Tuesday, December 13, 2011

Amazon, A Leviathan of the Contemporary Gilded Age

Amazon.com, the online retail behemoth managed by Chief Executive Officer Jeff Bezos, is undermining our local communities in a fashion reminiscent of Standard Oil; which to some observers of the Gilded Age was the worst of the Gilded Age's corporate leviathans.

The behavior of Standard Oil and its owner, John D. Rockefeller, is captured in Jean Strouse's Morgan: American Financier. Ms. Strouse, in the following excerpt from her book, provides a description of John D. Rockefeller's business conduct:
His tactics were not genteel.  He forced competitors to sell out by spying on them, depriving them of raw materials he controlled, and slashing prices until they had to operate at a loss.
Now, as we move forward to the contemporary Gilded Age, Richard Russo reports in The New York Times op-ed, "Amazon’s Jungle Logic," that Amazon.com is using unfair, "scorched-earth capitalism" and  possibly illegal tactics to undermine brick-and-mortar bookstores.  The following passages from the New York Times' article shine a light on the business deportment of Amazon.com and its CEO, Jeff Bezos:
According to a link Emily supplied, Amazon was encouraging customers to go into brick-and-mortar bookstores on Saturday, and use its price-check app (which allows shoppers in physical stores to see, by scanning a bar code, if they can get a better price online) to earn a 5 percent credit on Amazon purchases (up to $5 per item, and up to three items).
Scott [Turow] reminds me what happened the last time someone stood up to Amazon. Nearly two years ago, the Macmillan publishing group adopted a new sales model that would cost Macmillan in the short run, but allow other companies to enter or remain in the e-book market without having to take a loss on every sale. Amazon’s response to more competition? They refused to sell not merely Macmillan’s e-books, but nearly every physical book Macmillan published. Amazon eventually backed down, but its initial response helped shape a widespread sense that it envisions a world in which there will be no other booksellers or publishers, a world where, history suggests, Amazon may not use its power benignly or for the benefit of literary culture. 
Lastly, many of you may already be aware that Amazon.com is waging an enormous political effort to avoid pay sales taxes to states and local-communities.

Strouse, Jean. Morgan: American Financier. New York and Toronto: 
             Random House, 1999.

Russo, Richard. "Amazon’s Jungle Logic." The New York Times 12 December, 2011: online edition.

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