As convenient as Amazon
Few times in the history of this country has a crisis produced a profiteer whose power to exploit an emergency (the pandemic) exceeds that of the steel industry or munitions makers of the world wars. With the pandemic driving many thousands of retailers into extinction, Amazon’s growth (through convenience and necessity) made it arguably the largest monopoly in the world. And it’s time we treated it as such. This article in the Nation argues that it is time we nationalize Amazon and private delivery services—and operate it as “a series of democratically administered public utilities.” And I couldn’t agree more.
Recent hearings painted Big Tech companies in a similar way — as the railroad tycoons of the digital age. New York University marketing professor Scott Galloway said Amazon’s Prime membership service uses the kind of massive competitive advantage once enjoyed by railroad barons. “Amazon already owns the rails into 115 million households in America. Do we really want one company to be the arbiter of all commerce?”
In my view, commerce is just the tip of the iceberg when it comes to Amazon which has most certainly cracked the code on utilizing data to monopolize retail (using its Amazon Web Services to gain data on competitor products and services to undercut pricing and launch new products). Unfortunately, the muscle memory it has created with consumers by offering low priced items and free shipping has already created a growing audience blind to outside retailers. And believe me when I tell you that this will not stop with retail. Amazon is venturing into pharma, small business lending, logistics, grocery, insurance and smart homes.
Left unchecked, Amazon will have unfettered access to personal data on what you eat, what you owe, your health, what you insure, and even how you protect your home? Scary.
Put into context, Amazon currently has 150 million paid Prime members alone (a 50 percent increase from 100 million in April 2018 according to VentureBeat in 2020), and 38 percent of the U.S. e-commerce market, trailed by Walmart
With this kind of audience, is it any wonder that Amazon has 9.7 million sellers worldwide, of which 1.9 million are actively selling on the Marketplace. In fact, every year, more than a million new sellers join Amazon. Sellers that basically sell their soul to the devil – soon after finding out that Amazon has launched its own version of their top sellers, and of course, undercutting their prices and promoting them at the top of every search.
Remember the days when we’d raise up in protest against Walmart coming into our communities and putting our mom-and-pop stores out of business? Where’s the uproar? We can no longer listen to crickets chirping as Amazon gathers data, uses it against companies on its platform, and creates lower-priced products to control pricing around every aspect of our personal lives.
It’s not even like this is a “nice” company — and the pandemic proved it. This piece rightly points out that during the pandemic, Amazon shifted risk away from consumers and onto its employees, and “treated its workers brutally, bullied competitors, dodged taxes, and generally been a bad civic actor…Amazon has never been very interested in casting itself as a benevolent, doing-no-evil, world-connecting, different-thinking force for good. Its gambit has always seemed to be to lodge its user-friendly services into the middle of our lives so totally that we shoppers would tolerate or ignore its obvious failings, or at least convince ourselves that its transgressions amounted to a gray area.”
This story in The Guardian argues that Amazon is now a public utility, referencing the need for stronger antitrust legislation similar to nationalization, breaking up the company and stronger labor protections. “Rather than an Amazon that sacrifices workers on the altar of shareholder value, we could have an Amazon that balances the needs of all relevant stakeholders.”
With a new administration in place, there *may* be hope on the horizon. The selection of two major critics of the Big Tech companies, Lina Khan and Tim Wu, for key roles in the administration could signal that President Biden is serious about taking a tough look at Amazon. And there is support from consumers, with the majority (59 percent) surveyed supporting breaking up big tech monopolies, including 24 percent who said they strongly support it.
Khan told Retail Dive in a 2017 interview, “I think it is important to separate the way Amazon has introduced new technologies and the ways it’s potentially abused its power. These things are not one and of the same. We as a society can live in a world of internet commerce without resigning ourselves to all that commerce being mediated by Amazon.”
Further, data around shipping, usage of USPS into secondary and tertiary markets from a profitability perspective is putting pressure on the cost of the U.S. government anyway. Why do you think Amazon bought the Washington Post – for its direct line to lawmakers? Yeah. It makes you wonder.
In my view, Amazon is at a tipping point, and Bezos is well aware, which is why he’s branding into every tertiary market he can find. This is similar to what happened at Apple
At this point, I believe that Amazon should become a government-regulated infrastructure like airlines or a trucking network. At a minimum the retail business should be broken away from AWS. But with very little innovation left, you can bet that Amazon won’t go down quietly.