Is Amazon Unstoppable?Oct 15, 2019
In 2017, a few months after Forbes named Jeff Bezos, the founder of Amazon, the world's richest man, a rumor spread among the company's executives: Bill Gates, the former wealthiest person on earth, had called Bezos's assistant to schedule a lunch, asking if Tuesday or Wednesday was available. The assistant informed Bezos of the invitation, and told him that both days were open. Bezos, who had built an empire exhorting employees to be "vocally self-critical," and to never "believe their or their team's body odor smells of perfume," issued a command: Make it Thursday.
Bezos's power play was so mild that it likely wasn't noticed by Gates, but within Amazon the story sparked a small panic (and, later, an official denial). Such a willful act of vanity felt like a bad omen. At Amazon's headquarters, in Seattle, the company's fourteen Leadership Principles--painted on walls, posted in bathrooms, printed on laminated cards in executives' wallets--urge employees to "never say 'that's not my job,' " to "examine their strongest convictions with humility," to "not compromise for the sake of social cohesion," and to commit to excellence even if "people may think these standards are unreasonably high." (When I recently asked various employees to recite the precepts, they did so with alarming gusto: " 'Frugality breeds resourcefulness, self-sufficiency, and invention!' ") A former executive said, "That's how we earn our success--we're willing to be frugal and egoless, and obsessed with delighting our customers."
Amazon is now America's second-largest private employer. (Walmart is the largest.) It traffics more than a third of all retail products bought or sold online in the U.S.; it owns Whole Foods and helps arrange the shipment of items purchased across the Web, including on eBay and Etsy. Amazon's Web-services division powers vast portions of the Internet, from Netflix to the C.I.A. You probably contribute to Amazon's profits whether you intend to or not. Critics say that Amazon, much like Google and Facebook, has grown too large and powerful to be trusted. Everyone from Senator Elizabeth Warren to President Donald Trump has depicted Amazon as dangerously unconstrained. This past summer, at a debate among the Democratic Presidential candidates, Senator Bernie Sanders said, "Five hundred thousand Americans are sleeping out on the street, and yet companies like Amazon, that made billions in profits, did not pay one nickel in federal income tax." And Steven Mnuchin, the Treasury Secretary, declared that Amazon has "destroyed the retail industry across the United States." The Federal Trade Commission and the European Union, meanwhile, are independently pursuing investigations of Amazon for potential antitrust violations. In recent months, inquiries by news organizations have documented Amazon's sale of illegal or deadly products, and have exposed how the company's fast-delivery policies have resulted in drivers speeding down streets and through intersections, killing people. Company insiders were accustomed to complaints from rivals at book publishers or executives at big-box stores. Those attacks rarely felt personal. Now, a recently retired Amazon executive told me, "people are worried--we're suddenly on the firing line."
Amazon executives were also concerned about dramatic changes within the company. In 2015, Amazon had roughly two hundred thousand employees. Since then, its workforce had nearly tripled. Bezos, now fifty-five, had transformed as well, from a pudgy bookseller with an elephant-seal laugh to a sleek, muscled mogul whose empire included a television-and-movie studio. (Bezos declined to be interviewed for this article.) Amazon executives comforted themselves with the thought that, even if the story about the Bill Gates lunch was true, at least their boss wasn't reckless, like, say, Elon Musk or Travis Kalanick or Adam Neumann. Many admired Bezos's dedication to his wife and children, and saw it as an embodiment of the company's integrity. Still, they whispered, what if his flywheel has gone off track?
The notion of the flywheel--the heavy disk within a machine that, once spinning, pushes gears and production relentlessly forward--is venerated within Amazon, as Ian Freed learned on his first day of work, in 2004. Freed had initially glimpsed the power of the Internet as a Harvard student, when he guessed an e-mail address in Indonesia that led him to strike up a correspondence with the country's minister of telecommunications. After graduating, Freed built computer networks in Russia and drafted policy papers for the World Bank and the United States Agency for International Development. He felt that every organization he advised failed to take advantage of all the opportunities created by the Internet. He moved to the West Coast, where he became an expert in streaming networks. Then he joined Amazon, as a director of its fledgling mobile-services team. During an orientation that included a warehouse stint unloading boxes of shampoo and stocking shelves with toothpaste, he realized that people at the company saw things in a fundamentally different way.
