The price of Amazon’s success is worker exploitation, the destruction of local enterprise and the creation of a corporate oligarch.
By Jim Hightower
September 25, 2014
Even by the anything-goes ethical code of the corporate jungle, Amazon.com’s alpha male, Jeff Bezos, is considered a ruthless predator by businesses that deal with him. As overlord of Amazon, by far the largest online marketer in the world (with more sales than the next nine US online retailers combined), Bezos has the monopoly power to stalk, weaken, and even kill off retail competitors—going after such giants as Barnes & Noble and Walmart and draining the lifeblood from hundreds of smaller Main Street shops. He also goes for the throats of both large and small businesses that supply the millions of products his online behemoth sells. They’re lured into Amazon by its unparalleled database of some 200 million customers, but once in, they face unrelenting pressure to lower what they charge Amazon for their products, compelled by the company to give it much better deals than other retailers can extract.
Lest you think predator is too harsh a term, consider the metaphor Bezos himself chose when explaining how to get small book publishers to cough up deep discounts as the price for getting their titles listed on the Amazon website. As related by Businessweek reporter Brad Stone, Bezos instructed his negotiators to stalk them “the way a cheetah would pursue a sickly gazelle.” Bezos’ PR machine tried to claim this sneering comment was just a little “Jeff joke,” but they couldn’t laugh it off, for a unit dubbed the “Gazelle Project” had actually been set up inside Amazon.
This top-level team focused on doing exactly what Bezos instructed: Pursue vulnerable small publishers and squeeze their wholesale prices to Amazon down to the point of no profit, thus allowing the online retailer to underprice every other book peddler. When Stone exposed Gazelle last year in his book, The Everything Store, the project was suddenly rebranded with a bloodless name—“Small Publisher Negotiation Program”—but its mission remains the same.
Today, Amazon sells a stunning 40 percent of all new books, up from 12 percent five years ago. It is even more dominant in the digital book market, which is fast catching up to the sales level of physical books and is widely perceived as the future of publishing. Electronic book sales were non-existent just seven years ago; today about a third of all books sold are e-books, and Amazon sells two-thirds of those. Of course, Amazon also owns Kindle, the largest-selling device for reading digital books.
With his market clout, deep-pocket financing, and ferocious price-cutting, Bezos has forced hundreds of America’s independ ent bookstores to close and has humbled the superstore book chains that once preyed on the independents and dominated the market. Borders, the second-largest chain, succumbed to bankruptcy in 2011. Now Barnes & Noble, the largest brick-and-mortar bookstore, is stumbling. It has lost millions of dollars, closed dozens of stores, shrunk most others, and suffered the embarrassment of its own board chairman frantically dumping big chunks of Barnes & Noble stock.