“I see them as kind of a great white shark. You don’t really want to mess with them.” The words are those of a former manager at Amazon – and she is describing her former employer.
It is an apt analogy. Amazon is huge – worth $740bn (£530bn) at Monday night’s share price – but it moves fast and is a lethal predator.
This week, the Guardian is shining a spotlight on Amazon, examining how the company has disrupted an ever-expanding range of industries and the power it wields.
One of the 14 business principles set out by founder Jeff Bezos, who started the company in a Seattle garage in 1994, is “think big”. Amazon does exactly that. It operates in nine out of the 10 biggest industrial sectors in the US and its scale and control is such that it has been compared to a private company owning the road network. It has also turned Bezos into the world’s richest man, worth $130bn.
The company’s Prime service has 100 million paying members. Half of US households are subscribers. More than half of all online shopping searches in the US start on Amazon – not Google – up from 18% less than a decade ago. The company scoops up almost $1 of every $2 US shoppers spend online.
Later this week, the company, which employs 560,000 staff worldwide, is expected to report a 40% jump in sales. Analysts say Amazon’s revenues in the first three months of the year will hit nearly $50bn – or more than $500m a day.
The company has fundamentally changed the way hundreds of millions of people across the world shop for books, music, movies, electrical gadgets, clothing and – more recently – food. But it is now much more than just a retail business.
Amazon Web Services controls around 45% of the world’s cloud-computing capacity and provides the web infrastructure on which thousands of other huge businesses and vital organisations are built – with customers ranging from Netflix to the CIA to the UK’s Department of Justice.
Amazon is blamed for driving traditional retailers out of business; it is accused of copying other firms’ products and services and driving them out of business too. It is accused of treating staff poorly and avoiding tax by all legal means possible, no matter how contrived its offshore structures.
It knows where its customers live, what they buy and what web pages they browse. It has been accused of not wanting to dominate the market – but to own it.
Its scale and attitude to paying tax has drawn the ire of Donald Trump, the European Union and the International Monetary Fund (IMF), but the online behemoth and its multibillionaire owner show no signs of slowing down or bending to the demands of politicians.
Last week, the head of the IMF, Christine Lagarde, warned that technology companies such as Amazon had “too much market power – in the hands of too few”. She said the tech companies’ dominance was “not helpful to the economy or to the wellbeing of individuals”. She said that in order to tackle their hegemony “a lot of new thinking has to be done”.
President Trump has tweeted his anger about Amazon six times so far this year. Last month, he said: “Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!”
But Amazon is focused on further expansion – new countries, new products (from Alexa voice recognition speakers to healthcare and home robots), into bricks and mortar stores (some of which have replaced bookshops that Amazon had put out of business) – and making even more money.