Most firms have a mission statement that even the C.E.O. has trouble remembering. Amazon employees, Freed discovered, studied the Leadership Principles like Talmudic texts. During his first few years, he occasionally pulled colleagues, and even Bezos, aside to ask questions. What, for example, does "leaders are right a lot" really mean? Bezos explained, "If you have a really good idea, stick to it, but be flexible on how you get there. Be stubborn on your vision but flexible on the details." Executives at other companies tended to lay out definitive plans. But Bezos urged his people to be adaptable. "People who are right a lot change their mind," he once said. "They have the same data set that they had at the beginning, but they wake up, and they re-analyze things all the time, and they come to a new conclusion, and then they change their mind." Freed often felt an impulse to answer his subordinates' questions, but at Amazon leaders are encouraged to let team members puzzle out problems on their own.
About a year after joining the company, Freed became Bezos's technical assistant, which gave him entrée to almost any meeting and provided a deep education in the company's culture. Amazon's internal processes were "mechanisms," Freed learned, as in "What's the mechanism for talking to the press?" Executives were expected to reduce "complexifiers," and someone who failed to suggest ways to simplify a process might be interrupted by Bezos asking, "Are you lazy or just incompetent?"
The Leadership Principles were never paraphrased; when a question over wording arose, the laminated cards were often whipped out. PowerPoint was discouraged. Product proposals had to be written out as six-page narratives--Bezos believed that storytelling forced critical thinking--accompanied by a mock press release. Meetings started with a period of silent reading, and each proposal concluded with a list of F.A.Q.s, such as "What will most disappoint the customer on the first day of release?"
Tech companies are often profligate, but Amazon had an ethic of thrift. Freed learned to anticipate the eye rolls that greeted new employees who printed on just one side of paper, or the admonishment coming to anyone who wanted to book a business-class seat. Whenever Amazon moved to new offices, Bezos had them furnished with cheap desks made from wooden doors. Whereas other tech companies supplied employees with an array of free meals and snacks, Amazon offered only coffee and bananas. (In a statement, Amazon said that it is "frugal on behalf of our customers.")
Freed and other Amazonians were delighted by the company's quirks. Bezos amused his colleagues when he humble-bragged about being such a sci-fi nerd that he owned a Jean-Luc Picard uniform from "Star Trek: The Next Generation." And staffers loved it when Amazon offered a promotion, known as Share the Pi, in which customers were given a discount of 1.57 per cent (3.14 divided by two). When Amazon leaders joined the low-carb craze, they ended meetings debating the finer points of ketosis, and raced one another up the stairs. It wasn't fair to call Amazon a cult, but it wasn't entirely unfair, either. "We never claim that our approach is the right one," Bezos wrote, in a 2016 letter to shareholders. "Just that it's ours."
Above all, Freed loved Amazon's focus on spinning its flywheels faster, and finding new markets where they could whirl. "Amazon's culture is designed to prevent bureaucracies," he told me. "Everything Jeff does is to stop a big-company mentality from taking hold, so that Amazon can continue behaving like a group of startups." Among the worst sins was doing anything that slowed the company down. (As the Leadership Principles put it, "Speed matters.") Freed was soon assigned to help oversee the creation of a new e-reader, the Kindle. His team expanded quickly ("Hire and Develop the Best"), came up with dozens of concepts and prototypes ("Invent and Simplify"), and, in just a few years, delivered a device of startling simplicity and elegance. When the Kindle was launched, in 2007, it sold out in less than six hours, and soon became one of the most popular gadgets of the past quarter century.
As Freed learned, it was also fine to stumble at Amazon, as long as the experience yielded strategic insight. After overseeing the Kindle, Freed was asked to help lead a team developing the company's first smartphone. Bezos had become enamored of a sophisticated display that approximated 3-D. For four years, Freed oversaw a group that grew to a thousand employees, and spent more than a hundred million dollars. But when the Amazon Fire Phone was released, in 2014, it was a flop. No matter: when Freed had presented an early prototype of the phone's software to Bezos, he'd shown him how it included voice recognition that could hear, and then play, any popular song whose title a user said aloud. "I can ask for any song?" Bezos asked. "What about 'Hotel California'?" The tune began playing. "This is fantastic," he said.
