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Following the request from Bruno Le Maire, Amazon and most retailers and e-commerce sites agreed to postpone the consumerist extravaganza known as "Black Friday" to December 4th. In recent days, calls to boycott Black Friday and block warehouse operations have multiplied. Under the impetus of the Green Friday movement, several companies have decided to forego the event altogether. The Amazon psychodrama has generated a lot of ink and will likely continue to do so. Self-proclaimed defenders of Amazon and paragons of virtue who accuse the American giant of all evils have written extensively on the topic. However, if one wishes to be even somewhat honest and objective about this matter, there are just as many reasons to defend the e-commerce giant as there are to criticize it. More importantly, there is enough to reproach Amazon for—especially regarding their labor practices and tax issues—that there’s no need to make an unfair case against them.
"Hide That Purchase I Cannot See"
A 2008 cover of The New Yorker. Illustrator: Adrian Tomine. Since the lockdown, and even long before that, Amazon has been at the center of much resentment in France. The company has become the new "Monsanto," a consumerist, environmentally destructive multinational that people love to hate. More than any other, Amazon embodies the concept of creative destruction developed by economist Schumpeter. According to Stacy Mitchell, who leads the Institute for Local Self-Reliance, a research organization on the evolution of the American economy, for every job created by Amazon, two are lost in existing businesses.
However, by inventing the online bookstore, Amazon merely facilitated access to books, much like Netflix did for films, Uber for drivers, and Spotify for music. While these companies have transformed consumer habits, they have also, and more importantly, met consumer expectations by offering services at the click of a button, anytime, anywhere, as long as there’s internet access. Should we be happy about this? It's almost a philosophical question that everyone must answer for themselves. But it would be unfair to lay the entire blame for the difficulties faced by independent bookstores on Amazon. The health crisis has merely highlighted the delay of our small and medium-sized enterprises in digitalizing and the necessity of accelerating it. Already severely impacted by high downtown rents, small businesses and bookstores have no choice but to digitalize to survive.
Amazon, a Tentacular Empire
Every day, Amazon ships 14 billion parcels, 158 every second, and serves 300 million customers worldwide. The health crisis and lockdown have further strengthened Amazon's dominant position, with the company recording record sales in the second quarter and doubling its profits year-over-year to reach $5.2 billion. Amazon's market capitalization now stands at over $1.55 trillion, almost as much as the 40 companies in the Paris market's leading index (CAC40). While e-commerce accounts for 52% of its revenue, compared to 11% for Cloud services, it's the latter segment that provides the highest profitability (25% compared to 3% for e-commerce). The Seattle giant, which has built a veritable empire with tentacular activities—ranging from retail, aerospace, robotics, healthcare, food, cloud computing, banking, video games, insurance, fashion, music, and now education with the opening of its first preschool—attacks every sector with disconcerting success. Since its inception, the company has acquired 88 companies worldwide for a total of $21 billion in acquisitions. Amazon looks to the future with even more optimism, as the company recently revealed its intention to train its employees—through its "Careers Choice" training program—in areas where it is not yet present. These indicators hint at what the American giant's strategy might be for the next decade.
The Stockholm Syndrome
The French have an ambiguous relationship with American tech giants, a mix of attraction and repulsion. More and more voices are rising to denounce the methods of the American giant, but it must be acknowledged that Amazon delivery drivers have never been so numerous in our streets. According to Frédéric Valette, head of distribution services at Kantar, Amazon is "the most important player" in online physical goods sales. If Amazon is raking in record profits and overwhelmingly dominates the e-commerce sector globally, it’s because consumers favor this platform over others. Today, many people claim to be outraged by the closure of bookstores and small businesses, but how many of them regularly order from Amazon? Have we not become willing victims? Riding the wave of the digital revolution and capitalizing on our compulsive shopping frenzy, the e-commerce giant has shrunk time and transformed our society and habits along with it. Our consumption patterns, now dictated by a need for urgency and convenience, have made us forget that going to a store and meeting people remains an irreplaceable experience. While online shopping meets real needs, it is up to consumers to reflect on their purchasing practices and choose players who are respectful and mindful of social and environmental impacts.
