It is a testament to the shift in global power that one of Boris Johnson’s most significant meetings in New York during a trip to the UN General Assembly this week was not with a head of state, but with Jeff Bezos, founder and executive chairman of Amazon.
Ahead of his departure to New York, Johnson promised to confront Bezos about the amount of tax Amazon pays. Amazon’s revenue in the UK increased by more than 50 per cent in 2020 to £20.6bn; yet its key UK division paid just £18.3m in direct taxes.
The most powerful organisations in today’s world are arguably private corporations. Among them are Google, Facebook, Apple and, of course, Amazon. One can imagine how the Prime Minister’s meeting with Bezos, which took place yesterday (20 September), will have unfolded. Perhaps it involved the PM begging the multinational to pay its fair share in tax. The nation state is not what it once was.
Faced with Amazon, the democratic world finds itself in a predicament and as the corporation expands its reach and increases its power, it will get harder to deal with. Indeed, Amazon’s growth has already been turbocharged by the pandemic. The company’s net profits increased by 84 per cent in 2020. Meanwhile, Bezos’s personal fortune increased by $24bn during March and April of 2020 alone.
Tax is one thing, but Amazon’s pernicious influence is felt far beyond that. Bezos, a libertarian by temperament, has always been transparent about his aims for the high street. “Proceed as if your goal is to put everyone selling physical books out of a job,” Bezos told his original deputy at Amazon, Steve Kessel, in the early days of the business. Amazon’s artificially low prices are helping to do just that: in the three years to 2018, retail employment fell in more than three-quarters of local authority areas in the UK.
Amazon encourages small business owners to sell through its website, which the company portrays as a great boon for entrepreneurs. Yet it hammers its business affiliates with a 15.3 per cent rate of commission (for products sold above £10). Amazon has also used data from third-party sellers against them, seeing which products sell the most and then offering its own products to supplant them.
The rise of Amazon forms part of a larger story about the triumph of winner-takes-all cities over declining towns and suburbs. The American journalist Alec MacGillis documented this well in his recent book Fulfillment: Winning and Losing in One-Click America. With a few exceptions, politicians have acquiesced in the process. As MacGillis writes: “A revolving door between Washington and corporate jobs in Silicon Valley has popularised the idea that what is good for Amazon is good for America.”
We have witnessed something similar here in the UK. Amazon has often chosen to build its vast fulfilment centres in depressed former industrial heartlands: its warehouses have sprung up in Swansea, Doncaster, South Yorkshire and the town of Rugeley in the West Midlands. The tantalising prospect of restored local pride – after years of decline following the closure of industry – leads local authorities to offer millions in subsidies and tax breaks to entice Amazon to their area. According to the Trades Union Congress, Amazon was awarded national and local government contracts with a lifetime value of up to £630m between 2015 and 2020 in the UK.
From a local perspective, it is easy to see the appeal of the promise of Amazon warehouse jobs. Yet the reality usually falls very short. In 2018, I broke the story that Amazon warehouse workers in Rugeley were urinating into Coca-Cola bottles because they were afraid to take toilet breaks.
Since then, similar stories have emerged from Amazon sites around the world. In the US, a study of 23 Amazon warehouses conducted by the Center for Investigative Reporting found that serious injuries were reported at a rate of more than double the national average for the warehousing industry. Tim Bray, a vice-president at Amazon, quit the company “in dismay” in May 2020 after the company fired several workers who had ask questions about the safety of its warehouses.
We – the public – may be addicted to the convenience that Amazon provides. But convenience comes at a cost. Indeed, Amazon’s “customer obsession… might not be good for people who aren’t customers”, as Shel Kaphan, whom Bezos once called “the most important person ever in the history of amazon.com”, pointed out in a 2020 PBS documentary.
On the back of Johnson’s trip to New York for a cap-in-hand meeting with the Amazon founder, it seems relevant to ask for how long national leaders are going to treat Amazon as a strictly private concern. If Amazon was a country, it would be the 14th richest nation in the world; its market value puts it on a par with South Korea. The company accounts for nearly 40 per cent of all ecommerce spending in the US.
The PM’s rendezvous with Bezos took place outside the walls of the UN headquarters in New York. It should arguably have taken place inside: the Amazon founder wields more influence over our lives than most politicians gathering at the UN this week. Yet as Amazon subordinates workers, deprives governments of revenue and embeds itself further in our lives (it continues to expand into healthcare), the company is accountable only to its shareholders.
Perhaps it is time to ask whether democratically elected politicians should be in Johnson’s position at all – pleading with a vast multinational to pay its fair share. British political leaders understand a thing or two about imperialism. Maybe it is time they lobbied for the break-up of Bezos’s all-powerful Amazon empire, before it is too late.