A few days after that presentation, Bezos asked Freed to help build a cloud-based computer that responded to voice commands, like the one in "Star Trek." Freed started amassing a team that eventually reached two hundred people, and was given a fifty-million-dollar budget. The Fire Phone's voice-recognition technology had been licensed from another firm, and wasn't an exact fit for what Amazon was seeking. So Freed and his team hired speech scientists and artificial-intelligence experts, and created new software that could comprehend someone from Louisiana as well as someone from Liverpool--and distinguish the babble of a toddler from parents talking with food in their mouths. The team chose a name (and a "wakeup" word) for the device by considering hundreds of possibilities, before landing on Alexa--a name that was sufficiently familiar yet unusual enough to avoid too many accidental commands. Just four months after releasing the disastrous Fire Phone, Freed revealed the Echo, a voice-activated speaker that can tell you the weather, compile a grocery list, remind you to take a pie out of the oven, and play "Hotel California." The initial price was a hundred and ninety-nine dollars. Today, you can buy one for half that, and fifty million homes have them.
Around the time of the Echo's launch, Amazon wrote off more than a hundred and seventy million dollars in costs associated with the Fire Phone. Bezos told Freed, "You can't, for one minute, feel bad about the Fire Phone. Promise me you won't lose a minute of sleep." By 2015, Freed was a vice-president and Amazon was the most valuable retailer in the world.
Identifying and building flywheels became second nature to Freed. When a junior executive came by his desk with an idea--"What if we made a streaming device that you could plug into a television?"--Freed invited him to lunch, coached him through writing a mock press release, and took him to pitch the idea to Bezos. They reminded Bezos that, with existing streaming devices, searching for content was difficult. "It's really hard to type 'Gene Hackman movies from the nineteen-seventies' when you're using a remote control," Freed explained. Amazon's product, he said, would allow customers to simply say what they wanted to watch. The flywheel began spinning. If Amazon sold a streaming device, it could collect more data on popular shows; if Amazon had that data, it could begin profitably producing its own premium movies and television series; if Amazon made that content free for Prime members--customers who already paid ninety-nine dollars per year for two-day delivery--then more people would sign up for Prime; if more people signed up for Prime, the company would have greater leverage in negotiating with UPS and FedEx; lower shipping costs would mean bigger profits every time Amazon sold anything on its site. The Amazon Fire TV, as the device was named, soon became one of the most popular streaming devices on the planet. Amazon Studios began producing premium shows, and before long it had won two Oscars for "Manchester by the Sea" and eight Emmys for "The Marvelous Mrs. Maisel." In 2017, the number of Amazon Prime subscribers surpassed a hundred million.
Although Freed was thriving at Amazon, he could see that there was something dizzying about its flywheel mentality. "It was hard," he said. "That's the culture--do whatever it takes, even if it seems impossible." Amazon's obsession with expansion made it the corporate equivalent of a colonizer, ruthlessly invading new industries and subjugating many smaller companies along the way. In 2006, the company had launched Fulfillment by Amazon, an initiative in which outside sellers--everyone from mom-and-pop venders to major Chinese manufacturers--housed inventory inside Amazon's giant warehouses and paid a fee for Amazon to handle logistics, such as packing and shipping products and fielding customer-service calls. Companies enrolled in Fulfillment by Amazon often appeared in the Buy Box, the top search listing on Amazon.com. To participate, many venders had to pay about two dollars per item. They also had to let Bezos collect valuable data on which products were becoming popular and which companies were having trouble satisfying demand. Soon, some venders felt as though they had to participate in Fulfillment by Amazon; they couldn't otherwise attract much attention on Amazon.com, or ship products inexpensively enough to compete with rivals.
Today, Amazon.com lists more than three hundred and thirty million products sold by other companies. Scott Needham, whose company, BuyBoxer, sells about seventy thousand products on Amazon, ranging from toys to sporting goods, paid the company roughly twenty million dollars in fees last year. "There's really no other choice," Needham said. "There's a lot of things I don't like about Amazon, but that's where all the customers are." Recently, the U.S. House of Representatives and the European Union began scrutinizing Fulfillment by Amazon and similar programs, out of concern that they impede competition. "Amazon is the gatekeeper," Needham said. "It makes all the rules."
Tim Wu, a law professor at Columbia, said, "Amazon is a microeconomist's wet dream. If you're a consumer, it's perfect for maximizing the efficiency of finding what you want and getting it as cheap and fast as possible. But, the thing is, most of us aren't just consumers. We're also producers, or manufacturers, or employees, or we live in cities where retailers have gone out of business because they can't compete with Amazon, and so Amazon kind of pits us against ourselves."
