Amazon is not a company…it’s a machine trying to take over our lives
As the online retailer announces plans to start selling groceries Robert Colvile looks at the potentially terrifying future of the internet giant
THE news this week that Amazon is going to start selling groceries will have taken a few people by surprise. What’s it doing going toe-to-toe with Tesco and Sainsbury’s?
The key to understanding the shopping giant is that Amazon doesn’t want to sell you groceries. It wants to sell you everything.
From its beginnings in 1994, the objective was simple: world conquest.
Amazon boss Jeff Bezos’s early ideas for its name was “Relentless.com”. In the end, he went for“Amazon” because “this is not only the largest river in the world, it’s many times larger than the next biggest river. It blows all other rivers away.”
But how to get there? Bezos’s answer was simple: scale and speed. Above all, Amazon wants to be the largest and the fastest. To have the most to sell, and to deliver it the quickest.
This helps to explain one of the strangest things about the company: it hates to make money. Given the choice between banking a profit and lowering prices, Bezos will always, always lower prices.
How come? The lower Amazon’s prices are, the more they sell. The more they sell, the lower their costs. The lower their costs, the lower their prices. It’s a virtuous cycle - and one that makes Amazon almost impossible to compete with.
It’s not just about price. It’s about convenience. Amazon has invested hugely in its delivery network - because its research has shown that the quicker you get stuff, the more you buy.
This is the idea behind “Amazon Prime”, the £79-a-year membership service that gives you lightning-fast and ultra-cheap delivery, as well as free access to Amazon’s TV shows and movies - because it knows that once you’re signed up, you’ll become a turbo-consumer.
The strangest things about the company: it hates to make money. Given the choice between banking a profit and lowering prices, always lower prices.
Crucially, Amazon isn’t just good at selling stuff. It’s good at selling other people’s stuff. This is the Amazon Marketplace - and in 2014, it was used to flog two billion products.
It’s not just Marketplace. Amazon also does delivery - other people’s products are stacked in its warehouses and loaded into its vans. It also hosts websites, using its computers to power not just Amazon.com itself but also Netflix, Pinterest, Nasa and even The Sun.
These services have, just like Amazon’s main website, proved fantastically useful - helping not just consumers but also entrepreneurs who want to flog stuff online, or set up their own web business.
The problem is that it’s a fine line between using Amazon’s platforms and becoming dependent on them. In particular, many of the sellers on its Marketplace are in the same situation as those little birds that clean the teeth of crocodiles: it’s a great living, until the jaws go snap.
That’s because Amazon isn’t just running the market - it’s also got the best stalls. And it sees everyone else’s receipts. So if it notices that a particular product is selling well, it will start selling it too - almost invariably at a lower price.
Its latest move is to cut out the middleman entirely, and make its own versions of nappies, tea, baby food and more - which won’t just be cheaper than existing products, but will show up higher in the search results.
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Amazon’s march towards world domination, in other words, is driven by a remorseless desire to crush the competition. In publishing, its “Small Publisher Negotiation Program” was originally called “the Gazelle Project” - because it involved chasing down smaller companies and feasting on their entrails.
Amazon’s march towards world domination is driven by a remorseless desire to crush the competition
It’s not much kinder to its own workers. The shelf-stackers are being treated like robots - and, increasingly, replaced by them.
There are other reasons to be worried. Amazon’s shareholders have put up with it not making money. But that’s because they think it will eventually be able to make a lot more - once it’s driven everyone else out of business.
Its sheer size and clout now make Amazon a fearsome competitor. Tesco might be able to match its prices on fruit and veg. Waitrose might be able to offer a finer cut of steak. But can they offer next-hour delivery, with exclusive access to Jeremy Clarkson’s new TV series thrown in?
For some people, the real problem isn't just that Amazon is a fearsome competitor. They think it cheats, notably on tax.
Facebook wants to oversee your friendships. But Amazon? Amazon wants to run your life
Today, if you buy a book from Amazon UK, the small print will tell you that you have actually bought it from Amazon EU Société à Responsabilité Limitée, 5 Rue Plaetis, L-2338, Luxembourg.
Until 2015, Amazon registered its UK sales in low-tax Luxembourg — helping it to undercut British rivals. In 2014, sales to UK shoppers were £5.3billion, yet it paid just £11.9million in tax. In the end, Amazon isn't really a company.
It is a machine built to give us whatever we want, as quickly as possible. And it’s one that’s moving into more and more areas of our lives.
In 10 years’ time, it’s entirely possible that we’ll be woken up by our Amazon voice assistant, drink our Amazon tea, eat our Amazon cereal, then read our Amazon book on the way into work.
If we’ve got some downtime, we’ll order some clothes on Amazon to try on in the evening - delivered to us via a flying Amazon drone. Or we might just settle down with the latest Amazon TV series.
Google wants to control your information. Facebook wants to oversee your friendships. But Amazon? Amazon wants to run your life. And it’s already well on the way.
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