A Blog by Jonathan Low


Apr 30, 2020

How the Pandemic May Worsen Amazon's Political Problems

Increasing consumer and producer dependence on Amazon - and evidence of it's resulting success - are engendering greater resentment. American history suggests that there is such a thing as becoming too big and powerful: just ask US Steel, General Motors, IBM and Microsoft among others. There is a growing sense that Amazon could be next.

And it hasnt helped that CEO Jeff Bezos, despite being the richest man in the world and the one who has financially benefited the most from the virus, has been relatively cheap in offering his personal wealth to help alleviate pandemic-related suffering. JL

Cat Zakrzewski reports in the Washington Post:

The health crisis is exacerbating long-running sore spots for the company in Washington. Amazon’s recent success could raise new questions about its power. The trends that prompted investigations could be accelerated as pandemic sellers become even more dependent on Amazon’s channels.The virus is also renewing concerns among regulators about the company’s treatment of warehouse workers.
Amazon’s business is booming amid the novel coronavirus pandemic. But it’s still a political target in Washington.
One of the top tech industry critics in Congress is now calling for the Justice Department to open a new, criminal antitrust investigation of the e-commerce juggernaut. Sen. Josh Hawley (R-Mo.) said recent reports indicate the company “has engaged in predatory and exclusionary data practices to build and maintain a monopoly.” His letter, addressed to Attorney General William Barr, cites the Wall Street Journal’s reporting that Amazon employees used data from third-party sellers to develop competing products.
He said government action is even more urgent because of the virus.
“Thousands of small businesses have been forced to suspend in-store retail and instead rely on Amazon because of shutdowns related to the coronavirus pandemic,” Hawley said. “Amazon’s reported data practices are an existential threat that may prevent these businesses from ever recovering.”
The backlash from Hawley stands in stark contrast to the company’s goodwill tour. 
Amazon has been trumpeting the many new jobs it’s creating during the pandemic and its role in delivering essential items. The company’s stock climbed to a record high in recent weeks as its e-commerce business appears to not just be immune to the pandemic but benefiting from it. As the country grapples with a record-setting surge in unemployment, the company has announced plans to hire 175,000 new employees, mostly in jobs in its warehouses. Meanwhile, the pandemic dealt a blow to brick-and-mortar retailers, as companies such as Macy’s furlough thousands, as Elizabeth Dwoskin reported. 
“There are really two Americas right now,” said Scott Galloway, a marketing professor at the New York University Stern School of Business, told Elizabeth. “There is Big Tech and there is everyone else. They can do what very few companies can do, which is play offense in the middle of a pandemic.”
(Amazon chief executive Jeff Bezos owns The Washington Post.)
Amazon has pushed back on the notion the pandemic could make it even stronger as other companies falter. Amazon spokesman Dan Perlet told Elizabeth in a statement, “While we appreciate the opportunity as a retailer to serve customers and are seeing increased demand for essential products, there are no winners out of Covid-19.”
Amazon did not immediately respond to request for comment about Hawley’s letter, but the company told the Wall Street Journal it has launched an internal investigation into how its employees were using seller data.  
Yet the health crisis is exacerbating long-running sore spots for the company in Washington.  Amazon’s recent success could raise new questions about its power.
The Federal Trade Commission was already reportedly scrutinizing the company, interviewing sellers about its data practices. Amazon is also part of the House antitrust subcommittee’s investigation of the tech industry, as well DOJ's broad review of large tech companies. Amazon, however, has not disclosed formal investigative inquiries from DOJ or FTC as have Facebook and Alphabet. 
Those investigations are slowed for now, Elizabeth reports. 
But some of the trends that prompted them could be accelerated as many pandemic sellers become even more dependent on Amazon’s channels.
ProPublica reported many suppliers are favoring Amazon over other retailers out of fear the company’s algorithms will bury them in rankings if they have product shortages at a time when such vendors are more reliant on e-commerce. Amazon spokeswoman Jodi Seth says the ProPublica report is based on “temporary changes” made in light of covid-19. 
“It shouldn’t be surprising to anyone that, by definition, products need to be in stock to be on a current best sellers list, and that sellers will prioritize sending stock to retailers where they are out of stock,” she said. “These temporary changes were in no way designed to advantage any particular Amazon brand, retail vendor or seller—they were based on how to best serve customers during the outbreak while helping ensure the health and safety of our employees.”
President Trump’s long-running feud with the company has also persisted.
The administration has weighed tough terms on an emergency coronavirus loan to the U.S. Postal Service in an effort to change charges for delivering packages, Jacob Bogage and Lisa Rein report.  A potential price hike on package deliveries – USPS’s sole area of profitability in recent years – could hit Amazon and other Internet companies that Trump argues are exploiting the service. 
Trump recently suggested to reporters that USPS loses money on every package they deliver for Amazon — a claim The Post's fact checker has given four Pinocchios.
Trump has also conspicuously omitted mention of Amazon at many White House coronavirus task force briefings — even when praising actions by other tech company chiefs or hosting major retail executives. Bezos, however, is a member of the administration’s Great American Economic Revival Industry Groups retail task force.  
The virus is also renewing concerns among regulators about the company’s treatment of warehouse workers.
The New York state attorney general’s office says Amazon may have violated safety standards by taking “inadequate” steps to protect warehouse workers in the state amid the pandemic, NPR reported last night. 
The office says the company may have run afoul of the state’s whistleblower laws for dismissing a warehouse worker who helped lead a protest in a Staten Island facility, according to a letter to Amazon obtained by NPR. The worker, Christian Smalls, called to close the plant after several workers there contracted the coronavirus. Employees have fallen sick at Amazon warehouses around the world, and they have complained Amazon is not offering them proper protective gear.
“While we continue to investigate, the information so far available to us raises concerns that Amazon’s health and safety measures taken in response to the COVID-19 pandemic are so inadequate that they may violate several provisions of the Occupational Safety and Health Act,” as well as other federal and state guidelines, Letitia James’s staff wrote in the letter. 
Five Democratic lawmakers also recently pressed Bezos on the company’s decision to fire Smalls. 
Amazon has said Smalls was fired for putting other workers at risk by coming to the warehouse after coming in contact with another employee who tested positive for the coronavirus. The company has also said it’s taking measures to keep staff safe, such as enforcing social distancing and supplying masks to U.S. and European workers.


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