Amazon

Understanding a Global Communication Giant

Benedetta Brevini, Lukasz Swiatek

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000286052
• Edition: 1
• Topic: Business
• Subtopic: Digital Marketing
• Index: Business

Taking a political economy of media approach, this book examines Amazon as a significant actor in the global media landscape.

Amazon is mainly conceived in the popular consciousness and media commentary as a corporate body, selling products and services to individual consumers and organisations, but Brevini and Swiatek show that Amazon has become a communication giant that trades in diversified media (its own and others), and exerts a significant influence on global communication, especially through its online services. Further, the authors provide evidence of Amazon's multiple influences on politics, economics, and culture.

With its comprehensive and critical overview, this book is ideal for students, scholars, and researchers of media and communication studies and political economy.

1 Introduction

Benedetta Brevini

As I write this introduction, the coronavirus global pandemic is impacting global economies in unforeseen ways. It is not surprising that Amazon, one of the wealthiest corporations in the world, is making the daily news during the coronavirus emergency. When the world as we knew it stopped and lock-downs kicked in, stressed and bored consumers rushed to Amazon to secure precious and not-so-precious commodities without leaving home. The pandemic – and the associated growth of Amazon – has reignited concerns that have been repeatedly raised in the past: Amazon is too big, too powerful, and is insufficiently attentive to its workers.

At the start of the COVID-19 crisis, Amazon CEO Jeff Bezos was asked to explain why a $25 million U.S. relief fund¹ he established to help his own contract employees during the pandemic was also soliciting contributions from the public. Why, the media asked, was the wealthiest man in the world,² at the helm of a $1 trillion company, seeking voluntary donations to help its employees?

This was not the only criticism directed at Amazon related to the company’s treatment of its employees, who, because of their workplace, are heavily exposed to the risk of contracting COVID-19. Although Amazon refers to its warehouse and delivery workers as “heroes fighting for their communities”,³ performing the crucial work of delivering supplies to locked-down consumers, many of these employees are anxious about the safety of their health. Their options in the face of the pandemic are limited: they can take unpaid time off with no salary at all, or those who test positive for the disease are entitled to two weeks of paid sick leave. As a result, most employees continued to go to work. Many workers have now added a badge to their profiles, stating, “I can’t stay home, I work at Amazon”.

The pandemic has also highlighted ongoing global issues of wealth inequality, and the impressive rise of Amazon stocks on the NYSE did not go unnoticed. In April 2020 Amazon stocks hit a new record, closing at $2.283 per share, an increase of over 20% in the first quarter. This occurred just as the Standard and Poor (S&P) 500, severely hit by the crisis, lost about 15% of its value. Bezos’s net worth increased by nearly $36 billion between March and June 2020, at the peak of the coronavirus crisis, while millions of workers lost their jobs. As Senator Bernie Sanders keeps repeating, “Our society cannot sustain itself when so few have so much, while so many have so little”.

Enthusiasts of globalisation argued for years that we had created an interconnected financial system that was resilient enough to help us through major crises. However, the coronavirus crisis, just as the global financial crisis of 2008 before it, has highlighted once again in striking terms that super capitalism⁴ has failed. From every corner of the world, we turn to public support and public resources to overcome the crisis. Once again, we have had to be rescued by the nation state and especially by centralised banks, charged by government to carry out major plans that are consistent with the social democratic ideals of a welfare state.

In such dire circumstances, with unemployment levels rising, Amazon is still prospering.

Looking at the performance of Amazon in the last weeks of April 2020, coronavirus has offered major opportunities: the company hired 175,000 full- and part-time workers, its online shopping branch kept thriving, as well as its technological and communication branch, with cloud computing and video streaming increasing their demand. Amazon Prime Video is ranked only behind Netflix Inc in popularity in the U.S.

Moreover, during the first three months of 2020, Amazon’s shares rose 6%, so that the growth from the beginning of 2020 reached 11%, when S&P 500 was down 15%.

Reflecting on these numbers, one might think that this is the perfect example of the shock doctrine thesis by Naomi Klein,⁵ author of the 2007 book The Shock Doctrine: The Rise of Disaster Capitalism. In this book, Ms Klein describes disaster capitalism as

the way in which private industries spring up to directly profit from large-scale crises… . We are seeing a very selective use of emergency measures, of the utilization and the instrumentalization and the weaponization of states of emergency to offload risks onto individual workers and families, while the people who are already most cushioned are getting these no-strings-attached bailouts.

As the political economy of communication (PEC)⁶ has long shown, huge corporations like Amazon do not arise in a social vacuum. We know that markets are always manufactured, and contrary to economist Friedrich Hayek’s stance, they are created by clear economic and political choices in a given society.⁷ This book argues that Amazon did not become the powerful global giant it is because of its “disruptive” and “innovative” character but because of decades of laissez-faire regulations measures, decreased antitrust oversight, and unequal wealth distribution frameworks (taxation in primis). By looking at Amazon as a global giant that is crucially embedded in the capitalist systems where it operates, we examine the corporation as a site where business and cultural strategies, capital structures, ownership and control, public relation efforts, and the state all interact.

While PEC sets the framework of this book, four additional theoretical perspectives are extremely relevant for an analysis of Amazon. These concepts are concentration, data extraction, rent in the digital economy, and network effect. Together, they underlie the central hypothesis of the book: that Amazon has become a Global Communication Giant and a Digital Lord.

Political economists have long explored the issue of concentration in the communication industry, focusing on forms of concentration that distort market systems.⁸ Organisations that are too large or that operate as monopolies reduce competition and restrict innovation, thus interrupting the free flow of market forces, while at the same time wielding their intrinsic power to direct politics and policy making. Concentration thus becomes a crucial concept to understand the basic power relations and capitalist structure in which new Internet platforms have been developed and thrive.⁹

Other business and political economy studies have looked at significant network effects in the adoption of technology products and services. Major studies such as Katz and Shapiro¹⁰ and Liebowitz and Margolis¹¹ demonstrate that the more users a digital service attracts, the more the value is increased. In other words, the utility of the goods increases with the number of users. The bigger the network, the bigger the return on some services. Scholars also distinguish between two types of network effects:¹² direct and indirect. Direct is strictly linked to the number of adopters on the intrinsic value of the product. Indirect network effects are due to the secondary effect caused by the cumulative number of users, for example, obtained or triggered by players on the other side of the market. One example is an increase in the range of matching components related to the core product or service, which in turn increases the value of the core product or service. These concepts become of great relevance in understanding how Internet platforms work in the context of capitalism and certainly are crucial in comprehending the strategies of growth of Amazon. The more Internet platforms are used and the more users they have, the more interesting they become for returning users and the more challenging for smaller providers to compete. As I argue in Chapter 2, the influence and size of the pool of users and reputation also trigger indirect network effects activated by other players operating in the same markets but with different objectives (consider, for example, other producers or other sellers or advertisers).

From a different scholarly perspective, economist Mariana Mazzucato¹³ argues that if we are really to understand the sources of power inequalities in our economy, we need to focus on rents.¹⁴ As Adam Smith explained, rent is a monopoly price. Smith used the example of land/real estate to explain the ways in which owners can extract money from consumers, which is neither payment for labour nor for necessary capital.¹⁵ In other words, rent can be conceived as merely “value extraction” without production involved. Rents are tightly connected to the network effect: it...

Table of contents

• Cover
• Half Title
• Series
• Title
• Copyright
• Dedication
• Contents
• List of Illustrations
• Acknowledgements
• 1 Introduction
• 2 Economic Profile
• 3 Political Profile
• 4 Cultural Profile
• 5 Conclusion
• Index