regulators are stuck in an outdated view of the world, while the internet giants are more attuned to their nascent competitive threats.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 start-up that will preserve the hegemony of a select few.”
The Times item stated that, “This [acquisition of Jet.com] could be seen as a victory for competition. Walmart 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 Walmart with everyone else thrown by the wayside.
“The problem with this narrative is that it cements the positions of Walmart and Amazon as the only players in town.
“This is the modus operandi of the big internet behemoths. They live in fear of new technology disrupting their businesses and killing them off.”
Mr. Solomon noted that, “Facebook and its elite brethren will do anything to make sure they are not the next Yahoo or Radio Shack, killed by disruption and failure to innovate. This translates into paying obscene sums for technology that might challenge their dominance one day…[B]illions of dollars are made in Silicon Valley by selling nascent upstarts to the giants. And the dominant players pay eagerly to remain dominant. That is what is going on with the Jet.com acquisition and perhaps even the $26.2 billion purchase of LinkedIn by Microsoft.”
Yesterday’s article added that, “If antitrust authorities do not adapt and emerging competitors continue to be bought up, we should not be surprised of the continued dominance of a very few companies like Facebook, Google, Amazon and Walmart.”
