Many people know that Jeff Bezos is the richest person in the world and the founder of Amazon. They have seen pictures of him and perhaps heard about his high-profile 2019 divorce. But many are not aware of the darker side of Bezos’ Amazon empire, including business ventures that raise questions about privacy, surveillance and product safety.
A Frontline documentary, “Amazon Empire: The Rise and Reign of Jeff Bezos,” released in February 2020, exposes the backstory of the Amazon CEO’s rise to power and the global implications of his rampant ambition and aggressive ventures.
It took Frontline a year to create “Amazon: The Rise and Reign of Jeff Bezos” and it includes many interviews with his top lieutenants, almost all of whom are men. What emerges from people who know Bezos and worked with him is not so much a picture of a power-driven despot as someone with uncanny visions of how people can be engineered and data can be exploited.
Customer Is King and so Is Data
As a Princeton graduate working on Wall Street, Bezos is largely credited with introducing the idea of basing financial analyses on data, an approach that had not been done before. He founded Amazon in 1995 as a seller of books, but even then collection of data was crucial to the business plan.
Right from the start, Bezos “treated the site as a laboratory where he studied customer behavior,” says the film. According to Randy Miller, former director of pricing and product management at Amazon:1
“We could track how a customer navigated through the site. So we could see what you looked at; we could also see what you paused at; we could see what you put in your basket but didn’t order; we could see what you put in your basket and did order.
So that’s when we started realizing, man, this [data collection] is rich, this is rich rich rich. And so we’ve used it for everything.”
Even when it only sold books, Amazon’s ruthless business philosophy of using size to annihilate competitors was seen. Amazon could forego profits to gain market share and monopolize the marketplace, unlike smaller companies that couldn’t afford to lose money. Undercutting competitors enabled Amazon to deal a deathblow to brick and mortar retailers who also had to pay taxes, unlike online Amazon.
Dennis Johnson, CEO of Melville House Books, says he was shocked when Amazon required 4% of profits to sell his books, which he considered a kickback. Miller admits that Amazon played dirty with booksellers.2
“In order to bring them into line, we would actually take them out of automated merchandising, take their prices up to list price. We would put references on the product page, their product page saying, ‘You want this cheaper? You want this book on this topic for a way cheaper price? Click here.’
And we’d send them to whoever we thought their worst competitor was. That was how Amazon forced their vendors to comply. But that’s an old Walmart trick. It wasn’t like Amazon created that.”
New Initiative Solidified Amazon’s Power
Two new initiatives turned Amazon into the force it is today, reshaping the retail marketplace forever. First was its decision to enlarge its offerings beyond books to include almost all merchandise. Sellers and manufacturers could avail themselves of Amazon’s 12 million customers as Amazon became America’s biggest “mall,” reaching more customers than they could hope to on their own.
According to Yahoo Finance, 58% of Amazon sales3 are now from third parties. The second initiative was Bezos’ decision to launch Amazon Prime in 2005, which was “the most successful membership program in history,” according to Scott Galloway, a professor at NYU Stern School of Business.
Amazon Prime, a program in which customers pay a minimal yearly fee and receive free two-day shipping, later upgraded to one-day shipping, again stemming from Amazon’s willingness to undercut competitors even when it meant foregoing immediate profits.
Though Amazon had few warehouses at the time, the bold move, according to James Thomson, formerly a senior manager and business head of Amazon Services4 at Amazon:
“… ‘is one of the most important drivers of Amazon’s growth. When you go on [Amazon] and look to buy a product and it’s available in two days, delivered to your door anywhere in the country, that Amazon Prime program becomes a mechanism that keeps bringing you back as a customer to keep buying and keep searching for new products on Amazon.”
Amazon also launched its own delivery service in 2013, creating a system that “would rival Fed Ex or UPS,” says the documentary. The company made delivery vans small enough to be exempt from federal regulation and also dodged liability. When the vans were involved in accidents, which happened with regularity, Amazon claimed the vans “contractors” and it had no legal responsibility.
The Sale of Defective and Fraudulent Products Grows
With Amazon Prime, the company locked in customer loyalty and undercut competitors. But it also put customers at risk of defective and fraudulent products, according to the documentary. If you buy something harmful or defective at Walmart or Target, you can sue them, but Amazon says it is not legally responsible if customers are hurt by products sold by third parties on the site.
According to Rachel Johnson Greer, a former product safety manager at Amazon, when you create your Amazon account, you accept this indemnification of the company when you assent to the terms and conditions, though it is likely many do not realize this.
There have been reports of Amazon selling hair driers and hoverboards that caught fire, school supplies made with toxic metals, and other unsafe or mislabeled products. These dangers are especially concerning since 77% of all vitamins and supplements sold online are sold by Amazon. Only 2.3% of online vitamin and supplement sales come from brick and mortar retailers.
One example of the many fraudulent and misbranded products that have infiltrated Amazon was a counterfeit probiotics supplement sold last year by Procter & Gamble called Align.5 According to Wired, Procter & Gamble spokesperson Mollie Wheeler said in an email:
“We are aware that some counterfeit Align product was sold on Amazon via third parties … Amazon has confirmed they have stopped third party sales of the Align products in question and Amazon is only selling Align product received directly from P&G manufacturing facilities.'”
