Published on August 3rd, 2018
A blog post by Graduate RA student Annis R. Sands.
On May 9th, 2018, I co-presented research on the historical emergence of Amazon.com with Vicky Zeamer, a fellow MIT graduate student and Research Assistant in the Global Media Technologies and Cultures (GMTaC). We presented these preliminary findings as part of a new collaborative project between Professor Parks and Professor Jing Wang at MIT called Analysis of Amazon + Alibaba, or AAA for short.
We have a particular interest in understanding how is data driving Amazon’s unregulated expansion into “sectors without borders” (McKinsey published this report). Professor Wang recognized a similar pattern occurring in China with the expansion of Alibaba based on her research. Working with Professors Parks and Wang we are trying to analyze and understand Amazon and Alibaba as modern-day cross-sector monopolies. Our labs are specifically interested in understanding how having unlimited access to data related to e-commerce is driving Amazon and Alibaba’s efforts. In the fall, Professor Wang’s incoming Research Assistant, Han Su, will conduct research on Alibaba’s historical emergence.
For the first phase of our research on Amazon, we explored when, how, and why Amazon acquired so many subsidiaries across diverse sectors and developed a powerpoint presentation that laid out some of our findings (link to it). The next phase of our work will be to explore how Amazon avoids US regulatory policies by operating as “ a technology company” as opposed to a “media company” (for instance, some media regulatory policies are described on this Cornell Law website).
Jeff Bezos started Amazon — initially called Cadabra — out of his Bellevue garage on July 5, 1994 with investments from twenty or so investors who each contributed $50,000 for a 1 percent stake in the company (source: Govindarajan and Warren, 2016). Amazon.com started as a website where customers could purchase books. Twenty-four years later, Amazon operates across diverse sectors; participating in everything from launching satellites to building AI-enabled home assistants to owning food chains (such as Whole Foods acquired to the tune of $13.7B in 2017). How did Amazon become such a massive cross-sector empire?
Examining Amazon’s first job posting indicates that Bezos recognized the Internet’s as an alternative to brick and mortar stores. The August 1994 job listing described the following: “Well-capitalized start-up seeks extremely talented C/C++/Unix developers to help pioneer commerce on the Internet.” Not once did the word “book” appear in the initial job listing potentially foreshadowing . The stated goal of “building large and complex (yet maintainable) system,” suggests that Bezos envisioned his company as not just a website but a technological tool to challenge the status quo. At that moment, the dominant player in the bookstore market, Barnes & Noble, did not have a website. Within two years, Amazon dominated the online market and branded itself as “world’s biggest bookstore.”
This rapid online growth certainly presented new challenges including surpassing its core brick and mortar competitors: Barnes & Noble and Borders. Although our research focused on the adversarial relationship between Amazon Barnes & Noble, there is ripe opportunity in the future to expand this research to draw the parallels between Borders and Amazon. The July 2011 article ‘Borders’ rise and fall’ describes how back in 1995 Borders’ “innovative inventory management system was considered ‘the envy of the [publishing] industry….” (Bomey, 2011). Borders and Amazon’s similar quest to gather and store information suggests that coveted status in controlling access to data as a market strategy. An idea revisited a little later.
But arguably, the most important moment in Amazon’s early history occurred on May 12th, 1997 when Barnes & Noble filed a lawsuit against Amazon. According to CNET Barnes & Noble sued Amazon for “false advertising practices” in claiming that it is the “world’s biggest bookstore.” Some analysts at the time suggested that Barnes & Noble lawsuit sought to thwart Amazon’s projected IPO on May 15th, 1997. The fact that Barnes and Noble’s launched its website on the same day of the lawsuit legitimized Amazon as a key competitor. When Barnes & Noble and Amazon settled out of court several months later in October 1997, some analysts even saw the settlement as a notable win for Amazon in the familiar David versus Goliath paradigm.
The Barnes & Noble lawsuit foreshadowed Amazon’s rise as a company committed to a “pioneer” spirit and industrial competition and innovation. Nearly two year decades after Bezos stated his goal was to “pioneer commerce on the Internet,” he continues to focus on being a “pioneer.” For instance, he described back in 2011, “We are culturally pioneers.” (Levy, 2011). The focus on being a “pioneer” represents a persistent push to use collected data to both design and project their customers’ future needs.
