Unlike previous weeks of this newsletter, there wasn’t a single dominant storyline about Amazon this week. Except maybe this one: an ongoing thread about disinformation. I like this story because it reminds us that despite all the heavy lifting Amazon does, despite the trucks and boats and shipping containers, despite its forays into groceries or robotics, it’s still fundamentally a purveyor of information, working in a marketplace where the primary currency is trust.
Here’s the problem. Amazon has a lot of anti-vaccination content on its site. A lot. Books, videos, and more. In search results, and in sponsored posts. Facebook and YouTube have already been through the wringer over this; this week, it was Amazon’s turn.
After CNN’s story, Congressman Adam Schiff wrote an open letter to Amazon on Friday asking the company to consider whether medically inaccurate information violated its terms of service. In response, Amazon pulled Vaxxed and other anti-vaccination documentaries from its Prime service for free streaming. At least five documentaries which had been available on Prime were not available to stream by the end of the day.
This doesn’t mean everything’s now hunky-dory. The Guardian’s Julia Carrie Wong reported that AmazonSmile, the company’s charity arm, allows shoppers to donate money to anti-vaccine groups. NBC’s Ben Collins noted that an anonymously written QAnon conspiracy book had climbed to the top 75 of all books sold on Amazon, including no. 9 in all books about politics and no. 1 in all books about censorship. (It seems like the QAnon book had actually gone to the top of the “Hot New Releases” category, where it’s currently #2.)
In “How Amazon’s Algorithms Curated A Dystopian Bookstore,” Renee DiResta writes:
Amazon shapes many of our consumption habits. It influences what millions of people buy, watch, read, and listen to each day. It’s the internet’s de facto product search engine—and because of the hundreds of millions of dollars that flow through the site daily, the incentive to game that search engine is high. Making it to the first page of results for a given product can be incredibly lucrative… Sometimes sellers outright buy or otherwise incentivize review fraud; that's a violation of Amazon’s terms of service, but enforcement is lax. Sometimes, as with the anti-vax movement and some alternative-health communities, large groups of true believers coordinate to catapult their preferred content into the first page of search results.
This problem might be especially egregious in books and movies, but it affects Amazon’s broader product sales, too. Jason Del Rey writes for recode:
What happens as Amazon gives more and more third parties access to its global store? The number of opportunities for bad actors to plot nefarious things multiplies. Trust from customers and merchants alike is at risk—and Amazon knows it. The biggest threat to Amazon’s future success isn’t some imaginary antitrust case; it’s Amazon itself… But Amazon doesn’t want to be home to just a massive selection of goods. Nor will Amazon executives be satisfied if Amazon’s product catalogue is just larger than any competitor in the world. Instead, Amazon wants to sell “every genuine product in the world,” according to [Dharmesh Mehta, Amazon’s vice president of worldwide customer trust and partner support]… “[O]ur general mental model... is actually quite simple: We want the vast selection of every genuine product in the world [and] we want it at the lowest prices.”
Amazon’s tried a mix of AI and human efforts to stop counterfeiting on the site, and now it’s turned control over to brands to try to police themselves. Project Zero provides a mix of automated protections, takedown notices, and serialization to help authenticate that a product is what it says it’s supposed to be.
But what do you do when a book, a movie, a supplement, or whatever, is 100% authentic, but still a fraud? How can you still aim to sell “every genuine product in the world… at the lowest prices” when what you’re selling is a lie?
Running a marketplace is a complicated business. In some countries, Amazon has to fight to even take down paid reviews. There are free speech and free market considerations here. Amazon’s light hand has worked well for the company so far.
But as Del Rey writes, “Customer trust does not erode overnight. It happens slowly, disappointing order by disappointing order—and then all at once.” And the more Amazon involves itself in product lines where people are not content to let a hundred flowers bloom and every idea have its say—for instance, in groceries—the less wiggle room Amazon has to play with customers’ trust.
