Corona Daily 305: Big Brand Tyranny

Amazon acted fast. When the USA was in the grip of historic unemployment, Amazon hired 175000 warehouse workers. Though they were given zero-hour contracts, meaning contracts that didn’t guarantee a minimum number of weekly hours, Amazon paid them an extra $2 per hour until May. In June, a one time thank-you bonus of $500 was paid to full-time warehouse associates.

Jeff Bezos’s mind is on Blue Origin, the rocket company that one day will take him to the moon or mars. His other priorities are Alexa, which has 10000 employees working fulltime on it; and expensive Hollywood productions that can be watched on Amazon Prime. Online retail business is the cash cow. And yet, Jeff Bezos and the top bosses of Amazon spent every day discussing emergency covid strategies to maximise opportunities.

They were lucky to get more opportunities. Italians love to visit shops. Between March and May, more than two million Italians tried e-commerce for the first time. During the lockdown 75% Italians shopped online, sales grew 26% to a record 22.7 billion Euros. A sad Italian described the future of an Italian village as “a village with couriers and without shops.”

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The key reason for Amazon prospering, though, is that such brands have become monopolies, commercial tyrants.

Concentration of power is always dangerous. In politics, civilized societies create checks and balances. The law-makers, the governing powers, the judges, the media are expected to act as one another’s auditors. This is why a US president runs out of power after eight years. A president or a Prime Minister can be impeached or removed, or in extreme cases tried in courts. When politicians, even in democracies, attack the checks and balances mechanism, democracy gives way to dictatorship.

In business, this function was expected to be served by the anti-trust and anti-monopoly bodies. What do we see in practice?

With the Indian economy becoming liberal, Coca-Cola entered India, bought the company which made Thums-up, (a local Cola), which in every consumer research was preferred to Coca-cola. Coke bought Thums-up so as to stop its production. This is not how capitalism is supposed to work.

WhatsApp is an amazing invention. Billions fell in love with it for business and pleasure. As soon as it became successful, what happened? Facebook bought it. As soon as Instagram became successful, what happened? Facebook bought it. Anti-monopoly laws are not supposed to allow such acquisitions.

I have a few Apple devices in my house. Each device has a unique charger with a pre-programmed short life expectancy. And each charger is super-expensive. Unless I update whatever Apple wishes me to update, and digitally sign whatever it wants me to sign, my i-phone stops functioning. This is not how consumer protection is supposed to work.

Granted Bill Gates, Mark Zuckerburg and Jeff Bezos are geniuses who have revolutionized the world. That doesn’t mean they should be allowed to become business tyrants. Google, Amazon, Apple and Facebook are currently being investigated by the American Congress. Sweeping reforms and antitrust laws are being talked about. Unfortunately, those tech-monarchs have enough financial muscle to buy off protesting politicians.

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Today, PriceWaterhouseCoopers and UBS, the Swiss bank, published a report “riding the storm”. In the pandemic, total billionaire wealth reached $10.2 trillion, an all-time record. Between April and July, the wealth of billionaires went up by 27.5%. The superrich benefited from the crisis, because they had “the stomach” to buy more shares when equity markets crashed. Shares in Amazon and other technology companies rose very sharply.

Concentrated, unchecked power in the hands of politicians or businessmen creates dictators. Amazon now qualifies as one.

Ravi