Freed loved how things whizzed along at Amazon headquarters, but he understood that the "Speed matters" credo meant something different at the warehouses. "Is it the role of a company to only do what's best for shareholders?" he asked me. "Yes, shareholders are critical, but it's also important to understand the impact on employees." More than a hundred thousand people work at Amazon's fulfillment centers, and nearly everything they do is digitally tracked and evaluated, meaning that if someone falls behind--even for just a few minutes--it can be grounds for reprimand. Many employees carry handheld scanners that deliver a constant stream of instructions, such as a countdown clock detailing how many seconds remain until the next item must be plucked from a shelf. Workers can walk more than fifteen miles a day, and their breaks, including trips to the bathroom, are brief and closely measured. A company document explains, "Amazon's system tracks the rates of each individual associate's productivity and automatically generates any warnings or terminations regarding quality of productivity without input from supervisors." A former warehouse employee told me that she knew of people who got fired largely "because they were too old, or their knees started acting up, or they just had a bad week." She added, "Managers are always vague about what will get you fired, which creates this paranoia." Employees, she said, sometimes ask questions about "what exactly will get them fired, and the responses are so vague that you basically know that if you're not constantly moving, you're probably gone." Employees line up at vending machines that dispense free over-the-counter painkillers. For years, some Amazon warehouses lacked sufficient air-conditioning; this changed only after reports emerged, in 2011, of workers passing out and requiring emergency medical treatment for heat-related problems.
William Stolz, who has worked for two years at an Amazon warehouse in Shakopee, Minnesota, told me that he's expected to grab an item every eight seconds, and has seen co-workers injure their wrists, knees, shoulders, and backs by repeatedly kneeling, or by rushing up and down ladders. "There's a constant pressure to hit your numbers," he said. If you get four writeups within ninety days for falling below the expected productivity rate, you will be fired. Stolz said, "I've seen people who aren't even thirty years old get injuries they're going to have for the rest of their lives, but whenever we ask for the speed of work or the repetitive motions to be changed we're told that's not going to happen."
When Safiyo Mohamed moved from Somalia to Minnesota, in 2016, at the age of twenty-two, she found work at the Shakopee warehouse, sorting products and moving boxes on and off conveyors. The job was taxing and the pressure relentless, she said. One day, when she picked up a heavy box, she tore an intervertebral disk in her back. The pain was excruciating, but Amazon didn't offer her time off; her managers seemed not to care. "If you can't work all the time, you are nothing to them," she said. A doctor told her that the injury was pinching a nerve, and that the discomfort might never abate. She quit Amazon, and got an office job that allows her to pause, or stretch, when her back hurts. "How am I going to have a baby when I can't pick him up, when I'm worried about being pregnant?" Mohamed said. "I'm so angry. Amazon doesn't want humans, they want robots. I will have this forever because of them. They don't care at all."
At Amazon's corporate headquarters, many executives' performances are similarly quantified and ranked. "It can be a hard place for women," a former executive told me. "If you have a kid, it's a disadvantage to your career, unless your husband is the primary parent." (Amazon said, in a statement, that it "disagrees strongly with this perspective," and noted that it offers twenty weeks of paid parental leave.) A former senior female executive told me she counselled younger colleagues that "it's not the company's job to create a work-life balance--it's your job," adding, "The idea of a company as a caretaker is not our culture." There is only one woman on Amazon's S-Team, the group of eighteen executives who largely run the firm. The lack of female representation is a sensitive topic at the company. A current high-ranking executive told me, "I'm not sure it would be any different for a woman at an investment bank or a big law firm. The pace is fast, yes, and it's not for everyone or every stage of life, but these are highly compensated people who know they can easily get other jobs. No one works at Amazon--at least, in corporate--unless they want to."
Amazon argues that criticisms of working conditions in its warehouses are unfair. Dave Clark, the senior vice-president for worldwide operations, told me that work expectations at its facilities "are very achievable for folks." He said that the company has increasingly automated its warehouses, to ease physical tasks. "We make mistakes," Clark said. "And, when we do hear about it, we learn from it, and we go out and fix it." Amazon pays all U.S.-based employees at least fifteen dollars an hour--more than the minimum wage in many places--and full-time warehouse workers have access to the same health and retirement plans as executives. A company statement noted that workers at Amazon begin and end every shift with a short meeting and a group stretching session; it also said that employee performance is evaluated over extended periods, noting, "We would never dismiss an employee without first ensuring that they had received our fullest support, including dedicated coaching."