A Psychodrama Revealing Our Contradictions
With the new lockdown, "non-essential" businesses were forced to close while e-commerce platforms like Amazon continued to operate freely. Many merchants and booksellers rightly feel they are victims of unfair competition. But who is to blame? As independent bookstores raise an alarm for their economic survival in France, rather than allowing them to open, the authorities preferred to ban hypermarkets and other large stores from selling books! A leveling down that can hardly be attributed to Jeff Bezos. It is still surprising—not to say otherwise—to see part of the political establishment come to Amazon's rescue after months of demonizing the GAFAM and indirectly encouraging the latent anti-Americanism of some French people. The much-maligned GAFA tax has greatly contributed to this anti-GAFA sentiment. Because while this tax does indeed apply to the GAFAM, it also affects many other American and foreign companies (Zalando, Criteo, Uber, Airbnb, Alibaba, Booking, eBay, Expedia, Groupon, Microsoft, Rakuten, Tripadvisor, Twitter, to name a few). A tax as poorly named as it is useless since Amazon has already announced that it will pass it on to all stakeholders.
Repeated scandals do not seem to encourage French consumers—or the French authorities, for that matter—to turn their backs on the GAFAM. The choice of Microsoft to host the health data of the French, the decision to partner the Canopé education network with Amazon, and the extension of the DGSI's contract with the American company Palantir are all decisions that raise questions, especially when digital sovereignty is proclaimed a national priority by our leaders. These are hard-to-understand decisions when one knows that the American Cloud Act allows U.S. authorities to demand data collected by their companies both inside and outside the United States. It should be noted that any data held on American soil or by an American company is subject to local law.
Prayers for Rain...
It is an understatement to say that Europe is dramatically behind the American and Chinese tech giants. While this lag is not inevitable, it cannot be closed without a profound reform of how institutions function. The fiasco of the European tax on internet giants illustrates the decision-making process's blockages. Due to a lack of consensus, it was suspended in the name of unanimity, which has become a dogma, a Gordian knot that will have to be cut sooner or later.
Another hurdle is the favorable tax systems of several European countries—including Cyprus, Hungary, Ireland, Luxembourg, Malta, and the Netherlands—which reduce national revenues and disrupt competition. The recent setback inflicted on the European Commission by judges in the tax dispute with Apple sent a disastrous signal in the fight against tax havens and for European sovereignty.
For years, Europe has dreamed of its "cloud" to better control its digital sovereignty and destiny. Supported by Germany, France, and 22 founding companies, including several large French companies, the "Airbus of the Cloud" aims to offer an alternative to the American and Chinese giants. This interoperable, reliable, and sovereign digital infrastructure, designed to promote the growth of existing players, is expected to launch in 2021. The Digital Services Act—a European text aimed at regulating content published on platforms and reforming the liability regime of online intermediaries—also fits into this approach to reclaim European digital sovereignty. Thierry Breton, the European Commissioner for Digital Affairs, and Margrethe Vestager, the Competition Commissioner, seem to have grasped the problem and aspire to a genuine Copernican revolution on all these issues. But isn't it already too late, as China has already woven its web into the heart of the Union, and the United States has slowly but surely colonized European data?
In ancient traditions, prayers for rain are often the last resort in times of drought. In Europe, we would be well-advised to create the economic conditions for European competitors to the GAFAM to emerge rather than relying solely on prayers for the dismantling of American giants.
Sources :
(1) Le Monde selon Amazon, a documentary directed by Adrien Pinon and Thomas Lafarge
(2) How the Tech Giants Make Their Billions - Infographic: How the Tech Giants Make Their Billions (visualcapitalist.com)
(3) Le réel poids d’Amazon dans la vente en ligne en France pose question - Le réel poids d’Amazon dans la vente en ligne en France pose question - Le réel poids d'Amazon dans la vente en ligne en France pose question (maddyness.com)
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