Moving more of its vendors, especially its smaller vendors, to third-party, Amazon Marketplace status (which Amazon is aggressively doing) doesn’t really solve this problem so much as shift it, as customers move to the third-party marketplace as well. The trust relationship, the move that got everyone, customer and vendor alike, through the door, is still the dominant one.
I mean, people are talking about YouTube in glowing terms next to Amazon when it comes to fighting misinformation now. YouTube! Don’t be YouTube.
Amazon Is Entering the Grocery Business… Again
Let’s try to keep track. Amazon sells non-perishable groceries online, in many countries. It offers same day fresh grocery delivery in certain markets. It has a small number of cashless convenience stores. It owns Whole Foods, a full-service bricks-and-mortar grocery store. And now it’s starting a fifth (fifth? I swear I’m missing one) grocery venture, distinct from Whole Foods and Amazon Go, in cities across the United States.
Here’s what we think we know:
- Amazon plans to open dozens of grocery stores;
- The first will open in Los Angeles, and other sites include San Francisco, Seattle, Chicago, Washington, D.C., and Philadelphia;
- Amazon may purchase regional grocery chains that operate at least a dozen stores;
- The new stores are not intended to compete with Whole Foods;
- That’s about it.
Here’s what we can wildly speculate:
"AMZN's Next Major Innovation Could Well Be In-Store Shopping," a team of analysts led by Brian Nowak, who has a bullish $2,200 price target on Amazon shares, wrote to clients. "Expect AMZN to re-define what a 'store' is," the analysts said. They added: "Just as they've innovated the digital experience via Amazon.com, the logistics experience via their fulfillment network, and computing / storage via AWS, and (early days) internet of things with Echo, we expect this push (if true) to change consumers' in-store shopping experiences and expectations." The stores might see more of a no-line, no-checkout, "frictionless" payment-type format akin to Amazon Go stores, Morgan Stanley said. That could also come with the use of augmented reality and other "digital in-store experiences."
That does sound cool, although if I had a $2200 price target on Amazon shares, I’d want it to sound very cool also. (Remember, too, not everybody’s a fan of frictionless cashless shopping, including several of the cities where Amazon’s supposed to open some of these stores.)
More speculation, although this may have a nugget of truth:
At any rate, it’s clear that Amazon’s ambition in the grocery space was never going to be limited to what Whole Foods was able to do. Jeremy Bowman at The Motley Fool has a good analysis here; Amazon needs to be able to offer a lower price point, a wider selection of products, and to experiment more with customer data and other innovations than it was ever going to be able to do comfortably within the Whole Foods brand.
Amazon is learning from Whole Foods, it’s learning from Amazon Go, it’s learning from Amazon Fresh, and it’s learning from its sales of cereal and tuna fish online. The entire retail space including groceries is in upheaval; it’d be foolish not to put multiple irons in the fire if you have them available.
The important thing, though, especially if Amazon expands rapidly, is that it has to be able to maintain a high level of trust in its products and its customer service. It has to push past Costco and Trader Joe’s in customer satisfaction. Then it can let Whole Foods be Whole Foods, and let Amazon be Amazon.
This might be the best possible outcome. Or they could f— it up. Let’s wait and see.
More Things To Read
I have two this week, and they’re very different. The first is by the EFF’s Shahid Buttar and Mitch Stoltz, and it’s called “Antitrust Enforcement Needs to Evolve for the 21st Century.”
At the same time that antitrust regulators and courts developed an unsustainable, myopic interpretation of consumer harm, they also sharply limited one of the strongest levers in antitrust law for guarding competition: the “essential facilities” doctrine. It has been applied in cases ensuring that railroads could access bridges over rivers even when their competitors owned the bridges and that advertisers could run ads in newspapers even when the newspaper might prefer to exclude them in retaliation for those advertisers also buying ads in other advertising mediums. When a firm wielding monopoly power leverages a resource that other firms cannot duplicate by refusing to allow access, courts can apply the essential facilities doctrine. On the one hand, leveraging a firm’s unique infrastructure might seem like a normal way of doing business. Seen from another perspective, this kind of activity preys on consumers—and competition—by preventing competition from emerging and forcing users to settle for the first mover.
