Platforms and Pandemics
The Covid-19 pandemic has been a boon for the global tech giants. While millions of people have died, many more have lost their jobs, and innumerable others have struggled under the isolation of global lockdowns, the biggest Western platforms have seen their revenue soar. Amazon, Apple, Facebook, Google, and Microsoft are on their way to a record-breaking $1.4 trillion in sales over the course of 2021, a figure larger than the GDP of Australia. Profits have followed, with nearly half a trillion dollars expected over the course of the 2020 and 2021 financial years. And investors have driven the stock prices of these companies skyward: up more than 50% between March 2020 and March 2021.
Amazon has been a particularly large beneficiary of the global pandemic. The move to ecommerce globally is one of the most obvious ways that lockdowns accelerated the scale and profits of the company. With bricks and mortar stores closed, and people fearful to leave their homes, consumers turned to the internet to meet their shopping needs. In countries like the US and UK, ecommerce’s share of retail grew significantly. But the more noteworthy story concerns those countries that had previously been hesitant about online shopping. Lockdowns led vast numbers of consumers toward the conveniences of clicking and ordering from one’s home for the first time. Despite being one of the most hesitant European countries before the pandemic, for example, three quarters of Italians soon found themselves turning to online shopping during the first lockdown.
Less well known, perhaps, are the ways in which Amazon has benefited from the widespread shift to online communication and remote work. Amazon’s profit engine is not ecommerce, but rather its cloud computing unit known as Amazon Web Services (AWS). With companies moving online, both for remote work and for general IT purposes, AWS has consolidated itself as the dominant cloud service. Zoom and Netflix, for instance – those two bedrocks of lockdown life – are both based on AWS’ servers. It is no wonder then that operating income (an important measure of Amazon’s profitability) grew by a brisk 33% year-over-year in 2021.
But is what’s good for Amazon good for everyone?
Cheap prices and rapid delivery appear to offer immense benefits for consumers – and Amazon relies on this one-sided benefit for political leverage to resist any restraints on its actions. But these are borne on the backs of a vast army of low-paid and highly exploited workers – an inconvenient reality that is all too easy to ignore when sitting in front of a computer screen. Amazon warehouse workers are far more likely to be injured than other warehouse workers; delivery drivers have been forced to urinate in bottles to meet intense delivery requirements; and in the US, six warehouse workers recently died when Amazon managers reportedly refused to let them leave before a tornado struck. Amazon touts its pay as being above minimum wage, while neglecting to mention it is below industry averages.
There are also the impacts that Amazon has on smaller businesses, who find themselves unable to compete with the scale or deep pockets of the Bezos behemoth. As small businesses become ever more reliant on Amazon to sell their wares, Amazon is becoming ever more predatory in return, extracting significant fees. The recent €1.129 billion fine imposed by the Autorità Garante della Concorrenza e del Mercato (AGCM) is one reflection of this, targeting practices whereby Amazon used its monopoly position to coerce small businesses into further dependence and expenditure on its services.
Amazon, along with all the other platform giants, is also an adept practitioner of tax avoidance. For instance, its European arm generated €44 billion in sales in 2020, but clever accounting allowed it to claim a loss and avoid paying any corporate tax. In fact, by basing its European operations out of the low-tax Luxembourg, Amazon has managed to receive tax credits despite record revenues arising from the pandemic. While governments around the world opened their pocketbooks in response to the challenges of the pandemic, big tech companies have resolutely failed to pay their fair share of taxation. The result is more fiscal pressure placed on states, less room for social expenditures, and more tax pressure placed on average workers and citizens. We pay in rising taxes, in crumbling infrastructure, in exhausted healthcare systems – but at least that book we ordered arrives the next day.
In this context, recent actions against Amazon – significant fines imposed by the AGCM and tax deals made with the Italian revenue service – are clearly important but woefully insufficient. Efforts to increase competitiveness and decrease dependency for small businesses are only one small part of the solution. There also needs to be a reckoning with Amazon’s imposition of intense and dangerous working conditions, with their failures to pay a fair share of taxes, and with the dependency being created by their sprawling digital infrastructure. As the revived antitrust movement in the US has argued, monopolies are bad not only as a result of their impacts on prices but more importantly because they are concentrations of unaccountable power. In the case of platform giants, and perhaps particularly in the case of Amazon, this concentration of power and profit is being exacerbated by the pandemic and reaching historic levels. A broad-based movement for workers and for democracy is needed to combat this.
What might such a movement involve? Minimally, it could mean pushing for democratic accountability over these platforms and basic public utility regulation. It might mean building things like platform cooperatives and even some sort of public ownership whether that be at the level of municipal, regional or national government. In the past, when a natural monopoly offering key public services became dominant – think of railways, for example, or electricity grids, or postal services – it became subject to significant public oversight and, at times, outright public ownership. We need to be bold and reimagine such efforts for the digital age if we are to avoid having our world carved up between a handful of corporations.