Amazon. Creeping tyranny and the public policy resistance

Amazon has announced its plans to acquire Whole Foods for 14 billion dollars “Amazon has no plans to use the technology it developed for Amazon Go to automate the jobs of cashiers at Whole Foods. No job reductions are planned as a result of the deal.” – Amazon Spokesperson

Lets break that into small, de-legalistics and marketing ‘good-will’ proaganda pieces for forensics:

  • “Amazon has no plans to use the technology it developed for Amazon Go to automate the jobs of cashiers at Whole Foods. No job reductions are planned as a result of the deal. Amazon ‘has no plans’. I had no plans to get root canal either, but these things do happen
  • ‘…no plans to use the technology it developed for AmazonGo to automate the jobs of cashiers…’This is not the generosity of spirit of Amazon. AmazonGo, in its own words is a “The technology lets people pay with smartphones without seeing a cashier or going to a checkout kiosk…” But, AmazonGo has met technological hurdles, it can’t handle significant volume. I’m sure that problem is getting attention and will be solved. But, that advance can’t be planned, it is not a party and the invitations have a date and time. The fix will happen, and when it does, cashiers get fired
  • to automate the jobs of cashiers… This is specific that there is ‘no plans’ to substitute cashiers for a specific technology. Will cashiers be termed and those positions no plans to be replaced by technology, and then, as our short term memories are exhausted, replaced by technology.
  • to automate the jobs of cashiers…What of stockers and all those other employees
  • No job reductions are planned as a result of the deal What job reductions are planned that are not ‘part of the deal’?

Everything you buy and transact is flowing through one pipe called ‘Amazon’. Most of the pipe is buried deep underground in the digital world, however as Amazon is coming up from the low margin depths and is moving into the brick and mortar retail, that pipe is being revealed. 

Whats in the pipe? Its Marketplace for third-party sellers is the dominant platform for digital commerce. Its Amazon Web Services division provides the cloud computing backbone for much of the country, powering everyone from Netflix to the CIA. Its distribution network includes warehouses and delivery stations in nearly every major U.S. city, and it’s rapidly moving into shipping and package delivery for both itself and others. Amazon processes payments for other e-commerce businesses; it makes restaurant deliveries in more than a dozen cities; It manufactures thousands of products, from blouses to batteries to baby food.

Their bet is that as long as consumers are enjoying one-click ordering and same-day delivery, we won’t notice the creeping tyranny.

The company uses its data on what we browse and buy to shape what we see and adjust prices accordingly, and its control over suppliers and power as a producer itself means that its increasingly steering our choices, deciding what products make it to market and what products we are exposed to. But we’re also much more than consumers. We’re people who need to earn a living, who want to have meaningful jobs, who care about the freedom to build a business. We are neighbors and we are citizens, entrepreneurs and producers, taxpayers and residents, with needs and wants from an economy that go beyond the one-click checkout.

The taxpayer footed Amazon

  • Their rise has been heavily assisted by government support, including subsidies and tax advantages worth billions of dollars. Amazon has pocketed at least $613 million in public subsidies for its fulfillment facilities since 2005, and more than half of the 77 large facilities it built between 2005 and 2014 have been subsidized by taxpayers.
  • Dodging sales tax collection was critical to Amazon’s early growth and continues to drive sales. Today, Amazon still does not collect sales tax in 16 states, a competitive advantage that recent scholarship shows fuels almost 10 percent of its sales in these states, at the expense of brick-and-mortar retailers
  • Amazon has used an overseas tax haven to skirt hundreds of millions of dollars a year in federal taxes. The company’s tax-dodging scheme, which it has used for more than a dozen years, is now the subject of multiple investigations. Whatever the outcome of these cases, the scheme has already helped Amazon grow into a formidable market power by enabling it to pay a federal tax rate of less than one-third the average paid by other retailers
  • and…all those first class packages n the mail, well…The Postal Service is also subsidizing Amazon package delivery with first-class mail. If costs were fairly allocated, on average parcels would cost $1.46 more to deliver

Resistance is not futile. Little bites of big issues…

Why is there no ‘net neutrality’ imposed on Amazon?  Adopt common carrier rules for Amazon’s platform, regulating Amazon’s platform as a common carrier, similar to how we treat railroad companies and other firms that control essential transportation and communications infrastructure. A platform draws its power from its position as a  broker that controls the relationship with producers and consumers. Once a platform reaches a critical mass of consumers, producers, or both, these groups become vulnerable to the platform’s control over standards and policies. Amazon would be required to treat all producers and consumers equally, and would be barred from discriminating among them
Monopolizing the Economy

