For-profit

Amazon

Amazon Spheres from the Sixth Avenue side, Seattle, Washington, U.S. (link) by Joe Mabel is licensed CC BY-SA 4.0 (link)
Website:

Amazon.com

Location:

Seattle, WA

Founder:

Jeff Bezos

Formation:

1994

Type:

For-profit retail conglomerate

Amazon is an American online retail company based in Seattle, Washington. As of April 2021, Amazon was the third-largest company in the world, with a market cap of $1.7 trillion. [1]

Amazon was founded in 1994 by Jeff Bezos, originally designed to be an online book retailer. The company grew rapidly, went public in 1997, and expanded its retail services throughout the 2000s. By pursuing a high-growth, low-profit strategy, Amazon acquired a massive share of the consumer retail market.

As Amazon has grown, it has attracted criticism from left-wing sources for allegedly embodying the worst aspects of corporate America, including allegedly paying low wages, maintaining poor working conditions, suppressing unionization, and avoiding taxes. Amazon has denied wrongdoing in most cases, though it has become an advocate for a higher federal minimum wage after raising its own American minimum wage to $15 per hour in 2018. Right-of-center sources have criticized Amazon for censoring right-of-center advocacy materials by ceasing to distribute them. [2]

History

Amazon was founded in 1994 by Wall Street hedge-fund executive Jeff Bezos as an early web-based retailer. Bezos envisioned the company monopolizing digital retail for books and eventually becoming the largest bookseller in the world. In July 1995, Amazon.com launched. [3]

Amazon rapidly found success and quickly began selling merchandise in all 50 states. By 1996, the company reported $16 million in annual sales. In May 1997, Barnes and Noble sued Amazon over its advertising claim that it was the “largest bookstore in the world,” with Barnes and Noble claiming that Amazon was actually a “book broker.” In 1997, Amazon launched its initial public offering. In 1998, the company began selling consumer electronics. That same year, Amazon sales reached $600 million. [4][5]

Amazon sustained heavy losses in 2001, but it was one of the few major online retailers to survive. Throughout the 2000s, Amazon created numerous subsidiaries and expanded its retail services into server space, Kindle reading devices, and ordinary consumer goods. [6]

In the 2010s, Amazon continued to expand into one of the world’s largest companies. Amazon Web Services, first created in the early 2000s, became the largest provider of cloud-computing services in the world. In 2014, Amazon launched the Fire Phone and acquired Twitch, the online gaming streaming platform. In 2017, Amazon acquired supermarket chain Whole Foods Market for $13.4 billion. By 2018, Amazon controlled 5% of American retail spending and a 43% share of total American online spending. [7][8]

Profits

Amazon has a famously low profit margin, which it has maintained to reinvest in its operations. The company first turned a profit in the fourth quarter of 2001, earning $5 million on $1.1 billion in revenue. Despite revenue increasing to $60 billion per quarter by 2017, Amazon’s profit margin has always remained close to 0%. In 2018, Amazon’s quarterly profits rose into the low billions. [9][10]

Political Contributions

In 2020, employees and organizations associated with Amazon gave $12,795,719 in contributions to political candidates and PACs, the 51st-highest amount of contributions associated with any organization. The level of Amazon-associated political contributions was low in the 1990s but rose into the hundreds of thousands of dollars in 2004 and passed $1 million in the 2016 cycle. In the 2018 cycle, spending rose dramatically to almost $13.5 million. [11]

In 2020, almost 85% of Amazon-associated political contributions went to Democrats, the highest level since 1998. Typically, 60-80% of Amazon-associated donations go to Democrats. [12]

In 2020, the average Democratic U.S. Representative received $5,000 from Amazon-associated donations, compared to just under $4,000 for the average Republican Representative. The average Democratic U.S. Senator received almost $20,000, largely due to massive contributions in support of U.S. Senators Jon Ossoff (D-GA) and Raphael Warnock (D-GA), compared to the average Republican Senator’s $5,500. [13]

In 2020, the largest recipient of Amazon-associated funds was then-Democratic presidential candidate Joe Biden, who received $2.3 million, followed by the Democratic National Committee (DNC) Services Corp and the presidential campaign of U.S. Senator Bernie Sanders (D-VT), both of which received under $1 million. The fourth and fifth largest recipients were U.S. Senators Jon Ossoff (D-GA) and Raphael Warnock (D-GA), who both received around $300,000. Among the other Democratic presidential candidates, U.S. Senator Elizabeth Warren (D-MA) received $264,000, entrepreneur Andrew Yang received $184,000, and Pete Buttigieg received $183,000. Former President Donald Trump received $287,000, the most of any Republican candidate or organization. [14]

In the 2016 cycle, the largest recipient of Amazon-associated funds was Democratic presidential candidate Hillary Clinton ($417,000), followed by Sen. Sanders ($110,000). President Trump received $5,510 in contributions. [15]

