Break Up Amazon

Last Friday, Amazon announced its plans to acquire Whole Foods for $13.4 billion. This was the latest in a series of acquisitions by the company, which now owns Twitch, a video game streaming service; Zappos, an online apparel retailer; and Diapers.com, an online retailer for childcare essentials. This latest acquisition represents another milestone in Amazon’s push into physical retail. In 2015 the company opened a bookstore in Seattle, and has been experimenting since late 2016 with a grocery store that requires no checkout. With the acquisition of Whole Foods, Amazon gains more than 400 storefronts in the United States, representing a profound investment in physical real estate.

On the surface, this appears to be a positive development. Amazon’s dominant position in online retail stems from their ability to provide prices and speed of delivery few, if any, competitors can match. One would hope that a push into physical retail would bring similar benefits. However, this ignores the ways in which Amazon’s relentless pursuit of efficiency has come at the cost of both salaried and hourly workers. Employees at Amazon’s warehouses have complained of long, unpaid waits in security lines after shifts, unrealistic performance standards, and dangerously hot working conditions. While working conditions at Amazon’s corporate offices are less physically demanding, a brutally competitive office culture takes a similar psychological toll.

Additionally, Amazon has a rocky history with its suppliers. In 2014, Amazon began a dispute over ebook pricing that led to the company delaying deliveries of books published by Hachette. In other words, Amazon chose to engage in what many consider to be anticompetitive practices instead of negotiating in good faith. This tactic was enabled by Amazon’s dominance in both physical and ebook sales, and speaks to the power they have accrued with that dominance.

The power Amazon wields over labor and other companies is not new. It was previously embodied in the Standard Oil and US Steel monopolies of the gilded age. These monopolies aren’t remembered fondly; instead, they are considered the enemies of progressive reformers and presidents alike. They were eventually broken up because a public consensus emerged that the supposed efficiency benefits these monopolies provided were not worth the costs—namely, the anticompetitive and anti-labor practices these companies engaged in.

Why, then, do we consider Amazon to be much different? Part of it is certainly that the company’s public image is one of benevolent concern for consumers. They proudly declare themselves to be almost single-mindedly focused on the customer, and have a reputation for service that seems to back that up. However, it is important to remember that Amazon is not a charity. It is a company that exists to make money. While the benefits that it provides to consumers are real, they do not outweigh the company’s history of anticompetitive practices and labor abuses.

Further, these benefits do not provide a compelling argument for maintaining Amazon as a single company. There is little reason to believe that a separate Kindle company would provide worse service to consumers than Amazon’s existing Kindle division, just as there is little reason to believe that Zappos was less efficient as a separate company than it is as part of Amazon. Breaking up Amazon would help to eliminate the potential for anticompetitive activity while providing similar benefits to consumers. In other words, it would be a win for the public and a loss only to Amazon. A fair trade, in my book.

This post was edited to reflect the fact that Amazon’s warehouse security checks only occur after shifts, not before.