Thinking clearly about Amazon, Bezos and the era of tech overlords

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With the purchase of Whole Foods, Jeff Bezos is replacing the government as a dystopian overlord. This sentiment seems to be widely shared by many writers and analysts as Bezos and his fellow travelers among the Silicon Valley tech constellation have pushed pundits and op-ed writers to move from analysis to pure, unadulterated hysteria.

The following looks at two articles published on reputable news sites to illustrate the ongoing and growing hysteria over prolific tech entrepreneurs and the companies they steer.

Exhibit #1

In an op-ed, ominously titled It’s not just Amazon coming for Whole Foods – Silicon Valley is eating the world, Arwa Mahdawi warns her readers about Silicon Valley’s – and Amazon’s – growth.

“The technology company accounts for 43% of online sales in the US, yet in today’s winner-takes-all economy it likely won’t be happy until it accounts for 100% of all sales, everywhere.”

I would be curious to know what Mahwadi means by winner-take-all-economy. Does she mean that Bezos, who has built the company consistently and by following a meticulously drafted strategy since the 90s, should be punished for making the mistake of thinking that success is a good thing?

Does Mahdawi think companies should not exceed a certain market share? If so, what is that magic number? Why is a big market share a problem? These rudimentary questions are crucial, but remain unanswered in her tirade.

I would actually recommend that Mahdawi gets Peter Thiel’s marvelous Zero to One from Amazon  – because it is the only company that can deliver the book to her doorstep within a few hours – to understand that companies do not exist to compete, they exist to dominate. This is what a supply and demand economy looks like: if your offering is better than that of your competitors, you win.

Mahdawi borrows the thesis of her article from Benjamin Barber’s Jihad vs McWorld by claiming that companies are slowly taking over our lives. Of course, Amazon being the main culprit of the hostile take-over.

“By many measures, corporations are more central players in global affairs than nations. We call them multinational but they are more accurately understood as postnational, transnational or even anti-national. For they abjure the very idea of nations or any other parochialism that limits them in time or space.” That was the state of affairs in 1995; since then, corporations have only grown in power.”

Mahdawi warns the readers of an impending Amazon-orchestrated coup over our lives. She also seems to be an unwitting advocate of nationalism, although finds room to criticize Brexit as an example of the ugly rise of nationalism.

“We live in a world where we are consumers first and citizens second. We may have seen a resurgence of nationalism with Brexit and Trump but it is looking likely that the nation state’s day will soon be done and we will move towards organizing ourselves in communities centered around corporations.”

Unless you live in a forest or in an uninhabited corner of the world, you are, by default, a consumer, whether it means buying an apple from your local coop or charging your electric bike. The notion that we identify first as a consumer and then as a citizen of a country whose passport we carry is a choice we need not make. In a free society we can be many things, but as a citizen you are more constrained than as a consumer.

Mahdawi fails to recognize that we can’t yet choose our nationalities or our responsibilities as citizens. We can’t opt out from paying taxes nor can we all decide to become citizens of Switzerland. As consumers, we are not coerced into buying from Amazon. We are free to spend our money as we like. If anything, Amazon is providing millions of consumers an option not to be constrained by local prices and monopolies, and this is giving consumers freedoms that their local governments are unable or unwilling to provide.

Mahdawi’s non-thinking is what happens when beautiful sounding sentences or talking points are mistaken for deep thinking or insights.  This is also what happens when the people you surround yourself with are people who think and act like you: You lose the ability to think clearly.

Mahdawi continues by sticking to her guns.

“Technology giants, whose business is built on data, know far more about us than our governments do and are gradually making themselves an indispensable part of our lives.”

Governments are also built on data collection, but the ever-growing salience of the difference between governments and companies is that the latter entities do not coerce us into giving away our data. Biometric passports and surveillance methods enforced by our governments, not by Amazon. You don’t get to opt out from the omnipresence of CCTV cameras at airports, banks or public institutions.

“They are even taking on the role of the welfare state in certain respects: it was recently reported that Google’s parent company, Alphabet, is spending is around $30m to provide short-term, prefab housing for 300 of its employees because Silicon Valley housing is in such short supply. Tech giants helped cause a housing crisis in Silicon Valley, now it seems they are becoming landlords. It’s feudalism 2.0.”

