How You Pay for All the Ways Amazon Cuts Corners
By: Manoush Zomorodi
Tags: Sally Hubbard, Regulation, Tech, Amazon, Business

How You Pay for All the Ways Amazon Cuts Corners

A few weeks ago, my friend Sally had a rather obvious nightmare. In her dream, she was wearing an orange jumpsuit — cut to be fashionable, but clearly prison attire — and stocking shelves in an Amazon warehouse. To some, this might indicate the guilt of one-click shopping reaching its apex. But Sally is Sally Hubbard, one of the country’s foremost experts on anti-trust law. She’s testified to Congress about why Amazon and other big American companies are, as she puts it, “exploiting their middleman positions to pick themselves as the winners of our economy.” So yeah, her dream was a little on the nose. Sally lives, breathes — and now sleeps — thinking about how corporate consolidation is destroying the American Dream.

But here’s where things actually get interesting: She’s also a pragmatist. She’s not going to ask you to cancel your Prime membership or leave Facebook. She just wants you to understand how much monopolies suck, as she lays out in her book of the same name: Monopolies Suck: 7 Ways Big Corporations Rule Your Life and How to Take Back Control.

Sally Hubbard testifying to the U.S. House Judiciary Committee’s Subcommittee on Antitrust

I should mention, Sally and I are friends for two reasons: Our kids go to school together, and I’m probably the only other parent who wants to drink white wine on her porch and talk about the history of robber barons while our two 10-year-olds play with her new kittens in the backyard. As a journalist, I’ve written about the pitfalls of Amazon Prime before… and what I think one-click shopping teaches our kids about how (and where) we spend our money.

But Sally comes to this issue from a different angle. And her frustration goes well beyond Amazon: to Bayer-Monsanto, which monopolizes seeds and fertilizer; Google, which tracks us ubiquitously anytime we do anything digital; and Walmart, whose employees make up the single largest group of food stamp recipients in many states. These massive corporations buy up smaller companies and “acquihire” entrepreneurs. They merge and then dominate sectors of the economy. But the real bummer about anti-competitive behavior? It’s anti-SOCIAL. As Sally puts it:

Anticompetitive practices have cut off an important path to economic opportunity and the middle class for Americans. It’s no accident that we find ourselves in the New Gilded Age, with astounding income inequality. Like the original Gilded Age, monopolies’ extractive business models and hyper-concentration of economic and political power leads to widespread inequality and threatens democracy.

In the Gilded Age, from around 1870–1899, industrialists with names like Rockefeller, Vanderbilt, Ford, and Carnegie made the U.S. economy go gangbusters in amazing ways. But, same as the technologists with names like Bezos, Brin, Musk, and Zuckerberg, their companies were barely regulated, their power so consolidated, that they managed to amass extreme wealth while their employees worked under often dangerous conditions and were usually paid poorly. In today’s dollars, John D. Rockefeller, the founder of the Standard Oil Company, would be worth over $400 billion (triple that of Jeff Bezos). His Standard Oil controlled about 90% of U.S. refineries and pipelines. It was the Sherman Antitrust Act of 1890 that eventually kept those men from stockpiling yet more wealth. A hundred and thirty years later, I heard a tween on the street say to his mom: “I just don’t know what I would do if I had all of Jeff Bezos’ money!” Hopefully, my boy, you’d up the wage of your warehouse workers.

Perhaps we’ll see an Antitrust Act of 2021. After investigating Big Tech for 16 months, the House Judiciary antitrust subcommittee — the one where Sally testified — recently put out a historic and damning report about their unethical business tactics. Thank goodness they’re finally talking about this stuff on Capitol Hill, because Sally says the onus lies with lawmakers. “In general,” she told me, “Monopoly rule of our economy is a structural, systemic problem that can’t be solved by consumer boycotts.” She points to the advertisers who boycotted Facebook over the summer for allowing hate speech. It made for powerful headlines, but really? It did jack sh*t. The next quarter, Facebook reported record-breaking profits.

So, back to Amazon. Boycotting is one answer, but not the answer. Sally’s goal is to expand how we define ourselves in modern day America — to help us remember that, for every cut-rate price we get on Amazon, the company is cutting other civic corners which we end up paying for as employees, entrepreneurs, or simply, as citizens who value democracy and social justice. We’re not just consumers, we contain multitudes! Let’s embrace our various societal roles.

For example, you are also…

A Voter

Vote for the politicians who get that the stock market is not reality. As markets soar, making the wealthy yet wealthier, millions of Americans are desperate for financial support beyond December 26.

A Taxpayer

Sally investigated Amazon’s taxes and found that its federal income tax rate in 2018 was negative 1.2%, and its income taxes were negative $129 million. That means the IRS sent Amazon a check that year! Last year, Amazon paid a rate of only positive 1.2%. “On top of that,” she emailed me, “Amazon has reportedly received close to $3 billion in subsidies from local governments around the country! Amazon has even used its political muscle to pass its utility costs on to regular people like you and me, like $172 million covered by tacking on a monthly fee to Virginians’ utility bills.” Damn.

A Parent

School websites often prominently display a “Buy On Amazon” button. Click the link and Amazon donates 0.5% of eligible purchases to the charity or school of your choice. “The heading says: You Shop. Amazon Gives,” Sally told me, “Meanwhile, Amazon escapes blame for all that it takes away, the billions of dollars that it has depleted from state and local tax bases — the same tax coffers that fund many of our schools.” One source shared data with Sally that showed Amazon failed to collect and pay an estimated $1.9 billion in state sales tax for marketplace merchants’ sales in 2016 alone. Nearly $2 billion in a single year would buy a lot of pencils, snacks, and tablets for schools. Don’t let Amazon bullsh*t you like your kids do.

A Neighbor

Chances are you’re in semi-quarantine, thinking about ordering all your holiday gifts online. I know I wrote earlier that your power as a consumer is limited, but why ruin the warm fuzzy feelings you may get choosing gifts with Amazon-tinged guilt? Sally suggests shopping local and small, even in quarantine. For example, she recommends Sook’s Chrome extension, which lets you shop local businesses all in one place. Here in Brooklyn, local shops have partnered with CinchMarket for a “Shop Brooklyn, Not Bezos” campaign. They also sell gift cards, with the goal of shifting one million dollars away from Amazon gift cards — which they say make up almost 50% of American holiday shopping dollars. Another option is Ellevest, which has put together great guides to Black, Latinx, and Native women-owned businesses that would love your business. It goes without saying that I think you should buy Sally’s book for someone on your list. But maybe try Indiebound and Bookshop — or, if you prefer audiobooks, Libro.fm instead of Audible.

Look, even Sally admits that she occasionally bends to the will of Bezos. On Election Day, she and her family desperately needed a distraction and wanted to watch a movie that was only available on Amazon Prime. They signed up, watched the movie, and then cancelled their subscription.

A bunch of us moms got together the other day for a socially-distant bitch session. It felt so good to get out of the house. I chatted with Sally, as usual, about work. Normally, she gets riled up when she talks about it but she was — all of us were — so damn tired. Later, I asked her what she was hoping for the holidays and she rallied: “My holiday wish is that, in 2021, we are all the bit wiser about how monopolies are screwing us over every day. And that we begin to use the tools we already have to dethrone today’s monopoly kings so that prosperity can be shared by all.”