Environmental Activism

In September 2019, a group of 1,800 employees within Amazon called the Employees for Amazon Justice staged a walkout in protest against Amazon’s environmental impact as part of the Global Climate Strike. Earlier that week, Jeff Bezos had announced that Amazon aimed to be carbon-neutral by 2040, and carbon-neutral on 50% of shipments by 2030. [16]

In September 2019, Bezos signed the Paris Accords Climate Pledge and stated that Amazon would meet the agreement’s goals ten years ahead of schedule. Bezos also offered $10 billion of his own wealth to left-of-center environmentalist organizations through the Bezos Earth Fund. [17]

Amazon reportedly considered implementing a shipping option for customers which would optimize based on environmental impact rather than speed or price, but Amazon ultimately rejected the idea out of concerns it would reduce orders. [18]

Taxes

Amazon has been accused of engaging in tax avoidance schemes. From 2010 until 2020, Amazon generated $57 billion in pre-tax earnings and paid an effective tax rate of 4.7%, despite the corporate tax rate being 35% for much of this period. [19] Amazon disputes these numbers, and claims its effective tax rate was 24% from 2010-2018. [20] While running for president in 2020, Sen. Bernie Sanders repeatedly criticized Amazon for not paying enough in taxes and promised to restructure the federal tax system to target companies like Amazon. [21]

According to a 2019 Wall Street Journal report, Amazon’s low effective tax rate is achieved by a combination of maintaining low profit margins; continuing high reinvestment of profits into the company; using tax credits offered by governments aggressively; and locating significant portions of the company in countries with low corporate tax rates, such as Ireland. [22]

Labor and Employment Practices

Left-of-center and labor-union-aligned activists have criticized Amazon for its labor conditions, particularly in its warehouses. Critics have claimed that Amazon purposefully lowers working conditions to reduce costs and maintain market competitiveness. In 2018, Business Insider and the Guardian both ran undercover investigations of Amazon reported missing wages, long shifts, and truck drivers urinating in plastic bottles due to lack of access to bathrooms. Later in the year, thousands of workers across Europe went on strike against Amazon warehouses, demanding higher pay and better working conditions. [23][24]

Sentiment against Amazon working conditions increased during the COVID-19 pandemic, when Amazon was accused of not properly protecting its employees against the virus. A statement by the British GMB union claimed that Amazon set unrealistic productivity targets, sabotaged labor organization efforts, and spied on its workers with surveillance cameras. [25]

Labor Unions

Amazon has consistently opposed the organization of unions within its workforce, with some accusing Amazon of doing so in violation of labor laws. In 2001, Amazon laid off over 700 employees in Seattle. The Washington Alliance of Technological Workers accused Amazon of firing the employees because they were considering unionizing, and therefore of violating labor laws, but the company claimed that the layoffs were unrelated to unionization. [26] In the same year, Amazon hired outside consultants to combat a unionization effort in Buckinghamshire, England led by the Graphical, Paper and Media Union. [27]

In 2018, after its acquisition by Amazon, Whole Foods was discovered to be tracking potential union activity within its stores by evaluating “risk factors.” Risk factors included racial diversity, poverty levels near stores, and calls to the National Labor Relations Board (NLRB). [28]

In April 2021, the NLRB charged Amazon with the wrongful termination of two “activist employees” who were fired for union agitation. [29]

That same month, about 3,000 out of 5,900 employees at an Amazon warehouse in Bessemer, Alabama voted on a highly publicized effort to unionize. National Public Radio (NPR) called the event “the most consequential labor battle in decades.” Among the 3,000 voters, 71% voted against unionization. Union advocates accused Amazon of using intimidation tactics and implicit threats of firing to suppress union sentiment, while Amazon claimed the vote indicated a clear preference against unionization among its employees. [30]

Minimum Wage

In October 2018, Amazon raised the starting pay for all 350,000 of its American employees to $15 per hour, compared to the current federal minimum wage of $7.25 per hour. Amazon also raised the minimum wage for British employees to £9.50 per hour. [31]

In a public statement, Jeff Bezos acknowledged that Amazon committed to the policy in response to persistent criticisms of the company. Earlier in 2018, Sen. Sanders asked for Amazon workers to Tweet their salaries and struggles to bring attention to minimum wage laws. At the time, the average annual salary for an Amazon warehouse worker was $28,000. [32]

After changing its own minimum wage, Amazon began speaking out in support of increasing the federal minimum wage. The company lobbied Congress to support the Raise the Wage Act, which would increase the federal minimum wage to $15 by 2025. In February 2021, Amazon took out a full-page ad in the New York Times advocating for a $15 minimum wage. [33]

Critics of Amazon, like Business Insider’s Kate Taylor, have argued that Amazon’s support of a higher minimum wage is an attempt to force the government to increase costs for Amazon’s competitors, particularly small businesses and large companies like Walmart which tend to pay lower wages than Amazon. [34]

