The Amazon Problem

SUBHEAD: There is only one force that can stop Amazon from running all American retail commerce.

By Matt Stoller on 17 June 2017 for Huffington Post -
(http://www.huffingtonpost.com/entry/americas-amazon-problem_us_59443b5be4b06bb7d2731cba)


Image above: Exterior of AmazonGO store at the BETA participant entrance. From original article.

To understand the depth and breadth of Jeff Bezos’ ambitions for the company he built, type www.relentless.com into your browser. The domain Bezos registered in 1994 will redirect to Amazon, the company aptly, and ambitiously, nicknamed The Everything Store.n>

He tells his shareholders that the company will act like an aggressive startup — that at Amazon, it is always Day One.

Like Google and Facebook, Amazon uses technology and data to sidestep traditional restrictions on monopoly power.

Our lives are increasingly organized by the platforms these companies run, platforms which now mediate the way we communicate and engage in commerce with each other.

We are living in a world organized by tech monopolists, a change in power relationships that no one voted for but has been imposed upon us nonetheless.

Now, Bezos is attempting to add more power to his empire with the surprise announcement that the company will pay $13.7 billion for Whole Foods Market. Amazon will now have a store footprint in neighborhoods across America.

Our communities and the way we engage in commerce will change. Imagine walking into a Whole Foods store and seeing different prices depending on whether you are a member of Amazon Prime — or seeing different prices depending on any other way that you interact with Amazon.

This isn’t implausible. It is what the company does when it opens up stores. For instance, Amazon is creating a chain of physical book stores to take the place of the book stores the company destroyed.

In these stores, there are no price tags at all: You scan the items with your phone and have a price delivered to you, personalized by Amazon.

Why wouldn’t Amazon extend this to Whole Foods? “Our goal with Amazon Prime, make no mistake,” says Amazon CEO Jeff Bezos, “is to make sure that if you are not a Prime member, you are being irresponsible.”


Image above: People shop in the newly opened Amazon Books on May 25 in New York City. Amazon Books, like the Amazon Go store, does not accept cash and instead lets Prime members use the Amazon app on their smartphone to pay for purchases. Non-members can use a credit or debit card. From original article.

This statement and the amount of power in Bezos’ hands should frighten all Americans. Bezos meant that Amazon will soon be so good for consumers that it would just be folly not to be a member.

But what he unwittingly implied is that as a citizen, you will have no choice but to interact with his institution to buy and sell key goods that everyone needs — on his terms.

Jeff Bezos, in other words, has a vision. To be everywhere, to be the platform for everything for every consumer. So when Bezos calls you irresponsible for not tithing to Amazon, America has a big political problem.

Amazon’s takeover of Whole Foods means that it can target and eliminate regional competitors one by one as it did with its online competitors. When Diapers.com emerged as a competitor to Amazon, Amazon simply sold diapers below cost until the company capitulated and sold itself to Bezos.

Why wouldn’t it? Even though predatory pricing is illegal, the government hasn’t enforced those laws for decades.

Whole Foods tends to source from local farms as part of a commitment to localism; these farms will now be negotiating with a much bigger entity that is committed to a ruthless model of efficiency.

There are so many ways that Amazon can use its power that it’s simply impossible to figure out what it will do. Amazon probably doesn’t even know yet; it will discover and test them, relentlessly.

Maybe you will get first in line, or last in line, for the most popular toy during the Christmas period, or maybe the restaurant you own will get access to the freshest yet limited batch strawberries you need based on whether you are giving better deals to Prime members.

Or here’s a more creative possibility. Amazon is excluding Amazon Prime video from Apple TV so that Prime members will buy its streaming device instead of Apple’s.

As the smartphone market commodifies and transforms, Bezos could simply use his combined physical and online footprint to keep you from even seeing prices at his stores unless you are using Amazon-approved electronic devices.

If Amazon were just one of many stores that would be one thing. But Amazon is quickly becoming the dominant way to buy and sell.

And this, make no mistake, is what is happening. Upon the announcement of the acquisition, Target’s stock price dropped by 10 percent and Walmart’s by 5 percent. Amazon’s rose by more than the price it is paying for Whole Foods.

Wall Street sees the writing on the wall. There is only one force that can stop Amazon from organizing and regulating basically all American retail commerce — our democratic institutions and our political system. We the people.

Bezos knows Amazon is a political enterprise at this point. The day before he announced his company’s attempt to buy this supermarket chain, he released a request on Twitter to have people offer ideas for where he can direct charity money. That is the kind of public relations undertaken by political leaders.

And Amazon put out an ad for a Ph.D. economist-cum-lobbyist “to educate regulators and policy makers about the fundamentally procompetitive focus of Amazon’s businesses.”

And he has put political fixers, like Ivanka Trump’s lawyer and ex-Clinton administration officer Jamie Gorelick, on his board of directors. He also bought The Washington Post.

The public should speak out in opposition to this merger. More than that, the government should take this opportunity to reject the entire pro-finance pro-concentration philosophy that has taken hold in this country since the Reagan era. 

It is no accident that Whole Foods founder John Mackey was forced to surrender his life’s work because financiers looking for a quick buck bought up a large bloc of shares in his company and pressured him to sell the company to Amazon.

The day before the announcement of the sale, he called these hedge funds “Ringwraiths,” after the evil characters in “Lord of the Rings.” Bezos might be the most powerful empire-builder in the land, but he had help.

This merger should frighten all of us. But it should also embolden anyone who believes that America should not be in thrall to monopolists like Bezos. For them, today, as Jeff Bezos might put it, is Day One.

See also:
Ea O Ka Aina: World Logistic Center Warehouse 6/6/17
Ea O Ka Aina: The coming tech backlash 1/5/17
Ea O Ka Aina: AT&T and Amazon Cloud outages 3/11/17
Ea O Ka Aina: Robots taking over Amazon 1/4/17
Ea O Ka Aina: Discovery  1/5/16
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