Amazon Proves That a Competitive Culture Beats an Anti-Competitive Policy, Every Time
By: Bennat Berger
Tags: Technology, Work, Culture, Amazon, Business

Once more, titans of industry have fallen under censure for perceived monopolization and the abuse of their considerable power. But this time, their names aren’t Carnegie, Rockefeller, or Vanderbilt, but Bezos, Zuckerberg, Pichai, and Cook.

In recent weeks, all four have faced hard questions about perceived corporate misbehavior. The concerns directed towards each corporate icon may differ according to the specifics of their company’s actions, but all ask the same essential question: Can massive tech companies keep themselves from intimidating or using the small businesses that increasingly rely on their platforms to survive?

In late July, the House Judiciary Committee convened a hearing to address the matter. The event marked the culmination of an extensive antitrust investigation that encompassed over a million corporate documents and hundreds of hours of personnel interviews. One reporter for the Verge characterized the hearing as “one of the biggest tech oversight moments in recent years.” Representative David Cicilline, the Commercial and Administrative Law Subcommittee Chair, made the subcommittee’s belief in the importance of the hearing clear at its outset.

“Because these companies are so central to our modern life, their business practices and decisions have an outsized effect on our economy and our democracy,” Cicilline said. “Any single action by any one of these companies can affect hundreds of millions of us in profound and lasting ways.”

Cicilline further argued that each of the four tech companies under investigation — Amazon, Facebook, Google, and Apple — comprised a crucial channel for distribution, such as an app store or ad venue, and uses monopolizing methods to purchase or otherwise block potential competitors. He also noted that the companies all either show preference to their branded products or create pricing schemes that undermine third-party brands’ abilities to compete.

As you might have already guessed, each case has a wealth of associated information and considerations. Recapping them, let alone providing commentary, would be challenging at best. So, instead, I want to consider the question of whether or not a business can be both a market ecosystem and fair competitor through the context of one business: Amazon.

Amazon fell under fire earlier this year, when the Wall Street Journal released a stunning report that the e-retailer had used data from its third-party sellers — data that was believed to be proprietary — to inform the development and sale of competing, private-label products.

This revelation sent shockwaves through the business community, despite the fact that it wasn’t entirely unanticipated; according to reporting from the Verge, the European Union’s main antitrust body claimed that it was “investigating whether Amazon is abusing its dual role as a seller of its own products and a marketplace operator and whether the company is gaining a competitive advantage from data it gathers on third-party sellers” in 2019.

Amazon has pushed back on these concerns, claiming that it has policies that forbid private-label personnel from obtaining specific seller data. However, the Wall Street Journal’s interviews of former and current employees found that the rule was inconsistently enforced and overlooked so often that the use of third-party, proprietary data was openly discussed in product development meetings.

“We knew we shouldn’t,” one former employee said while recounting a pattern of using seller data to launch and bolster Amazon products. “But at the same time, we are making Amazon branded products, and we want them to sell.”

And therein lies the core of the problem. Amazon is a company that maintains a laser focus on success — even to the point that its employees are willing to circumvent policy for its sake. But we can’t blame the employees, not entirely. The tech industry has long been known for its move-fast-and-break-things attitude, and Amazon more than most; the e-retailer’s obsession with achievement is near-legendary.

In 2015, New York Times reporters Jodi Kantor and David Streitfeld published an exposé that painted Amazon’s culture as one specifically designed for intense, high-output, and unforgiving efficiency.

“Every aspect of the Amazon system amplifies the others to motivate and discipline the company’s marketers, engineers and finance specialists: the leadership principles; rigorous, continuing feedback on performance; and the competition among peers who fear missing a potential problem or improvement and race to answer an email before anyone else,” Kantor and Streitfeld described.

“The culture stoked their willingness to erode work-life boundaries, castigate themselves for shortcomings (being ‘vocally self-critical’ is included in the description of the leadership principles) and try to impress a company that can often feel like an insatiable taskmaster.”

The article even noted that Amazon holds yearly firing sessions (dubbed “cullings” in the exposé) to shed those who don’t perform up to its notoriously high standards. Illness, parenthood, and even family loss — none were considered excuses for lapses in performance.

Given the stressful environment and achievement-at-all-costs mentality, is it any surprise that employees would sneak around a barely-enforced policy to obtain data that will help their projects succeed? I would say no.

In a culture that positions cutthroat competitiveness as a professional survival mechanism, an anticompetitive policy is little more than flimsy caution tape: readily seen, easily circumvented, and meant more to provide plausible deniability than to prevent anyone from breaking the rules.

And, of course, we have to acknowledge the point that a company that periodically culls its staff for the sake of efficiency wouldn’t mind pushing blame onto a worker who happens to get caught. Bezos already did so in his hearing. He testified, “What I can tell you is we have a policy against using seller-specific data to aid our private label business but I can’t guarantee that policy has never been violated.”

Another hearing exchange between Cicilline and Bezos is particularly telling.

Cicilline asks, “Isn’t it an inherent conflict of interest for Amazon to produce and sell products that compete directly with third party sellers, particularly when you, Amazon, set the rules of the game?”

Bezos responds: “The consumer is the one making the decisions.”

But how is that an appropriate response, when the data Amazon collects allows the e-retailer an unfair advantage to design and market products designed to outstrip the competition? It remains to be seen whether legislators will ultimately choose to spin off Amazon marketplace from its Basics line, but Amazon has proven beyond a doubt that it is naive to believe that a company that was built with a crush-the-competition mentality should be trusted with safeguarding smaller, vulnerable competitors’ proprietary data.

Company culture beats policy, every time.