Treating Amazon’s cloud infrastructure or its retail marketplace as an essential facility is pretty exciting to me. However, I find this next to impossible to square with the sense (that I also feel quite keenly) that Amazon should keep medical misinformation and fraudulent products out of the public sphere. The EFF would probably land on the noncensorious side of this issue. We’ll see how it develops.
The Second Must-Read is a Quartz Obsession, which I am a sucker for. It’s all about pallets. If you want to know a little about how Amazon and other companies move goods all over the world, you have to know a little bit about pallets and how they work. And this article is the perfect chance to find out.
Amazon Is Already A Logistics Company
Shipping, Cloud, Payment, Marketplace: Amazon is already providing the infrastructure for virtual and physical goods all over the world. That doesn’t stop speculators from speculating that the company’s and its executives’ ambitions are even grander, that they aim to put FedEx, UPS, et al out of work.
[Amazon’s] network of ocean freight containers, trailers, fulfillment centers, cargo planes, and more is so large that not even Amazon could fill it, analysts say.
The more immediate goal of that logistics network is to find ways to work smarter, not harder; to make shipping more efficient, in terms of costs as well as energy consumed. That requires buy-in from the customer, which requires a direct relationship with the customer that Amazon, luckily has. Hence, Amazon Day:
This new delivery innovation enables Prime members to choose a day of the week to be their delivery day, which makes it easier to get purchases grouped and delivered together and, in many cases, in fewer packages. Members can also choose from Prime’s fast, free shipping options for any item they don’t want to include as part of their Amazon Day shipment. The program is one of many sustainability initiatives to help achieve Shipment Zero, the company’s vision to make all Amazon shipments net zero carbon, with 50% of all shipments net zero by 2030.
(Shipment Zero, Project Zero; Amazon likes its 0s lately.)
These numbers are not zero; Amazon Web Services’ Andy Jassy points out that the company’s cloud business has a $30 billion run rate in its early stages. RightScale’s State of the Cloud report shows that a full 61 percent of responding companies use AWS, more than any other company (although Microsoft Azure is gaining.) And somewhere short of a million merchants use Amazon Pay to handle payments. It’s tiny compared to PayPal, but growing, and offers Amazon key insights into marketplaces it can’t access in any other ways.
That’s infrastructure; that’s logistics. And Amazon is enclosing it all.
“How David Pecker Built His Tabloid Empire AMI On Fear” is long and a little dated but enlightening, if you’re interested in the man with whom Jeff Bezos has picked a very public fight.
The New York Times and Vanity Fair went head-to-head with their deep dives into the Bezos-Sanchez affair and its fallout. Both are worth reading: “How Jeff Bezos Went To Hollywood and Lost Control” is a little more high-minded, while “‘We’re F--ked. Gavin Is Going to Get Jeff Back Together with MacKenzie’: Inside the Bezos Affair, a Tale of Love, Lust, Uncertainty, and Way More Complexifiers Than Previously Imagined” is, as the headline suggests, way more immersive.
“Jeff Bezos: This is how I organize my time” is much more inspirational, yet impossible.
I try to organize my personal time so that I live mostly about 2 to 3 years out… We'll announce our Amazon quarterly results and [people will say], 'Great quarter, congratulations!' And then I say, 'Thank you,'… But what I really think about is [how] that quarter was kind of baked and done 2 or 3 years ago, and right now the senior executives at Amazon are working on a quarter that's going to happen in 2021, 2022.
I think what’s really striking about this is that Bezos doesn’t think of 2-3 years as a long time from now. In fact, it’s kind of a restriction on his vision: “mostly, your time should be spent on things that are happening today, this year, maybe in the next 2 or 3 years." So three years, not ten or twenty. Near horizon. These are the things you have to think about when you spend a lot of your time thinking about outer space.
