Amazon used to empower small American entrepreneurs, then they sold them out
Amazon Unbound: Jeff Bezos and the Invention of a Global Empire, by Brad Stone, Simon and Schuster: 2021, 496 pages
The $218,385 that a judge in March ordered Michael Sanchez to pay Jeff Bezos must have been one of the sweetest checks the Amazon founder ever cashed. Sanchez had sued Bezos for defamation for spreading “the false narrative” that Sanchez had given his sister Lauren Sanchez’s sexts with Bezos from their extramarital affair to the National Enquirer in exchange for $200,000—which is exactly what happened. A judge threw out the defamation suit and awarded Bezos six figures in legal fees.
Author Brad Stone describes Michael Sanchez in Amazon Unbound: Jeff Bezos and the Invention of a Global Empire as “a handsome, gay Trump supporter and skilled amateur tennis player with a predilection for double-bridged Gucci eyeglasses.” Given that description, which does not exactly inspire trust, one wonders why Lauren was sharing her sexts with him in the first place. Even more amazingly, when the Enquirer approached the couple for comment as it prepared to run its exposé, a frantic Lauren hired her brother on a $25,000-a-month contract to advise her and to use his tabloid contacts to work the Enquirer. That was the last time she trusted him. The two siblings have since ceased all contact.
But the real story of Amazon Unbound is not Michael Sanchez’s abuse of trust. It is Jeff Bezos’s.
Stone is the author of The Everything Store, published in 2013, a mostly admiring chronicle of the rise of Amazon from its founding in 1994 through 2012. This sequel takes the story up to the present day, including the coronavirus pandemic and President Joe Biden’s nomination to the Federal Trade Commission of Lina Khan, a longtime Amazon foe. But the most pivotal moment comes early in that time span.
The year 2015 marked the first time that third-party sellers on Amazon’s marketplace had higher sales than Amazon’s own retail side. Amazon had gone to great effort to woo these third-party sellers, who in the early 2010s were mostly concentrated on eBay. Bezos’s philosophy was quantity over quality: recruit as many sellers as you can and then let the customer decide whether or not their low-priced goods are too crappy. When their recruitment of third-party sellers paid off, Amazon doubled down on that business model and made a fateful choice: to recruit sellers in China.
By 2016, thousands of Chinese sellers were registering on Amazon every day. The company had courted them with its initiative code-named “Marco Polo,” where Amazon translated its seller handbook into Mandarin and hired recruiters in Beijing, and another called “Dragon Boat,” which streamlined shipping out of Shenzhen and Shanghai to lower costs. The site was inundated with Chinese goods practically overnight.
This alienated the very independent sellers who had previously been Amazon’s biggest defenders. It used to be that every time politicians railed against Amazon for putting mom-and-pop stores out of business, Bezos could point to the small business owners he had empowered. Yoga mat maker Wendell Morris told Bezos in 2014, “The beauty of Amazon is that someone can say, ‘I want to start a business,’ and they can go on Amazon and really start a business. You don’t have to get a lease on a building.” Bezos put the quote in a shareholder letter.
But Morris has since soured on Amazon. He and other third-party sellers interviewed by Stone say that 2016 and the rise of Chinese sellers was the moment when things began to go bad. Stolen designs, fake reviews, counterfeit goods, and other forms of fraud became rife. There were lots of things Amazon could have done to crack down: requiring a security deposit that sellers would forfeit if caught breaking the rules or tracking violators so they didn’t just register under a new name the next day. But it did not.
Some Amazon executives were positively enthusiastic about the company’s headfirst dive into globalization. Sebastian Gunningham, senior vice president of Amazon Marketplace, “started wearing a gaudy 80-cent stainless steel necklace with a dangling owl pendant” that was selling in the tens of thousands per month to send the message that Amazon “should not dismiss such low-priced items,” Stone relates. “Everybody thought that lots of trash was coming onto the site, but trash is in the eye of the beholder,” Gunningham explained. “Lots of it was very fashionable to many.” (Gunningham later left Amazon for WeWork.)
One observer who did not approve of Amazon’s new business model was Donald Trump. “Amazon is doing great damage to tax paying retailers,” he tweeted in 2017. “Towns, cities and states throughout the U.S. are being hurt—many jobs being lost!” On another occasion he claimed: “If @Amazon ever had to pay fair taxes, its stock would crash and it would crumble like a paper bag. The @washingtonpost scam is saving it!”
Bezos did not take Trump’s criticism’s seriously. He put endless energy into combatting the president’s putdowns via Amazon’s P.R. shop and the Washington Post, but he never considered that maybe Trump had a point. Jay Carney, the former Obama White House press secretary who joined Amazon in 2015, reassured Bezos in an email that Trump was merely “playing to his base of disaffected voters.”
Perhaps it shouldn’t be surprising that Bezos and his colleagues did not have much sympathy for the populist case. When Amazon was researching Whole Foods in preparation for its acquisition in 2017, it discovered that Whole Foods locations “neatly aligned with the geographic distribution of Prime members.” That could be a shorthand for an entire class: the people who live where Whole Foods locations are. The social costs of the one-click economy have not been borne by these people.
The Covid-19 pandemic supercharged Amazon and also supercharged its particular way of managing its employees. Amazon workers were already subject to various forms of “biosurveillance,” tracking the movements and even the facial expressions of its drivers and packers. Now the cameras at fulfillment centers are equipped to monitor social distancing. “The robotics group built a system called ‘Proxemics’,” Stone writes. “If workers were walking too close together, their images on the screen were overlaid with red circles.”
It used to be that the worst thing America had to worry about was turning into a Third World country. Amazon shows that we could end up becoming worse than Third World. Actual Third World countries are insulated from the kind of surveillance and monitoring that Amazon has perfected by “low internet usage, balky wireless networks, and low credit card penetration,” the three factors that Stone says stymied Amazon’s expansion into India and Mexico. Hyperconnected American consumers have no such immunity. Our very technological sophistication gives Amazon enormous power. Judging from the portrait presented in Amazon Unbound, it is not a power they can be trusted with.