Amazon’s Just Walk Out Cashierless Solution Is an Antitrust Signal
Amazon is bringing the technology that powers its cashierless Go convenience stores to other retailers, selling the retail-as-a-service solution to brick-and-mortars looking to juice up the in-store customer experience with some Big Tech magic.
Street Fight’s lead analyst Mike Boland projected Amazon would take this turn in 2018, and the move will look familiar to anyone acquainted with Amazon’s market-crushing expertise. It’s the same playbook Amazon perfected with cloud computing: Marshal nearly unparalleled financial resources and in-house talent to manufacture a top-notch B2B solution (AWS) outside your core business (retail), and rely on the high margins from the secondary income stream to keep retail prices low and revenue booming. Consumers get deliveries and video on the cheap, and shareholders see the ballooning revenue figures that make investors salivate. Don’t forget that Amazon’s not just doing this with AWS, either — it’s media group is well on the way to making the duopoly a triopoly.
It’s well established, then, that Amazon dominates at dominating industries adjacent to retail. But that’s what makes its Just Walk Out solution more suspect. By doubling down on retail as a service, Amazon is courting enterprise customers in the very industry — brick-and-mortar retail — that its main e-commerce business gutted. The Seattle behemoth is asking firms like Walmart and Macy’s to pay it for the chance to meet the same Amazon-driven standards that put some of the retail champions of yesteryear out of business.
More strikingly still, the move will squeeze startups such as Standard Cognition, Mercaux, and Leap. Those companies may be succeeding at digitizing in-store experiences in part because Amazon perpetually raises the bar for retail, and Go stores showed the world cashierless retail is possible. But now, a 25-year-old company with outsize capital is directly stepping on the youngsters’ turf. Standard Cognition once portrayed itself as complementary to Amazon Go. Now that Amazon is selling cashierless tech to its potential clients, the startup is looking to distinguish itself.
“We have talked with every major retailer in the U.S., Asia, and Europe,” said Standard Cognition co-founder and CEO Jordan Fisher. “They all want to retrofit existing stores. Very few are willing to build new stores around technology, and that’s what Amazon requires. Standard is the only frictionless checkout technology provider that can retrofit a store.”
On the surface, it’s not a bad thing for consumers if Amazon sells cashierless technology to other retailers. While the sensor-reliant convenience play raises the same privacy concerns as the proliferation of voice devices like Alexa (i.e., ever more pervasive data collection), Just Walk Out offers the familiar exchange of potential surveillance for convenience. It’s a trade some consumers would not take, and mounting privacy legislation could complicate implementation depending on just how much data collection Just Walk Out facilitates. But the bottom line for consumer-focused antitrust action is that Just Walk Out will not necessarily boost prices. That means government antitrust authorities still complying with the norms used to assess the monopoly power of Standard Oil will be slow to act.
In Just Walk Out, I would suggest, another kind of antitrust problem is at play. It’s the kind that should be familiar to those of us who have watched Facebook copy and crush Snapchat, and Google hold court across two decades of search. As Stanford law professor Mark Lemley argues, the Big Tech firms, erstwhile startup icons in their own right, have grown so strong that they are thwarting innovation. Startups struggle to compete in any category Amazon and Facebook choose to enter; they are even less likely to emerge squarely in the categories (search, social, commerce) Big Tech dominates. As Amazon moves into another cutting-edge tech market, the market concentration signal is not the same one (price gouging) that busted last century’s trusts. This century, the sign is startup erasure, which undermines, at its core, the story of innovation-as-raison-d’être that Silicon Valley likes to tell itself.