It’s not only moms at Amazons who care about more and better day care options for their children, but the moms have a name, and that name is “Momazonians,” and frankly, I would be afraid of 1800 people calling themselves Momazonians. In particular, the Momazonians want backup day care options, an increasingly common benefit in the world of tech. At Vox, Chavie Lieber writes:
Snow days forcing schools to cancel, day care centers closing for maintenance, nannies calling out sick—there are all sorts of child care issues that working parents must navigate in addition to staying on top of their demanding workload… Per Care@Work, an online service pairing families and caregivers, there are typically two types of backup care options that employers can offer: in-home care or in-center care. With the former, an employer selects a pool of at-home caregivers that it sends to employees’ homes during temporary disruptions in child care. For in-center care systems, employers typically reserve a number of spots at local day care centers and employees are able to drop off their kids when they need to. Backup care doesn’t only apply to children: The benefit is also for employees caring for spouses, partners, or family members recovering from an illness, or for aging family members.
Spencer Soper and Rebecca Greenfield at Bloomberg, who broke the story, write that Bezos has been a holdout on providing emergency and backup care benefits at Amazon:
If the Momazonians succeed, they will have helped engineer a major cultural shift at Amazon, where the needs of workers take a back seat to Bezos’s goal of satisfying the hallowed needs of the customer. Winning a backup day care benefit could theoretically help women move up in a company where only one woman is on an influential senior management team that reports directly to Bezos. “Everyone wants to act really tough and pretend they don’t have human needs,” says Kristi Coulter, who worked in various roles at Amazon for almost 12 years and observed that many senior executives had stay-at-home wives. “You don’t want to be the one to step forward and say ‘I’m a mom with kids and I may not be as single-mindedly devoted to my career as everyone else.’ They're all trying to assimilate to this male-dominated culture.”
We Have Always Been At War With HQ2
Right as the news in New York and DC began to cool a little bit, someone high up at Amazon decided to stir things up with HQ1 in Seattle. (Or maybe it had been decided two to three years before; who knows?)
Amazon, which had put up a high-profile fight with the city over a headcount tax for the homeless population, then got its own way and killed that tax, decided to withdraw from a massive Seattle office building anyways. The company will sublet its enormous offices in Rainier Square, which had over 700,000 square feet of office space, room for as many as 5,000 employees. KOMO wondered if Amazon was souring on Seattle, noting that it had signed a 16-year lease on an office across Lake Washington, in Bellevue.
Meanwhile, while his budget director blamed the appointment of Sen. Michael Gianaris for Amazon-to-NYC all going wrong, Governor Andrew Cuomo begged Jeff Bezos to change his mind and come back to NYC again. There was even a full-page ad in The New York Times. On Friday, Cuomo told Brian Lehrer that none of this had gotten Amazon to reconsider its decision.
I am not an expert on New York state or city politics, but this feels a little like it’s less about actually getting Amazon to change its mind about New York, and more about getting New Yorkers to change their mind about Amazon. It’s taking something that was happening with soft support (but some ambivalence about the political process) and turning into a thing that if it had happened, would have been really great (with correspondingly warmer views for the politicians who would have supported it). This feels like theater.
As theater, the goals are very different. You do not have to persuade Jeff Bezos. You do not have to persuade skeptical politicians. All you have to do is change the feelings about a thing that didn’t happen. That might be an easier fight to win.
And it’s happening on the anti-Amazon side too; Alexandria Ocasio Cortez’s chief of staff Saikat Chakrabarti gave a generally noncommital, “we’d welcome having a community process” if Amazon were to decide to return. Everyone can have warmer feelings about the thing that is now looking increasingly like it’s never going to happen. I’m even writing things like “looking increasingly like” rather than just “never going to happen,” because I need to cover myself in case it all somehow comes together. (It’s not going to happen.)
Eugene Kim had a good postmortem on the whole thing with “Amazon's year-long publicity blitz for HQ2 has backfired.” What did he do? He asked PR experts.