Censorship of Right-of-Center Advocacy

Right-of-center critics have alleged that Amazon censors right-leaning advocacy materials by denying them access to or support from Amazon’s platforms. The most notable case involved the book When Harry Became Sally: Responding to the Transgender Moment, a book by social-conservative activist Ryan T. Anderson critical of transgender ideology and activism that was removed from Amazon’s bookselling platform in early 2021. [35] The site also ceased streaming a biographical documentary film on conservative Supreme Court Justice Clarence Thomas, at least initially refusing to provide the filmmakers with an explanation. [36]

Lobbying

In 2020, Amazon spent $18,725,000 on lobbying, the 9th most of any organization. The company’s lobbying expenditure rose slowly from $500,000 in 1998 to $2.5 million in 2012, before rapidly increasing thereafter. Annual lobbying expenditure has increased every year since 2009. [37]

Political Shareholders in Amazon

As of 2018, 28 U.S. Representatives and Senators owned shares of Amazon stock. The largest holders are U.S. Speaker of the House Nancy Pelosi (D-CA) and U.S. Representative Brad Schneider (D-IL), both of whom own between $500,000 and $1 million worth of shares. Other major shareowners include former U.S. Representative Joe Kennedy III (D-MA), U.S. Senator Sheldon Whitehouse (D-RI), U.S. Senator Jacky Rosen (D-NV), and U.S. Senator John Hoeven (R-ND), all of whom own hundreds of thousands of dollars in Amazon stock. [38]

References

  1. “Largest Companies By Market Cap Today (Top 50 List).” Dogs of the Dow. Accessed April 19, 2021. https://www.dogsofthedow.com/largest-companies-by-market-cap.htm. ^
  2. Flood, Brian. “Amazon Accused of ‘Absurd and Unacceptable’ Censorship after Book Questioning Transgender Movement Vanishes.” Fox News. FOX News Network, February 23, 2021. https://www.foxnews.com/media/amazon-harry-became-sally. ^
  3. McFadden, Christopher. “A Very Brief History of Amazon: The Everything Store.” Interesting Engineering. February 17, 2021. Accessed April 19, 2021. https://interestingengineering.com/a-very-brief-history-of-amazon-the-everything-store. ^
  4. McFadden, Christopher. “A Very Brief History of Amazon: The Everything Store.” Interesting Engineering. February 17, 2021. Accessed April 19, 2021. https://interestingengineering.com/a-very-brief-history-of-amazon-the-everything-store. ^
  5. “Amazon, B&N settle lawsuit.” Cnet. October 21, 1997. Accessed April 19, 2021. https://www.cnet.com/news/amazon-b-n-settle-lawsuit/. ^
  6. “Amazon, B&N settle lawsuit.” Cnet. October 21, 1997. Accessed April 19, 2021. https://www.cnet.com/news/amazon-b-n-settle-lawsuit/. ^
  7. “Amazon, B&N settle lawsuit.” Cnet. October 21, 1997. Accessed April 19, 2021. https://www.cnet.com/news/amazon-b-n-settle-lawsuit/. ^
  8. Ovide, Shira. “Amazon Captures 5 Percent of American Retail Spending. Is That A Lot?” Bloomberg Business. August 8, 2018. Accessed April 19, 2021. https://www.bloomberg.com/news/articles/2018-08-08/amazon-captures-5-of-american-retail-spending-is-that-a-lot. ^
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  17. Weise, Karen. “Jeff Bezos Commits $10 Billion to Address Climate Change.” New York Times. February 17, 2020. Accessed April 19, 2021. https://www.nytimes.com/2020/02/17/technology/jeff-bezos-climate-change-earth-fund.html.    ^
  18. Day, Matt. “Amazon nixed ‘green’ shipping proposal to avoid alienating shoppers.” Seattle Times. March 14, 2020. Accessed April 19, 2021. https://www.seattletimes.com/business/amazon-nixed-green-shipping-proposal-to-avoid-alienating-shoppers/. ^
  19. “Amazon Has Record-Breaking Profits in 2020, Avoids $2.3 Billion in Federal Income Taxes.” Institute on Taxation and Economic Policy. February 3, 2021. Accessed April 19, 2021. https://itep.org/amazon-has-record-breaking-profits-in-2020-avoids-2-3-billion-in-federal-income-taxes/#:~:text=Over%20the%20past%20three%20years,for%20most%20of%20this%20period.. ^
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  23. Hamilton, Isobel Asher. “’We are not robots’: Thousands of Amazon workers across Europe are striking on Black Friday over warehouse working conditions.” Insider. November 23, 2018. Accessed April 19, 2021. https://www.businessinsider.com/black-friday-amazon-workers-protest-poor-working-conditions-2018-11. ^
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