  • Amazon is using its market power to eliminate competition and take control of one industry after another, leaving us with an economy that is less diverse and innovative, and which affords fewer opportunities for businesses to start and grow
  • Amazon uses its vast financial resources to sell many products below its own cost as a tactic for both eliminating competitors that lack similarly deep pockets and hooking customers into its Prime ecosystem, which sharply reduces the chances they will shop around in the future.
  • By using Prime to corral an ever-larger share of online shoppers, Amazon has left rival retailers and manufacturers with little choice but to become third-party sellers on its platform. In effect, Amazon is supplanting an open market with a privately controlled one, giving it the power to dictate the terms by which its competitors can operate, and to levy a kind of tax on their revenue.
  • Amazon leverages the interplay between the direct retail and platform sides of its business to maximize its dominance over suppliers. As it extracts more fees from them, it’s hollowing out their companies and reducing their ability to invent and develop new products. 
  • Meanwhile, Amazon is rapidly expanding its own product lines, using the trove of data that it gathers. Amazon is fueling a sharp decline in the number of independent retail businesses, a trend manufacturers say is harming their industries by making it harder for new products and new authors and creators to find an audience.
  • Amazon poses a particular danger in the book industry, where its power to manipulate what we  encounter, remove books from its search results, and direct our attention to select titles threatens the open exchange of ideas and information.
  • Already there is evidence that Amazon is using its huge trove of data about our buying habits to raise prices, and its also started blocking access to certain products, charging higher prices, and delaying shipping times for customers who decline to join its Prime program.

Undermining Jobs and Wages 

  • Amazon’s labor model and find that work inside its 190 distribution facilities resembles labor’s distant past more than a promising future, with many workers performing grueling and underpaid jobs, getting trapped in precarious temporary positions, or doing on-demand assignments that are paid by the piece
  • Amazon has eliminated about 149,000 more jobs in retail than it has created in its warehouses, and the pace of layoffs is accelerating as Amazon grows. Many jobs are at risk: the retail sector currently accounts for about 1 in every 8 jobs, and unlike Amazon jobs, these jobs are distributed across virtually every town and neighborhood
  • Work in Amazon’s warehouses is exceptionally grueling, yet the company pays its fulfillment workers 15 percent less on average than other warehouse workers in the same region earn.
  • Many of the workers in Amazon warehouses are subcontracted temporary workers, which the company refers to as seasonal but are, in many cases, year-round perma-temps. This set-up allows Amazon to skirt responsibility for these workers and any injuries they suffer on the job, and helps deter its direct hires from advocating for better conditions
  • Amazon is expanding its reliance on on-demand labor. In 30 cities, it’s using freelance delivery drivers who take instructions from an app and are paid a small piece-rate for each package.
  • The company is also expanding the frontiers of automation, installing orange robots in its newest fulfillment centers and developing unmanned drones that could deliver most of the items it ships. Amazon appears to be aiming for a future in which it employs few workers and instead relies on machines and a bench of on-demand freelancers.
  • Amazon is spreading its low-wage, precarious labor model to package delivery, threatening the jobs of nearly one million unionized, middle-income workers at UPS and the U.S. Postal Service. Amazon has leased cargo planes, purchased truck trailers,  and lobbied for permission to fly drones as it builds a shipping system that could serve both its own needs and those of others.
  • As Amazon squeezes its workers, it’s also delivering enormous wealth to a handful of top executives and shareholders, and exacerbating income inequality. 

Weakening Communities 

  • Amazon is upending the longstanding relationship between commerce and place, changing the way that our communities feel and threatening the revenue streams and social capital that they depend on to function
  • Property taxes are the leading source of revenue for state and local governments, and brick-and mortar retailers shoulder a large share of this tax responsibility. As it displaces these businesses, Amazon, which has no property in 20 states and only a minimal footprint in the places where it does have warehouses, is not replacing this critical source of revenue
  • Much of the vitality of cities is linked to commerce that is based on the street and the many encounters with neighbors and friends that occur as we run errands. At Amazon, shopping is a solitary activity, and this has profound implications for communities and how we relate to one another
  • Local business ownership is a powerful source of social capital, as well as an expression of closely held American values, like personal agency and community self-determination. In recent surveys, locally owned businesses name Amazon as the top threat to their survival
  • Amazon’s invisibility and lack of a physical presence in most places makes it harder to build a grassroots response to its impacts. As it stealthily expands, however, it’s important to consider that not all  e-commerce follows its example, and that we could instead support the many local businesses that are operating online while still rooted deeply in their communities.

The Policy Response to Amazon

Locally: What of the Whole Foods employees. City executives and citizenry should make demands of Amazon:

  1. Disclose a precise schedule of planned, or likely termination by location, city and state and position
  2. Employees must be given at least 90 days notice of any planned, or likely, termination
  3. Disclose a precise list of planned, or likely hiring
  4. Employees must be offered to be retrained to other positions within the company or that they foresee staffing up

Congress is getting involved and need visibility and consituent support

  • Rep Cicilline sent out a request for a hearing: (the deal) “raises important questions concerning competition policy, such as how the transaction will affect the future of retail grocery stores, whether platform dominance impedes innovation, and if the antitrust laws are working effectively to ensure economic opportunity, choice, and low prices for American families.”
    and (the deal might) “increase Amazon’s online dominance, enabling it to prioritize its products and services over competitors.
  • Policymakers should restore the broader range of goals that guided antitrust enforcement for much of the 20th century, and use these policies to divide Amazon into separate firms, prevent it from using its financial resources to capsize smaller competitors, and ensure fair and open competition on its platform.
  • Officials should update both state and federal labor laws to protect workers rights in the digital economy, including establishing stronger protections for temporary workers and blocking companies from classifying workers as independent contractors as a way of evading wage and hour standards
  • Local and state governments should stop providing Amazon with subsidies and tax breaks, and revise their planning and economic development policies to reflect the fiscal and community benefits of local, independent businesses.