Amazon could have avoided all the negative publicity if it had just run the bidding process quietly, instead of spinning up a year-long media cycle, according to public relations experts. “To go out and create a ‘beauty contest,’ and turn it into a media circus—it was a dumb idea,” said Paul Argenti, a communications professor at Dartmouth College.
As it is, Amazon got a lot of cities that didn’t win the sweepstakes very riled up, and got the cities that did win (but have to pay the price of tax incentives and booming real estate) even more riled up. Now they’ve even got Seattle riled up. Particularly in New York City, it was a very public circus, and a very private process. That’s unbalanced. It could and should have been the other way around.
Don’t Miss These
- Amazon’s started selling customer data to brands, for those brands to send the customers free samples. It’s kinda cool (hey free stuff) and kind of creepy (wait, you gave out my home address?). It’s very Amazon.
- Alexa skills are largely monetized through in-skill purchasing. This post takes you through the developer side of it, but it’s worth reading to try to understand how skills are constructed to get you to engage with them, and eventually to spend money.
- “Selling Cookbooks In The Age of Amazon” is nearly a must-read. “For obvious reasons, publishers aren’t clamoring to disclose how much sweeter the purchasing deal can be for Amazon, but industry insiders project its discount is 50 to 55 percent. Amazon’s sometimes crazy-low prices, which can be more than 60 percent off the cover price during sales, support the speculation. ‘They were selling [Samin Nosrat’s popular 2017 cookbook] Salt, Fat, Acid, Heat in late November for $12.60,’ says Celia Sack, owner of San Francisco’s Omnivore Books, ‘when I was buying it from the publisher for $17.50.’” Related: “Why Are New York’s Bookstores Disappearing?”
- Spanish-Language Audiobooks will reach €7 Million this year. Currently, Amazon has a small share of this market; it’s dominated by Storytel, with Kobo, Scribd, and Amazon’s Audible each taking pieces. But in February, Amazon launched Audible Latino to create a dedicate site for US-based Spanish-language entertainment. There’s room for growth here.
- Amazon's online data use has been ‘less dangerous’ than Facebook’s, says tech investor Roger McNamee. That sounds pretty good! “That's not to say we can count on that going forward,” says Elevation Partners’ McNamee, an early investor in Facebook and Google. Oh. I see.
- “How Amazon Taught the Echo Auto to Hear You in a Noisy Car.” A cool feature on adapting the Echo to a new environment to optimize usability and safety. A huge part of the Echo’s and Alexa’s success is going to hinge on its adaptability into new environments, and the car is one of the most difficult (and lucrative) of all.
- “Amazon Gives AI to Harvard Hospital in Tech’s Latest Health Push.” Unlike voice UI, I’m skeptical of AI as a cure-all in hospital settings, but it’s interesting that it’s Amazon here, not IBM or a medical tech provider. And I also like that they’re starting small. “Beth Israel Deaconess Medical Center’s first projects with Amazon.com Inc. are less about sophisticated therapies and more about making day-to-day tasks like patient scheduling more cost-effective… “They’re identifying the right problems where machine learning truly can help,” said Taha Kass-Hout, senior leader for health care and AI at Amazon.
And don’t forget, Amazon has a longer-play interest in health care than this hospital partnership one-off: Haven, the finally-named joint venture it’s started with Berkshire Hathaway and JP Morgan Chase, headed by CEO and superstar doctor/author Atul Gawande. Haven has a new website with a vision statement:
“We believe it is possible to deliver simplified, high-quality, and transparent health care at a reasonable cost. We are focused on leveraging the power of data and technology to drive better incentives, a better patient experience, and a better system. Our work may take many forms, and solutions may take time to develop, but Haven is invested in making health care much better for all of us.”
Sounds good! Sounds vague. Maybe vague is good.
That’s it for this week at The Amazon Chronicles. If you liked it, please pass it on to a friend. If you loved it, please consider becoming a supporting member. Thanks for reading.
Tim Carmody https://tim-carmody.glitch.me