New Report: Amazon.com's Increasing Dominance Endangers Competition and Democracy

Posted Dec. 14, 2016

MP3 Interview with Stacy Mitchell, co-director of the Institute for Local Self-Reliance, conducted by Melinda Tuhus

amazon

Most Americans know Amazon.com as a super-convenient online marketplace where you can buy almost anything and get it delivered to your door super-fast. But the Institute for Local Self-Reliance has just published a report focusing on the negative impact the company has had in several areas of American life. The group's concerns are expressed in this quote from the report’s introduction: They state, “Amazon’s increasing dominance comes with high costs. It’s eroding opportunity and fueling inequality, and it’s concentrating power in ways that endanger competition, community life, and democracy.”

The report, titled, “Amazon’s Stranglehold: How the Company’s Tightening Grip is Stifling Competition, Eroding Jobs, and Threatening Communities,” is divided into four sections: Monopolizing the Economy; Undermining Jobs and Wages; Weakening Communities; and Government Support for Amazon. The Institute then suggests steps that policymakers can take “to check the company’s power and bring about a more competitive and equitable economy.”

Between The Lines’ Melinda Tuhus spoke with Stacy Mitchell, co-director of the Institute for Local Self-Reliance and co-author of their Amazon report. Here, she provides an overview of her group’s concern about Amazon’s economic impact and how establishing new public policies could protect both workers and communities.

STACY MITCHELL: We’ve been really struck by the fact that this company has become very dominant across the retail sector. More and more of our transactions are happening on Amazon, which is a company that’s enormously powerful and yet remains very invisible to most people. We see the package arrive on the doorstep and that’s really all we know about this company, so this report was a way to pull back the curtain and take a look at how much Amazon has grown and then what the implications are of its growing dominance over our economy and our communities and to ask some questions about whether we shouldn’t be concerned about that dominance. Just to give you a sense of how big Amazon is now, they’re now capturing one of every two dollars that Americans spend on-line, which is enormous. You know on line retail is growing very rapidly; Amazon’s share of that is growing even faster. We predict that within five years, a fifth of everything Americans buy will be bought on-line and that Amazon will capture two-thirds of those dollars. The company has more than doubled in size its distribution infrastructure in the last year. They’re now the largest seller of books and toys and by next year they’ll be the biggest seller of apparel and consumer electronics, both on-line and off. And they’re making big investments in areas like groceries and across a whole bunch of different industries. And as we document in this report, there are some significant hidden consequences and costs to that dominance.

BETWEEN THE LINES: I read an article years ago about the horrible working conditions at Amazon warehouses, so I don’t think of the company kindly. But almost everyone I know loves Amazon.

STACY MITCHELL: Some of the reason that it’s easy for all of us as consumer to overlook some of these hidden costs is that Amazon has a very friendly face to consumers. The interface is easy; it’s incredibly convenient; it’ll show up on your doorstep in a day or two. But what we remind people of in this report is that we’re not simply consumers out there; we’re also people who need to earn a decent living, who want to have meaningful jobs. We’re citizens; we’re stewards of communities and we want to have healthy places that we live, that have a vibrant street life and a lot going on. And when you look through all of those lenses, the impacts that Amazon is having are not so great. So if you take just the first one, the fact that we need to earn a decent living, you know Amazon has caused this dramatic die-off of independent retailers as well as squeezing national chains and leaving more and more vacancies across our communities and fewer and fewer opportunities to start and grow a business, as well as fewer jobs. One of the findings of this report is that Amazon has actually eliminated more jobs in retail stores than it’s created in its warehouses. Then we looked at the quality of the jobs in its warehouses and found that they’re very low paid and incredibly grueling work, a lot of it done not by full-time direct employees of Amazon but by temporary workers. So when you start to look at how this company is impacting our economy from a jobs and quality of work standpoint, it’s very concerning.

BETWEEN THE LINES: And to think back in the day that Amazon started out as just an online bookseller.

STACY MITCHELL: You know, Amazon has this enormous power to pick winners and losers in the publishing industry, and that is problematic both for authors and publishers, but also for us as readers we should not want a single company to have that kind of power. And as big as Amazon is in the book industry, what’s shocking is that books account for only about 7% of Amazon sales. As a company Amazon has become so big in these other categories. Amazon wants to be the gatekeeper for everything. They want all of our transactions to flow through a single pipeline called Amazon, and we question whether one company should have that kind of power.

BETWEEN THE LINES: Your report notes that Amazon has consolidated its hold over retail in America, but also how much clout Amazon wields in Washington, and part of that is the fact that Amazon founder Jeff Bezos now owns the Washington Post.

STACY MITCHELL: The last section of this report we document the ways in which Amazon has strategically manipulated government in order to propel its growth. Amazon has a huge overseas tax haven where they’ve saved billions of dollars in federal taxes and they’ve been able to lower their effective federal tax rate to about a third of what other retailers pay [through this kind of quasi-illegal tax transfer scheme that they have going]. We also document the fact that local and state governments have given Amazon over the past ten years over 700 million in direct subsidies to fund construction of its warehouses. Amazon, in order to maintain those favors which have played a big role in its growth, and of course its competitors – small businesses in particular – don’t have access to any of those things so it really distorts the playing field for them. In order to maintain those favors, Amazon has built up a tremendous lobbying capacity in Washington, D.C. They spend more money lobbying than other big companies – more than Walmart, more than Apple. And of course it’s quite striking that Jeff Bezos, the founder of Amazon, now owns the Washington Post, which is the paper of record for the nation’s elected officials. I find that very concerning and alarming.

For more information, visit The Institute for Local Self-Reliance website at ilsr.org.

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