According to Mahdawi, tech companies should not be in the business of working for affordable housing because they helped cause a housing crisis? By that same logic, the government should not be in the business of subsidies, grants or the welfare state because, well, the government is not doing a stellar job. At least, most Silicon Valley companies do not fund their ventures with other people’s money, unlike, of course, the government.

When given the prestige of a respected publication, all writers look good. But being published on The Guardian does mean you should disrespect the reader by spewing intelligent-sounding talking points with complete disregard to facts. Nor are you exempt from defining the terms you use.

Exhibit #2

Writing in the Daily Beast, Joel Kotkin – often brilliant – misses the mark with his piece Amazon Eats Up Whole Foods as the New Masters of the Universe Plunder America. Kotkin starts with a Louis Brandeis quote “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

He then quickly builds a case against tech giants

“With his $13.7 billion acquisition of Whole Foods, Amazon’s Jeff Bezos has made clear his determination to dominate every facet of mass retailing, likely at the cost of massive layoffs in the $800 billion supermarket sector. But this, if anything, understates the ambitions of America’s new ruling class, almost entirely based in San Francisco and Seattle, as it moves to take over industries from entertainment and transportation to energy and space exploration that once thrived and competed outside the reach of the oligarchy.”

Amazon, which has transformed shipping by making the transfer of goods cheaper and faster, and is following Netflix by making movies and distributing video content, is not innovating in the entertainment and transportation verticals according to Kotkin.

Kotkin continues by discussing Bezos’ remarkable wealth in the context of Brandeis’ quote and the oligarchs of the past.

“Brandeis posed his choice at a time when industrial moguls and allied Wall Street financiers dominated the American economy. Like the oligarchs of the past, today’s new Masters of the Universe are reshaping our society in ways that could, if unchallenged, undermine the foundations of our middle-class republic.”

Bezos and other tech entrepreneurs, according to Kotkin, are the new “Masters of the Universe”, but instead of giving the reader a scenarios of what this undermining would look like, Kotkin jumps head first in the pool of anachronisms.

“The tech booms of the 1980s and 1990s rode on a wave of entrepreneurialism that provided enormous opportunities for millions of Americans, the current wave is characterized by stagnant productivity, consolidation, and disparities in wealth not seen since the mogul era. As one recent paper demonstrates, the “super platforms” of the so-called Big Five depress competition, squeeze suppliers, and drive down earnings, much as the monopolists of the late 19th century did.”

This accusation is made by someone who seems to be uninformed about the offering and dynamics of companies such as Facebook and Amazon. Both are providing millions of individual consumers, entrepreneurs and others the ability to buy and sell goods as well as set up their own shops or advertise products. Both platforms are massive and make money when their users make money.

I would also like Kotkin to explain how the monopolists of the 19th century or big industries benefited “the little guy” in the same way as Amazon and Facebook do? The truth is that while it would be a mountain for any daring entrepreneur to climb in order to really challenge Amazon – whether shipping, cloud services or transportation – the company still provides a livelihood for millions through its online stores.

While the web is saturated with exaggerated articles that tell the reader how to make $10k per day with Amazon, the truth is that many people do make a good living by using Amazon. Can the same be said about the pre-Internet 19th century monopolists and their contemporaries living and working in deplorable conditions.

Let’s assume for a moment that Kotkin is right about Amazon and Facebook impoverishing and draining the societies in which they operate. What is the solution? Government intervention? Regulating the tech behemoths until they bleed and are forced to relocate?

Kotkin’s complaint extends to Facebook’s dominance as a distributor of information.

“The Masters’ ascendancy has been enhanced by their growing control of the means of communications. Facebook is already the largest source of news for Americans, particularly the young. They, along with Google, seem capable of shaping information flows to suit their particular world view, one increasingly hostile to any dissenting opinions from the right.”

Again, what is the solution? Regulate newspapers and the flow of information?

Let’s be clear

Both Kotkin and Mahdawi seem to beg for a third party intervention. The request would be easier to digest if they provided a few reasons as to why a) the dominance of specific companies is bad and b) why this dominance threatens our democracy.

It seems that both articles function as odes to a bygone romantic, pre-Internet era. But what would this world look like? Neither Kotkin or Mahdawi feel the need to offer an answer. In addition to the questions above, I would like both writers to explain if the world would be better off without Amazon and insatiable entrepreneurs such as Jeff Bezos – and what that world would look like.

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