Investor Nick Hanauer says Amazon’s HQ2 contest indicates a monopoly

Nick Hanauer is a
Seattle-based venture capitalist who was one of Amazon’s earliest
investors.
Courtesy of Nick
Hanauer

• Nick Hanauer is a wealthy, Seattle-based venture capitalist
  and progressive political
  activist.
• He made a fortune as one of Amazon’s earliest investors, but
  thinks the company has become too large.
• He thinks the competition for Amazon’s upcoming second
  headquarters is indicative of too much influence, which has
  become “corrosive.”
• This article is part of Business Insider’s ongoing series on
  Better
  Capitalism.

Nick Hanauer invested in Amazon when there were still people who
thought Jeff Bezos was a fool for trying to sell books online.
That investment helped make Hanauer, a venture capitalist and
entrepreneur based in Amazon’s hometown of Seattle, wealthy. But
now he thinks the retailer, now valued around $1 trillion, has
gotten too big.

In an interview with Business Insider, Hanauer said a great
example of what he considers to be harmful monopolistic influence
is the company’s quest to find the site of its upcoming second
headquarters, known as HQ2. After
announcing its search in late 2017, Amazon received
238 highly detailed, ambitious applications from cities,
states, and regions across the United States and Canada.

“That decision, where Amazon puts its HQ2, is incredibly
important to cities,” Hanauer said. “And as a consequence, you’ve
got this ridiculous race to the bottom contest to find America’s
dumbest and most vulnerable mayor.”

Hanauer isn’t the only person who thinks Amazon’s size and
influence should be scrutinized. Lina Khan, director of legal
policy at the Open Policy Institute, sees Bezos as the John D.
Rockefeller of our time, the head of a giant that is stifling
competition.
As a law student at Yale, she wrote that, “The long-term
interests of consumers include product quality, variety and
innovation — factors best promoted through both a robust
competitive process and open markets.”

Nobel Prize-winning economist Joseph Stiglitz, of Columbia
University, has said that
America has a monopoly problem, and the economists Marshall
Steinbaum and Maurice E. Stuck wrote
for the Roosevelt Institute:

“In highly consolidated markets, consumers have limited choice
and little power to pick their price, quality, or provider for
the goods and services they need; workers are met with massive
employers and have little agency to shop around for competitive
wages and benefits; and suppliers can’t reach the market without
paying powerful intermediaries or succumbing to acquisition.”

And last week, Citi Research said Amazon could avoid antitrust
scrutiny
if it split into two companies. The debate over whether
America needs to update its antitrust laws and use them on giants
like Amazon is continuing to gain traction in government,
academia, and Wall Street. For Hanauer, the answer is common
sense.

“Everything gets worse for most people when you let power
consolidate like this, because you just have these asymmetries of
power that are very, very corrosive,” he said.