Many Amazon executives have become defensive about the fact that even centrist politicians like Joe Biden see the company as a symbol of capitalism gone awry. (On Twitter, Biden recently said of Amazon, "No company pulling in billions of dollars of profits should pay a lower tax rate than firefighters and teachers.") Jeff Wilke, one of Bezos's top lieutenants, told me that Amazon "tries to be a good corporate citizen," and added, "We've built a for-profit enterprise that is improving the lives of customers and taking great care of employees. There's a lot to be proud of." The company, he said, has committed to spending seven hundred million dollars to train its workers in such subjects as coding and robotics. One senior Amazon executive said of its warehouses, "It's a hard economy for people without college degrees right now. We can't run a philanthropy, but we're trying to be the best of those bad kinds of jobs." Another top executive suggested that Amazon was merely a cog in the American economic machine--and inevitably reflected how contemporary inequality had created winners and losers. "We're doing what we can," he said. "But ultimately this is a problem only the government can really solve--by changing how the economy works."
Amazon has always been unabashed about being a cutthroat competitor. When the company started, in 1995, with fewer than a dozen employees, Bezos considered naming it Relentless. (The company still owns the URL for relentless.com--it redirects you to Amazon.com.) Amazonians know that outsiders want them to change, but listening to outsiders is not one of the Leadership Principles. One executive told me, with barely suppressed resentment, "What has made us great for so long is suddenly being seen as something we ought to be ashamed of!"
In 1913, an employee of the Ford Motor Company went to the Swift & Co. meatpacking plant, in Chicago, to study how hogs moved through the facility on conveyor belts while butchers stayed in place, making the same cut again and again. Someone prepared the carcass; another person cut the left haunch; another was responsible for incisions along the shoulder. The knives never stopped moving as the animals sped through the plant. When the Ford employee returned to headquarters, he told his colleagues, "If they can kill pigs and cows that way, we can build cars that way." The man's boss, Henry Ford, a lifelong tinkerer, had developed a radical new product: an automobile, with an inexpensive internal-combustion engine, that could be manufactured in a couple of days and sold for less than a thousand dollars. When Ford managers heard about the meatpacking plant, they began work on another major innovation: the mechanized assembly line. Within four years, Ford's plants could manufacture a car in less than two hours and sell it for about four hundred dollars.
In 1918, a man named Alfred P. Sloan began working as an executive at a much smaller company, General Motors. Sloan wasn't especially interested in automobiles. He loved making money--and figuring out how to manage people in order to make profits grow faster. Once installed at G.M., Sloan staged a coup by way of a memo, "Organization Study," which eventually reoriented the firm around himself and a set of foundational credos that included five "objectives." A chart of eighty-nine boxes connected by a blizzard of lines mapped out each executive's place in the hierarchy. It was the first org chart of its kind. Sloan's theory was that G.M. could codify the processes that delivered information up to headquarters and guidance down to managers. "If the whole General Motors central organization should be hit by an atomic bomb, Pontiac could go on just exactly the same," Sloan boasted to a reporter. Soon, the company had standard procedures for budgeting, hiring, firing, prototyping, promoting, and resolving disputes. Within this rigid framework, executives were given the freedom to be creative; G.M. essentially became the first company to segment the automobile market, selling Chevrolets to the middle class and Cadillacs to the wealthy.
When Sloan joined the company, G.M. was on the verge of bankruptcy. Within a decade, it had outpaced Ford, becoming the nation's largest carmaker, and for the next eighty years it dominated the auto business and, eventually, a wide variety of other industries. Sloan's systems made G.M. one of the country's biggest loan financiers and a powerful real-estate investor, and placed it among the largest manufacturers of refrigerators, industrial magnets, home appliances, aeronautic equipment, military gear, and medical equipment. In 1952, G.M. made the first mechanical heart. Sloan launched a sophisticated corporate polling division--another first--that uncovered customer tastes that other companies had overlooked; the R. & D. department used this information to create new products. The same playbook that dreamed up Cadillac's space-age tail fins was soon designing sleek Frigidaire iceboxes. G.M., in other words, was adept at creating flywheels. It sold plenty of cars, but, unlike Ford, it wasn't a product company--it was a process company.
