July 26, 2013

Stick a fork in it, it’s over: Obama to celebrate Amazon as champion employer, while company announces its umpteenth loss


The release of Amazon.com’s quarterlies yesterday seemed like the same old same old — earnings were up (to $15.7 billion, for god’s sake), and yet the company still somehow managed to file a loss for the quarter.

But as Miriam Gottfried noted in her Wall Street Journal report, Amazon “enjoys a rare competitive advantage: It doesn’t seem to need to make a profit.”

It’s a keenly perceptive statement — both in the way it observes that it’s questionable whether Amazon has ever really made a profit (something I’ve discussed ad infinitum), and in the way it seems to observe that Amazon is now an openly de facto — and I would ad de jure — monopoly.

Exactly the word remarkably few observers uttered in the wake of the Department of Justice’s successful prosecution of Apple and America’s biggest publishers (except for Teflon-coated Random House), but it’s more evident now than ever. After all, Amazon was the only party that stood to gain by that case. (The government’s claim that the consumer came out ahead is ludicrous. How in the world does the consumer come out ahead in a marketplace dominated by a monopoly, and a government-sanctioned one at that?)

The obviousness of Amazon’s monopoly, in fact, as well as the government’s sanctification of it, may be why, as Gottfried reports, Amazon’s stock “barely missed a beat” at the news that it had failed to make a profit once again, closing after the announcement “just below an all-time high.”

But if few people dared to discuss the fact that Amazon is a monopoly, or that the government protected and enriched its status as such, other reports are beginning to accumulate observing that Amazon may be starting to act more like a monopoly than ever — that is, that it may be starting to raise prices.

Leading it off was David Streitfeld’s New York Times report attempting to document Amazon’s rising prices on small press and university press books — a report proving to be seminal, in that it seems to have prompted, or is at least being cited in, numerous other similar reports making similar observations, such as this one from the New Statesman, and this one from the Guardian, and this one, from Wired.

Then came the news that Amazon UK was dropping free shipping — perhaps its most dramatic discounting tool — on some orders under £10, as this BBC News wire story reports. In the New Statesman commentary cited above, Alex Hern sees the move as “signalling a renewed attention to profit margins at the company … Reinstating delivery charges, even in such a limited way, suggests that the company is backing away from its strategy of loss-leaders and revenue growth above all else.”

A price rise is inevitable, of course, whether it’s happening now or not. No monopoly in history has ever lowered prices. That’s not what monopolies do. That’s not why they exist. Amazon did not suffer losses for 18 years in order to achieve total market domination and nonetheless continue posting the kind of losses it posted yesterday … and the quarter before that … and the quarter before that, dating back to the company’s inception in 1995.

That price rise is an ironic, not to mention pyrrhic, victory for the five publishers charged with colluding to raise Amazon’s prices — that is, the five publishers who were forced to settle with the DOJ to the tune of tens of millions of dollars. (See Alex Shephard’s MobyLives report on how that payout broke down — and how it nearly broke the publishers.)

And meanwhile Amazon’s status is historic in another way, too: No American monopoly has ever been so cozy with the government. As if the DOJ lawsuit wasn’t transparent enough, there’s the company’s multi-milion sweetheart deal with the State Department to sell it thousands of Kindles (a deal that was dropped seemingly due to recognition that it might be seen as a conflict of interest), and Amazon’s contract to provide cloud services to the Central Intelligence Agency.

And as if that wasn’t enough, now there’s this: President Obama is going to give a major policy speech at an Amazon warehouse in Chattanooga, Tennessee “focusing on the economic boost the [Amazon] center brought to the area and future growth in the country,” according to a report on the website of Chattanooga radio station WAAF.

All of which is to say that for this Amazon critic, at least, and perhaps for anyone who had a shred of belief left that they were in a system with some sense of concern for the little guy, it seems the company has, finally, won its ultimate triumph. The war seems to be over, and the good guys have lost. The only thing that would have stopped Amazon anyway was government intervention, and it’s hard to imagine the DOJ opening a proper antitrust investigation of a company that has the President of the United States dropping in to laud it and spend some time in one of its warehouses.

Unless, perhaps, it turns out that warehouse doesn’t have air conditioning.


Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.