June 10, 2016

Amazon has had a very busy couple of days

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Amazon.com-Logo.svgWhat matches the dictionary’s definition of a monopoly to a T, isn’t particularly profitable, makes your kids grow up rude, and can’t seem to stop making news? Yeah, you guessed it. It’s been a busy week for Amazon.

Where to begin?  In a story published by the Seattle Times on June 1, Ángel González writes that the company has filed three lawsuits against merchants who, it alleges, have paid for dishonest product reviews on the site. It’s a move that comes just weeks after another bout of lawsuits that targeted not the merchants paying for the reviews but the dishonest reviewers themselves.

In a statement, Amazon has said that its goal is to “eliminate the incentives for sellers to engage in review abuse and shut down this ecosystem around fraudulent reviews in exchange for compensation.” It remains to be seen whether the company’s legal strategy will serve those goals. González, for one, appears doubtful, referring to the effort as “a never-ending game of Whac-a-Mole.”

Amazon’s policies toward user reviews have come under fire in the past. In an article for Gizmodo last summer, Kiona Smith-Strickland decried the company’s rules as “creepy and bad for authors,” alleging that “Amazon isn’t very interested in working fairly with the producers who actually make the products in its online marketplace.”  In a new piece published by the Huffington Post, author and activist Anthony Papa, who recently released a book through Amazon’s Createspace service, carries things even further, expressing outrage at being “SABOTAGED by [his] own publisher” and calling for a boycott of the company’s Amazon Prime service.

Lawsuits haven’t been taking up all of the e-commerce giant’s time, though. David Brunnstrom reports for Reuters that in a speech on June 8 whose audience included Indian Prime Minister Narendra Modi, Amazon CEO Jeff Bezos declared his intention to more than double the company’s investments in India, bringing them to over five billion dollars. Motivated by the fact that Amazon India’s performance is, in Bezos’s words, “surpassing even our most ambitious planned milestones,” and perhaps not coincidentally coming close on the heels of a similar announcement from Apple, it is a move financial reporter Manish Singh notes will give the nation’s companies “a big reason to worry.”  Indian e-commerce is hardly the only front on which Amazon and Apple have been doing battle, although the fact that the American companies’ competitors in that country haven’t been doing too well does threaten to make collateral damage there especially ugly.

But the investment in India wasn’t the only international expansion Amazon announced this week. The retailer also inaugurated its Amazon Fresh UK program, through which customers in select areas of London can have a full line of 130,000 grocery products delivered to their doors. Saabira Chaudhuri of the Wall Street Journal notes that the announcement “intensifies competition in the U.K.’s already-cutthroat market for online grocery delivery, widely hailed as the world’s most advanced.” At the BBC, Emma Simpson agrees, calling the announcement “the last thing the [UK’s] big four grocers — and [online grocery retailer] Ocado — wanted to hear.”

David McCarthy, an analyst at HSBC, added, “Whilst not a ‘killer blow,’ it should be viewed as the start of a journey that could have impacts across the sector.”

Impacts across sectors kind of seem like Amazon’s thing, and Target may be feeling them soon, too: Kavita Kumar writes this week in the Minneapolis Star Tribune that the company has also announced plans to open a tech office in downtown Minneapolis. It may also not be a coincidence that this news follows increasing efforts from the Minneapolis-based big-box chain to enlarge its own staff in the city and attract tech-sector entrepreneurs to work out of its offices.

All in all, a busy run of days for Amazon. Too bad about the whole being-a-monopoly, making-children-rude, rarely-turning-a-profit thing.

 

 

Ian Dreiblatt is the director of digital media at Melville House.

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