Amazon also acknowledged problems with counterfeiters.6
“We investigate every claim of potential counterfeit thoroughly, and often in partnership with brands, and in the rare instance where a bad actor gets through, we take swift action, including removing the item for sale, permanently banning bad actors, pursuing legal action, and working with law enforcement when appropriate.
We have taken these actions against the bad actors in question and proactively notified and refunded customers.”
Anyone who buys from Amazon should be aware that companies selling knock-off products are not regulated under the Dietary Supplement Health and Education Act of 1994 (DSHEA) as legitimate supplement products are. (As a matter of disclosure, my store, in which I sell supplements along with a number of other products, is an online entity.)
Other Problematical Amazon Enterprises
Over the years, Amazon has moved into enterprises that seriously threaten privacy. By now, many people have heard of Amazon’s Alexa and Echo products, which so many homes unthinkingly install. While they may think of Alexa as an assistant or helpmate, they often do not realize it is a two-way street in which the device listens to and surveils its environments. According to Meredith Whittaker, codirector of the AI Now Institute:
“Alexa is one more way for Amazon to gather extremely valuable data. And this data collection is extremely important to this business model. It’s extremely hard to do, and convincing people to just deploy something like this in their home is a brilliant trick.”
Frontline reporter James Jacoby asked Dave Limp, senior vice president of devices and services at Amazon, how the trick was accomplished. “How is it that you convinced tens of millions of people to put what is essentially a listening device in their homes?” he asks. Limp replies:
“Well, I would first disagree with the premise. It doesn’t — it’s not a listening device. The device in its core is — it has a detector on it — we call it internally a “wake-word engine” — and that detector is listening — not really listening, it’s detecting one thing and one thing only, which is the word you’ve said that you want to get the attention of that Echo.”
Limp however, does admit that the devices could deceive.
“If I could go back in time and I could be more clear … how we were using human beings to annotate a small percentage of the data, I would, for sure. What I would say, though, is that once we realize that customers didn’t clearly understand this, within a couple of days we added an opt-out feature so that customers could turn off annotation if they so chose.
And then within a month or two later we allowed people to auto-delete data, which they also asked for within that time frame. We’re not going to always be perfect, but when we make mistakes, I think the key is that we correct them very quickly on behalf of customers.”
Other Ventures Create Privacy Threats
Another hugely successful Amazon initiative was the cloud computing service, Amazon Web Services, that Bezos built in 2013. The service got a huge boost, says the film, when it was contracted to design a computing cloud for the CIA for $600 million. According to James Bandler, a reporter at ProPublica:
“The CIA contract was probably one of the best things that happened to Amazon’s cloud business. It lifted all doubts about the security of the cloud and about whether you could trust Amazon with your most precious data.”
The contract bestowed instant credibility on Amazon, agrees Brad Stone, author of “The Everything Store” about Amazon. In the film he says:
“The message to the world is, if the CIA trusts Amazon with its data, then maybe other companies and government institutions can as well.”
Another controversial Amazon venture is Ring, a doorbell camera app dubbed “the new neighborhood watch” by Amazon. Ring has been exploited by hackers that spied on people in their homes. Amazon also used police officers to promote the product. Says Whittaker:
“You have Amazon in partnership with police departments, who have basically turned policemen into Avon salespeople for Amazon Ring. They have given police departments talking points and marketing materials to encourage the installation of Ring by community residents. None of this was public knowledge.”
A related app, Amazon Rekognition Video, that allows people to track, detect, recognize, extract and moderate faces from video,7 has also been widely embraced by police departments. Jacoby asks Andy Jassy, the CEO of Amazon Web Services, how the public would know if the app is being used on them since there is no public audit. Jassy says:
“I don’t think we know the total number of police departments that are using facial recognition technology. I mean there’s — you can use any number — we have 165 services in our technology infrastructure platform, and you can use them in whatever conjunction, any combination that you want.
We know of some [police departments], and the vast majority … are using it according to the guidance that we’ve prescribed, and when they’re not, we have conversations. And if we find that they’re using it in some irresponsible way we won’t allow them to use the service and the platform.”
How Amazon would disallow use of the app is unclear since there are “few laws governing the use of this technology,” the film notes.
Recent Amazon Ventures
In 2013, Bezos enlarged his empire by buying the struggling Washington Post.8 In 2019, the paper put its sights on me, running an inflammatory hit piece with untruths about my product claims and vaccine stances.
It also looks as though Amazon’s glide path may be faltering. In 2019, the Pentagon chose Microsoft over Amazon for a $10 billion contract9 and Amazon canceled its plans for a New York City corporate campus when lawmakers fiercely objected.10 In 2020, Amazon was slapped with a class action antitrust suit alleging that it has monopolized the online retail marketplace.11
Amazon is also trying to capitalize on the COVID-19 pandemic, reports The Verge.12 It has proposed legislation to indemnify seller hosts, like Amazon, from price gouging conducted by a host’s third-party sellers.
In addition to misbranded products and surveillance of customers, Amazon also has workers who suffer under its reign. By June it will remove a “combat pay” increase it had added to its overstressed warehouse workers’ salaries and compress its delivery times to compete with Shopify, Target and Costco.13
In addition, more than 130 Amazon workers, already likely stressed with pandemic work increases, are believed to have been infected with COVID-19, reports The Verge.14 The documentary includes many testimonials from abused Amazon warehouse workers. Buyers beware.