No wonder how in the last twenty years, Amazon mushroomed into such a massive organization (the screenshots below show the sheer volume of Amazon’s holdings). The company’s expansion and creation of new facilities for data storage, real estate acquisitions, and the production of original programming. But what is Amazon’s end goal?
Data. Data. Data. Amazon’s entrance into seemingly disconnected sectors suggests a corporation focused on improving its return on investment. Bezos acknowledged how Amazon’s customers remain “loyal to us up until the second somebody offers them a better service” (Robischon, 2017). Tiziana Terranova described how corporations like Amazon claim “the right to profit from the information that has been produced at great cost to the producer” (Terranova, 7). In the case of Amazon, data drives profits.
But there is a growing concern about the human costs to Amazon’s expansion. On June 5th, 2018, the Associated Press reported how workers at one Amazon fulfillment center in Minnesota “suffered exhaustion, dehydration, injuries while working without air conditioning.” It is important to emphasize that we are not advocating for people to drop their Prime subscription in protest of the above concerns. But rather facilitate a discussion about how does existing regulatory policies monitor Amazon’s cross-sector activities? Do we need to redefine the concept of monopoly to understand the tech industry in the contemporary era? We are excited to report more of our findings in the near future.
Blog post based on a May 9th, 2018 presentation by Vicky Zeamer (MIT, CMS) and Annis R. Sands (MIT, CMS), Research Assistants for the Global Media Technologies and Cultures (GMTaC) led by Dr. Lisa Parks.
https://docs.google.com/presentation/d/1wi3yjU49ZoxZNWl0P7GjXIBoMwUfJGOETJK4OqN_72U/edit?usp=sharing
Sources:
Venkat Atluri, Miklós Dietz, and Nicolaus Henke. “Competing in a world of sectors without borders,” July 2017. https://www.mckinsey.com/featured-insights/sectors-without-borders
Nathan Bomey. “Borders’ Rise and Fall: a timeline of the bookstore chain’s 40 year history,” July 18, 2011. http://www.annarbor.com/business-review/borders-rise-and-fall-a-timeline-of-the-bookstore-chains-40-year-history/
Vijay Govindarajan and Anita Warren, “How Amazon Adapted Its Business Model to India,” Harvard Business Review, 2016. https://hbr.org/2016/07/how-amazon-adapted-its-business-model-to-india
Matthew Humphries, “How Jeff Bezos Advertised for the First Amazon Employees,” December 28, 2010. https://www.geek.com/chips/how-jeff-bezos-advertised-for-the-first-amazon-employees-1994-1302442/
Adam Lang. Rewind&Capture, December 22, 2013. http://www.rewindandcapture.com/why-is-it-called-amazon/
Steven Levy. “Jeff Bezos Owns the Web in More Ways than You Think.” Wired Magazine, November 13, 2011. https://www.wired.com/2011/11/ff_bezos/
Alexander Nazaryan, “How Jeff Bezos is Hurtling Toward World Domination,” July 12, 2016. http://www.newsweek.com/2016/07/22/jeff-bezos-amazon-ceo-world-domination-479508.html
Noah Robischon, “Why Amazon Is The World’s Most Innovative Company of 2017,” February 13, 2017. https://www.fastcompany.com/3067455/why-amazon-is-the-worlds-most-innovative-company-of-2017
Tiziana Terranova, Network Culture: Politics for the Information Age. (Ann Arbor: Pluto Press, 2004).
Alex Wilhem. “A look back in IPO: Amazon’s 1997 move,” June 28, 2017. https://techcrunch.com/2017/06/28/a-look-back-at-amazons-1997-ipo/
“Amazon, B&N Settle Lawsuit,” October 21, 1997. https://www.cnet.com/news/amazon-b-n-settle-lawsuit/
The Associated Press (AP). “Workers at Amazon warehouse in Minnesota say they’ve suffered exhaustion, dehydration, injuries while working without air conditioning.” June 5, 2018, 7:37pm. Tweet. https://mobile.twitter.com/AP/status/1004145273382326274