Silicon Valley is filled with product companies. Google invented two products--a spectacular search engine and a set of algorithms for matching people's online behavior to ads--that today deliver eighty-five per cent of its revenue. Facebook invented (and acquired) addictive social-media products and then basically imitated Google's ad-matching algorithms, and gets ninety-eight per cent of its revenue from those products.
Amazon is a process company. Last year, it collected a hundred and twenty-two billion dollars from online retail sales, and another forty-two billion by helping other firms sell and ship their own goods. The company collected twenty-six billion dollars from its Web-services division, which has little to do with selling things to consumers, and fourteen billion more from people who sign up for such subscription services as Amazon Prime or Kindle Unlimited. Amazon is estimated to have taken in hundreds of millions of dollars from selling the Echo. Seventeen billion came from sales at such brick-and-mortar stores as Whole Foods. And then there's ten billion from ad sales and other activities too numerous to list in financial filings. No other tech company does as many unrelated things, on such a scale, as Amazon.
Amazon is special not because of any asset or technology but because of its culture--its Leadership Principles and internal habits. Bezos refers to the company's management style as Day One Thinking: a willingness to treat every morning as if it were the first day of business, to constantly reëxamine even the most closely held beliefs. "Day Two is stasis," Bezos wrote, in a 2017 letter to shareholders. "Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day One."
For many entrepreneurs, Amazon has been a godsend. David Ashley, who sells handcrafted address signs from Jackson, Mississippi, told me, "We probably wouldn't be in business without Amazon." The 2008 recession almost killed Ashley's small company. Then he began selling his signs on Amazon and discovered that--for forty dollars a month and fifteen per cent of each sale--Amazon would handle such tasks as processing credit-card transactions, identifying potential customers, and helping to insure that products were delivered on time. "But the biggest thing is that people trust Amazon," Ashley said. "And so they trust us." More than 1.9 million small businesses in the United States take advantage of Amazon's services. Last year, nearly two hundred thousand sellers earned at least a hundred thousand dollars each on the site.
Other retailers, however, don't share Ashley's enthusiasm. When David Kahan became the chief executive of Birkenstock Americas, in 2013, he began to discover how thoroughly Amazon had changed his industry. Kahan had started his career as a shoe salesman at Macy's; he went on to become a sales manager at Nike and, eventually, a top executive at Reebok. Birkenstocks have been made by hand, in Germany, for two hundred and forty-five years--thirty-two workers touch every pair. When Kahan became C.E.O., Amazon was among the company's top three shoe sellers. "They sold millions of dollars' worth of our shoes," Kahan told me. "But during my first year I was sitting in my office, where I can hear the customer-service department, and we were getting a flood of people saying their shoes were falling apart, or they were defective, or they were clearly counterfeits, and, every time the rep asked where they had been purchased, the customer said Amazon."
Kahan investigated, and found that numerous companies were selling counterfeit or unauthorized Birkenstocks on Amazon; many were using Fulfillment by Amazon to ship their products, which caused them to appear prominently in search results. "We would ask Amazon to take sellers down--or, at least, tell us who is counterfeiting--but they said they couldn't divulge private information," Kahan told me.
Kahan also discovered that Amazon had started buying enormous numbers of Birkenstocks to resell on the site. The company had amassed more than a year's worth of inventory. "That was terrifying, because it meant we could totally lose control of our brand," he said. "What if Amazon decides to start selling the shoes for ninety-nine cents, or to give them away with Prime membership, or do a buy-one-get-one-free campaign? It would completely destroy how people see our shoes, and our only power to prevent something like that is to cut off a retailer's supply. But Amazon had a year's worth of inventory. We were powerless."
Kahan spent months trying to negotiate with Amazon executives in Seattle. At the Birkenstock Americas office, in Marin County, California, he and his deputies would spend hours preparing arguments about why stopping unauthorized sellers would help Amazon's customers, and then they'd crowd around Kahan's desk and turn on the speakerphone. Sometimes the Amazon executives would let them go on; other times, they'd cut them off midsentence. It wasn't Amazon's place to decide who could and couldn't sell on the site, the executives explained, as long as simple guidelines were met. "They basically didn't care," Kahan said. "We're just one company, and there's millions of companies they deal with every day. But this is the biggest thing on earth for us. Amazon is the shopping mall now, and, normally, if you open a store in a shopping mall, you can expect certain things--like the mall operator will clean the hallways, and they'll make sure Foot Locker isn't right next door to Payless, and if someone sets up a kiosk in front of your store and starts selling fake Air Jordans, they'll kick them off the property." He continued, "But Amazon is the Wild West. There's hardly any rules, except everyone has to pay Amazon a percentage, and you have to swallow what they give you and you can't complain."
