Amazon Under Pressure

On all sides, the company's being pushed to do what it doesn't want to do

Welcome back to the Amazon Chronicles, a weekly update on the retail, logistics, and media giant. I’m still easing in after recovering from shoulder surgery, and still, to be honest, trying to figure out what this newsletter ought to be. It’s not as self-evident as it might seem.

I have a few rules. For instance, I don’t, to the best of my ability, help Amazon sell anything, so there’s no news about sales, no affiliate links, and relatively little product news.

If I were smart, I’d probably have a rule about whether or not I likewise help advertise other products, including other media products. But it turns out that I don’t, so I have to play it by feel. And here, feel tells me that it’s worth telling you about two new media projects that deal directly and look extremely promising.

A podcast and a newsletter

The first is Land of the Giants, a new podcast by Vox & Recode, the first season of which deals directly with Amazon. It’s hosted by Jason Del Rey, one of the best tech and retail reporters out there, so I feel comfortable recommending it. Here’s a quick look at where the podcast is headed:

Let’s start with Amazon’s power. Its roots can be traced back to a potent cocktail of vision, fortuitous timing, relentlessness, and a knack for exploiting loopholes — from state tax laws to a dearth of regulation that could have prevented it from acting simultaneously as retailer, retail platform, and consumer brand kingmaker…

Amazon is also the host of a giant online bazaar, a movie studio, a book publisher, a cloud computing giant, a leading developer of artificial intelligence tech, a grocery store chain ... and on and on and on.

What reporting Land of the Giants helped crystallize for me is that Amazon sees its mission as solving customer problems, no matter the industry. That’s impressive, but it’s also kind of scary. How many roles should one corporation fill in our lives? How much control do we give up if a single for-profit entity becomes a main source of our commerce, entertainment, communication, and, maybe someday, health care?

Del Rey and co. seem interested in exploring the company’s (and customers’) blind spots, the ways in which an obsessive focus on X necessarily lead to the preclusion of Y. That’s a valuable narrative in any story, but a particularly useful one for Amazon.

The second new media project worth noting this week on the Amazon beat is Tom Krazit’s new newsletter, Mostly Cloudy. Here’s Krazit on what it’s all going to be about:

For the most part, this newsletter will focus on the services sold by the Big Three public cloud providers and the impact cloud computing has had on the practice of software development. Expect to also hear about hardware, open source, enterprise software trends, security, interesting startups, emerging technologies, and maybe even the blockchain on a slow week.

With AWS and its range of attendant services playing a bigger and bigger role in the future of computing and the future of Amazon, I’m sure we could all use some big-picture perspective on where things are headed. And Tom is thankfully using the summer to offer a free preview of the site, so readers can get a chance to see whether or not they want to plunk down their dollars for the full version going forward. Marvelous.

Governments don’t like Amazon

The US Justice Department announced it’s opening “a wide-ranging antitrust review of ‘market-leading online platforms,” including Amazon. Treasury secretary Steve Mnuchin added that he believed Amazon had restricted competition and destroyed the US retail industry. So that’s not looking so good. Meanwhile, House Republicans are mad that Amazon doesn’t sell gay conversion therapy books. I would maybe buy direct? Or find another bookstore? The perils of market dominance are plentiful.

Publishers don’t like Amazon

This has longstanding animus, but the current issue is a new Audible feature, Audible Captions, which transcribes an audiobook so a reader can read along while they listen. This sounds useful, but just might be a copyright violation, and as usual, publishers are having to opt out rather than opt in.

Amazon’s other retail partners don’t like Amazon

Ditto, but here the issue are new rules governing when and how third-party retailers can be suspended from selling on the platform. It’s part of an antitrust settlement Amazon agreed to with Germany, to make these rules more explicit and allow for more give-and-take between the two parties, but the third-party sellers still feel like the power balance tips too sharply in Amazon’s favor. With Amazon dealing with broader European investigations into antitrust behavior, it has to show that it can play fair. But playing tough is more firmly ensconced in the company’s DNA.

Privacy advocates don’t like Amazon

It is probably fair to call Amazon a surveillance company. It operates on many scales; the devices that log all speech events in customers’ rooms, the newfangled convenience stores where customers forego lines in favor of having all of one’s movements watched and recorded, or, at its limits, the products it offers explicitly for surveillance, like its Ring doorbells and Rekognition face-recognition application that it uses with law enforcement and government agencies. Slate’s Future Tense recently found that Amazon was having more luck approaching surveillance from the civilian side, through programs like Ring, than through the government side, via programs like Rekognition.

Your Must-Read

Chronicles reader Chris Gillett suggested this thoughtful but provocative article from Palladium, “How Amazon Is Beating Antitrust Before It Happens.” A lot of it is not new if you’ve been reading along for a while, but I was struck by this section, on how Amazon ultimately has to seek an alliance with government power in order to stay on the successful side of the antitrust question.

If Amazon doesn’t want its wings clipped by antitrust agencies, it must decide whether to exercise its power aggressively and decisively to remain independent, or to broadly align itself with the government. If it opts for the latter, this presents the opportunity to hijack the state’s power through regulatory capture, while preserving its own….

To avoid antitrust action, Amazon must integrate with the state, and in doing so, would seek to come off the better—winning more new power than it loses in the coalition. If it coordinates with the state, it could protect its existing businesses from competition, stave off antitrust enforcement, and influence national policy. Even if Amazon doesn’t wish to use a coalition with government advantageously, it is still under pressure to coordinate to protect itself from government action.

Amazon and Bezos have taken action in recent years that can be interpreted as attempting to integrate with the state. Amazon and Blue Origin, Bezos’ rocket company, have contracts with government agencies. As one of the country’s top lobbying spenders, Amazon has sway with elected officials. The company’s second headquarters will be built across the Potomac from the National Mall. Employing a planned 50,000 people, this would make Amazon the largest non-federal employer in the DC area. This could build significant influence over the long-term by bringing the DC social scene within Amazon’s gravitational sway. A similar objective may motivate Bezos’ recent purchase of a Washington museum, which he plans to convert into a private residence and, the Washingtonian reports, “a veritable Death Star of Washington entertaining.” Most notably, Bezos purchased the Washington Post in 2013.

Sure enough, Amazon, along with Facebook, is spending more than ever before on its lobbying efforts in an effort to stay in legislators’ good graces. But there’s political pressure on both the left and the right to push Amazon places it doesn’t want to go.

Thanks for tuning in this week. We’ll see you again soon. And please, if you have tips or ideas for coverage, just hit reply; I’m always interested to know what you think is worth covering.