Amazon’s Evolution Threatens the Global Economy

The evolution of Amazon is worthy of study. It is the paradigm of entrepreneurship: it was created in a garage and has conquered the world. It represents the effort of a man who has become one of the wealthiest people in the world. 

Since its birth in 1994, the multinational company has penetrated numerous sectors. It has resumed looking for other business areas to continue expanding.

Adapt or die is the philosophy. For many companies, the power accumulated by the company is already unstoppable. 

Recently, Amazon announced the launching of an online pharmacy to sell drugs to Americans. It has shown, once again, the enormous tentacles that it has spread in sectors such as distribution, merchandise distribution, buying and selling of goods, cinema, music, industrial robotics. Everything revolves around Jeff Bezos.

Unlike Google and Facebook, Amazon’s business is not primarily dependent on the oligopoly of digital advertising. Its accounts are swollen thanks to online sales (everything that is bought through its platform) and Web Services, AWS.

The problem with this excessive dependence is that when it fails, and sometimes it does, it affects the entire digital ecosystem. This week digital platforms, mobile applications, smart home devices and hundreds of thousands of websites suffered crashes due to a failure in the AWS US East 1 data centre.

Antitrust investigations into Amazon’s business practices

The main criticism about Amazon is that it accumulates too much power. 

It seemed that Amazon had walked alone, without too many legal hurdles. Until last July, when Bezos made his first appearance before US lawmakers. The businessman participated in an interrogation in the country’s Senate along with his counterparts, Mark Zuckerberg (Facebook), Jack Dorsey (Twitter), Sundar Pichai (Alphabet, the parent company of Google) and Tim Cook (Apple). In his speech, Bezos defended that it has helped create more than a million direct jobs around the world and is an engine of growth for SMEs.

Amazon is now in the crosshairs of the European Commission and the United States. Last year, European Commissioner Margrethe Vestager made her position clear. She claimed that the e-commerce giant might have abused a dominant position in its relationship with companies that sell its products through its pages. This battle has taken shape in the accusations of last week. She blames the multinational company for abusively using the data it obtains from other companies that use the platform to sell their products.

A separate investigation was also opened into potential anti-competitive practices linked to Amazon supposedly unfairly pushing sellers to use the company’s logistics and delivery operations. 

According to the EC, the company relies on business data from independent traders who sell on the digital giant’s platform. This data is not public, and its use benefits Amazon’s retail business, which competes directly with other merchants. Traditional companies have denounced regulatory imbalances in recent years.

The EU has a range of penalties it could propose. It includes a fine of up to 10% of Amazon’s annual global revenue and behavioural remedies.