Hundreds of other companies have told Amazon about counterfeiting or what they see as unfair competition--some of it generated by Amazon itself. In the early two-thousands, a San Francisco firm named Rain Design began selling an aluminum laptop stand that had a graceful curve, and it became an unexpected best-seller on Amazon. Amazon then released its own stand, with a nearly identical design, under the brand AmazonBasics, at half the price. Rain Design's sales fell. In 2016, Williams-Sonoma had started selling a low-backed mid-century-modern chair called the Orb. A year later, Amazon released an almost identical chair, which they also called the Orb. Last December, Williams-Sonoma filed a lawsuit claiming that "Amazon has unfairly and deceptively engaged in a widespread campaign of copying." Earlier this year, a judge denied Amazon's motion to dismiss the case, ruling that the company might be "cultivating the incorrect impression" that ersatz products were authorized by Williams-Sonoma.
Critics say that Amazon uses the torrent of data it collects each day--how long a customer's cursor hovers over various products, how much of a price drop triggers a purchase--to divine which products are poised to become blockbusters, and then copies them. In July, the E.U. announced an investigation into whether Amazon uses "sensitive data from independent retailers who sell on its marketplace" to unfairly promote its own goods, or to create imitation products. Europe's top competition regulator, Margrethe Vestager, told me that Amazon is "hosting thousands and thousands of smaller businesses, but at the same time it is a competitor to them." She added, "This deserves much more scrutiny."
In a statement, Amazon said that many other retailers also produce their own versions of best-selling items, that such goods make up only one per cent of Amazon's sales, and that Rain Design's stands continue to sell well, despite competition from Amazon's stand--which, it insists, isn't a replica. The company added that it does not use "data about individual sellers to decide which products to launch." (Company insiders, however, told me that Amazon does use aggregate data from multiple sellers to make such decisions.)
Kahan, of Birkenstock, eventually decided to take extreme measures. He announced that his firm would no longer sell shoes on Amazon, and he sent a letter to retailers declaring that if they listed Birkenstock products on Amazon they would be "severing" their "relationship with our company." According to Kahan, Amazon began contacting authorized retailers, inviting them to sell their supply of Birkenstocks to the site. Kahan wrote to his retailers, "To me, the solicitation is quite frankly a 'wolf in sheep's clothing.' . . . I take their desperate act as a personal affront and as an assault on decency. . . . Amazon can't get Birkenstock by legitimate means so why not dangle a carrot in front of retailers who can make a quick buck."
Kahan's outrage hardly mattered. Today, despite Birkenstock's refusal to do business with Amazon, there are numerous resellers--some overseas, others with names that obscure their true identities--offering Birkenstocks on Amazon. Kahan has no idea who these resellers are, and Amazon won't tell him. Birkenstock requires authorized retailers to charge roughly a hundred and thirty-five dollars for its classic Arizona sandal. On October 8th, Arizonas were going on Amazon for as little as fifty dollars--which is great for customers looking for cheap shoes but potentially disastrous for Birkenstock, which relies on those higher prices to pay for marketing, product design, and the salaries of customer-service employees (who replace defective shoes for free).
Amazon says that it has spent hundreds of millions of dollars on anti-counterfeiting efforts, including machine-learning technology that identifies suspicious items. Nevertheless, the site remains full of dubious products. A recent investigation by the Wall Street Journal identified thousands of products for sale on Amazon that "have been declared unsafe by federal agencies, are deceptively labeled or are banned by federal regulators," including children's toys containing dangerous levels of lead. Many of these products were shipped from Amazon warehouses, some through the Fulfillment by Amazon program. And Birkenstock's customer-service department still gets calls from customers who bought fake sandals on Amazon and expect Birkenstock to provide a refund.
Amazon says that it cannot accommodate the demands of Birkenstock and other companies that wish to "limit availability of competitively priced products." In a statement, Amazon said that it is not its role to decide who is, and is not, authorized to sell various items. Amazon isn't a mall, a current executive told me. He described it as a Web site that offers unlimited shelf space for an almost unlimited number of products and sellers. Some might call this a platform. Other tech giants, such as Facebook and Twitter, describe themselves as platforms, partly as a way of justifying spotty oversight of their sites.
