Amazon is wonderful.
Amazon is terrible.
In 2019, both of these contradictory statements ring true.
How can a company that obsesses over serving its customers — that treats those people so well — be the same company that has been accused of using anti-competitive tactics to crush small-business owners on its third-party marketplace, and that often prompts fear and backlash when it announces plans to open headquarters or fulfillment centers in new communities?
How can an innovative company that radically transformed how we shop, live, and work in just 25 years also be a company that is often shortsighted about the potentially harmful consequences of its artificial intelligence technology, as well as the downsides of maintaining a homogeneous leadership team?
As a journalist who’s closely covered Amazon for six years, and as a 37-year-old dad who relies heavily on the company and the convenience it offers, I’ve struggled to understand and reconcile these contradictions.
That led me to spend the past six months reporting and hosting Land of the Giants, a new narrative podcast whose first season digs deep into Amazon, its staggering accumulation of power, and the ramifications of “The Everything Store’s” power for everyone and everything else. (You can subscribe here.)
My reporting has led to big realizations. One is that Amazon CEO Jeff Bezos’s execution of his vision for his company is a remarkable feat of business-building and world-changing that seems unlikely to ever be matched — or at least not anytime soon. Another is that despite facing increasing criticism, Amazon stubbornly refuses to acknowledge many of the unintended consequences that its rise to dominance has spawned, often only capitulating after some external force has applied overwhelming pressure.
So what else did I learn?
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 Prime is key to the company’s wild success, since it’s the foundation of its retail dominance. The subscription service, which Amazon introduced in 2005, has altered consumer psychology dramatically. Today, Prime members — there are more than 100 million of them globally — spend more on Amazon than non-Prime members do, in part because the Prime membership fee and the free express shipping it offers discourage them from price-comparing with competing retailers. But Prime has also caught the attention of the Federal Trade Commission, which is questioning whether Amazon Prime’s bundling of perks allows the company to unfairly undercut competitors on price.
Amazon’s unique relationship with Wall Street is one of its huge, long-running advantages over its more traditional competitors.
In its early years as a public company, Amazon was consistently unprofitable and, even when the company started turning a profit, the amount was minuscule — something for which investors usually punish publicly traded retailers. But Bezos convinced enough Wall Street investors to give him the freedom to spend the company’s cash on long-term initiatives rather than show short-term profits. One of those long-term efforts was Amazon Web Services, the company’s cloud computing platform that is estimated to control 35 percent of its market. AWS will do more than $30 billion in revenue this year and is a big reason why Amazon registered $10 billion in profits last year.
This leads us to Amazon’s ambition. It’s clear when you look at the company today that it is not simply an online retailer.
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?
On the whole, Amazon leaders are supremely optimistic — about the company’s net impact on customers’ lives, on its reputation as an employer, and on its technology as a force for good.
Amazon would be nothing like the company it is today without that optimism. It’s a strength. It’s also a weakness because it creates blind spots.
Blind spots like an inability to foresee fair criticism for questionable decisions. The brouhaha over its HQ2 contest quickly comes to mind. So does the internal turmoil caused by Amazon’s initially dismissive response when employees were outraged over the company’s opposition to a plan to codify the inclusion of women and people of color among candidates for open board director positions.
Like ignoring the reality that its race for ever-faster and more efficient customer service can come with unintended repercussions. Namely that Prime’s ever-increasing delivery speeds contribute to an intense pace of work for warehouse employees, which leads some workers to say they’re treated like robots — until the day Amazon’s robots are perhaps advanced enough to take their jobs.
Like comparing the company’s powerful facial recognition technology, Rekognition, to a knife. “Just because tech could be misused, doesn’t mean we should ban it and condemn it,” an Amazon executive said at Recode’s recent Code Conference. But the threats this tech could pose to civil liberties are real. An American Civil Liberties Union test of Rekognition last summer found that it incorrectly matched more than two dozen members of Congress — disproportionately members who are people of color — with mug shots of suspected criminals. (Amazon said the ACLU used the wrong setting.)
Separately, Amazon Web Services leadership says it welcomes federal regulation, espousing the now-common refrain among several tech giants: We just make the tool! Let someone else regulate it.
And I can’t ignore Amazon’s knack for patting itself on the back even after being pressured by outside forces to do something good. Just look at Jeff Bezos’s most recent annual letter to Amazon shareholders, and how he took a victory lap for Amazon raising its minimum pay to $15 an hour while neglecting to acknowledge the pressure from Sen. Bernie Sanders that seemed to have forced his hand.
“We did it because it seemed like the right thing to do,” Bezos wrote. “Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage. Do it!”
So what happens next? Amazon has no intention of slowing its growth. It will continue to expand its lead in online retail and home automation through its AI-powered Alexa voice assistant, and it will push further into new areas like health care.
Our dependence on the company and its myriad services will grow. I mean, if the retail behemoth Walmart can’t really compete with Amazon, who possibly could?
As a result, scrutiny of Amazon will also grow — from regulators, from lawmakers, and from Amazon’s own warehouse workers and corporate employees alike.
But until Amazon’s devoted customers change their habits, I’m hard-pressed to imagine Bezos’s company stepping off the gas.
In Bezos’s very first letter to the company’s shareholders, published in 1998, he wrote: “We will continue to focus relentlessly on our customers.” That’s what Amazon has always done. Everything else is a distraction.
Customers continue to reward Bezos for that. Last year, they bought more than $270 billion of stuff from Amazon.
And as long as that trend remains, Amazon will continue to push as far as consumers let it. Unless it is forced to stop.
Recode and Vox have joined forces to uncover and explain how our digital world is changing — and changing us. Subscribe to Recode podcasts to hear Kara Swisher and Peter Kafka lead the tough conversations the technology industry needs today.