Kahan told me that, with the rise of Amazon, the give-and-take that has long undergirded the retail economy has become lopsided in a titan's favor. "Capitalism is supposed to be a system of checks and balances," he said. "It's a marketplace where everyone haggles until we're all basically satisfied, and it works because you can always threaten to walk away if you don't get a fair deal. But when there's only one marketplace, and it's impossible to walk away, everything is out of balance. Amazon owns the marketplace. They can do whatever they want. That's not capitalism. That's piracy."
On January 7, 2019, as public criticism of Amazon's excesses grew louder, Jeff Bezos received an e-mail from Dylan Howard, the chief content officer of American Media, the parent company of the National Enquirer. "I write to request an interview with you about your love affair," the message began. Howard then asked dozens of questions about Bezos's involvement with Lauren Sanchez, a helicopter pilot who had founded a company, Black Ops Aviation, that filmed promotional videos for Bezos's rocket company, Blue Origin. Reporters for the Enquirer had been trailing Bezos and Sanchez for months, the e-mail indicated, photographing them in hotels and at airports, and compiling a dossier of trysts. Bezos and Sanchez were both married, and the Enquirer was prepared to expose it all.
Bezos and his wife, MacKenzie, a novelist, had been together for twenty-seven years. When executives went to their house for weekend meetings, it wasn't unusual to see them reading the newspaper together or helping their kids with homework. "They seemed to have the perfect marriage," a former Amazon executive told me. "I once saw them get out of the car at our holiday party, when they thought no one was looking, and hold each other's hand. It was that kind of relationship, real inspirational. Like, if they could stay together and keep their family sane, with all the work and money and stress, then the rest of us could, too."
Around the time that Bezos became the world's richest man, his life style changed. He appeared on television at the Academy Awards. He bought a mansion in Beverly Hills, and he threw a party co-hosted by Matt Damon. He was following an intense weight-training and diet regimen. He was in Seattle less frequently, employees noticed, and he often attended events without MacKenzie. Now the Enquirer was accusing Bezos and Sanchez of hiding their assignations from MacKenzie and from Sanchez's husband, Patrick Whitesell, a powerful talent agent whom Bezos had socialized with as Amazon expanded into Hollywood. A former American Media executive said of the Enquirer investigation, "It was a kind of weird story for us. Enquirer readers don't really care about C.E.O.s. But everyone was all worked up and excited about it--cackling about blackmail and dick pics. It was like the unpopular kids had finally found something embarrassing about the quarterback."
Two days after Bezos received Howard's e-mail, he posted a message on Twitter. "We want to make people aware of a development in our lives," he wrote, in a note co-signed by MacKenzie. "After a long period of loving exploration and trial separation, we have decided to divorce and continue our shared lives as friends." Hours later, the Enquirer started publishing articles about the affair, making reference to "sleazy photos" and "X-rated selfies" exchanged by Bezos and Sanchez. The tabloid quoted some texts that he had sent her--"I want to smell you"--which suggested that his or her phone had been compromised. But the tabloid did not end up publishing racy photographs; it ran mundane images of Bezos and Sanchez, some of which had already appeared online. According to the former American Media executive, the publication might not actually have had explicit images. "If we had pics of Jeff Bezos's dick, I would have seen them," the former executive told me. "That's standard operating procedure--you pass them around. But whenever I asked I was told, 'Well, we don't actually have them here right now.' I was, like, 'You're bluffing the richest man in the world?' " (A representative of the Enquirer said that the publication had "acted lawfully and stands by the accuracy of its reporting.")
Marriages break up all the time, yet many of Bezos's colleagues felt disoriented by the fact that he had been so undisciplined as to let his personal life become tabloid fodder. "The basis of Jeff's stature was a lot of things, but integrity was No. 1," a former colleague told me. "The way he dealt with his family, and customers, and the people around him--that was at the core of why we respected him so much. And then this thing happened, and it was so hard to make that fit into the picture of the person we knew." Even Bezos's friends were concerned. "It was like Jeff had been abducted by aliens and replaced," one told me. "It'd been going on for about a year--the bodybuilding stuff, and Hollywood, and just a big change in how he was--and then this came out, and I still don't know how to process it."