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| Amazon growth charts, one of revenues and one of returns since Amazon went public. Not the respective flat lines in each and consider what that means. |
Amazon is now the second U.S. company (following Apple) to top $1 trillion in value. That makes Jeff Bezos ($167 billion) world's richest man.
As Yasha Levine covered in his book “Surveillance Valley- The Secret Military History of the Internet” Amazon is an internet company engaged in surveillance as a key part of its profit model and it works with the federal government and the federal government’s military and CIA. As part of the sales blurb (on Amazon) for Mr. Levine’s book states:
Levine examines the private surveillance business that powers tech-industry giants like Google, Facebook, and Amazon, revealing how these companies spy on their users for profit, all while doing double duty as military and intelligence contractors. Levine shows that the military and Silicon Valley are effectively inseparable: a military-digital complex that permeates everything connected to the internet, even coopting and weaponizing the antigovernment privacy movement that sprang up in the wake of Edward Snowden.For more on what we have already covered on this see: Reading on the Internet vs. Reading a Book You Picked Up Browsing In Your Library: Yasha Levine’s “Surveillance Valley- The Secret Military History of the Internet” and for even more that is relevant coming from Mr. Levine’s book; Self Proclaimed As Fighting Surveillance, Library Freedom Project Is Tied to Tor Service With Its Deep Ongoing Connections, Including Financing, To The U.S. Government.
Second biggest U.S. Company as of September 2018? Amazon grew very fast to do that.
Amazon, which began in a converted garage of Bezos’ rented home, launched on the internet in July of 1995. That’s just 23 years ago.
The story is that Bezos, not particularly a book lover for any reason, coming out of an unusually successful Wall Street hedge fund, D. E. Shaw & Co., was not so to speak “following his bliss” when he decided to start his internet sales company with books. He was instead selecting books from amongst “a list of 20 products” he was considering theoretically as the result of what where essentially mathematical computations:
Bezos eventually decided that his venture would sell books over the Web, due to the large worldwide market for literature, the low price that could be offered for books, and the tremendous selection of titles that were available in print.The Unites States, in 2013, according to a Bloomberg Industries analysis was contracting out “about 70 percent” of its “intelligence budget.” That figure is probably, for the most part not calculated considering most of the surveillance being done by companies like Amazon, Google and Facebook as talked about by Levine in his book.
What is clear, as written about by Mr. Levine in his book and by Tim Shorrock, author of “Spies for Hire- The Secret World of Intelligence Outsourcing,” is how intertwined the intelligence community is with private sector companies with an interdependence that has a lot of implications for who succeeds or fails in the private market place. If we are talking about small start up companies trying to establish themselves, both these authors write about how the efforts of those companies may be aided and quietly, nay secretly, assisted by the government. Both authors write about how “In-Q-Tel” was founded in 1999 (an interesting date in terms of ramping up electronic surveillance) as the CIA’s venture capitalist company operating in Silicon Valley “to invest in start-up that aligned with the agency’s intelligence needs.” (Yasha Levine p. 174) And “through its In-Q-Tel venture capital fund, the CIA invested in all sorts of companies that mined the Internet for open-source intelligence” that’s “information that it could grab from the public web: Videos, personal blogs, photos, and posts on platforms like YouTube, Twitter, Facebook, Instagram amd Google+.” (Yasha Levine p. 188 -189)
In-Q-Tel “works with the CIA’s Directorate of Science and Technology” to find companies with products with intelligence application and then “buys equity positions in these firms— many of which are managed by former intelligence officials.” (Shorrock p.16) Along with technology incubation funding from the CIA and other agencies “high-tech companies would be offered a huge natural market—the Intelligence Community and the federal government, plus assistance in testing and perfecting their products for use by the private sector.” (Shorrock p.144) The interrelationships between the Intelligence Community and the tech community are very widespread, Stephanie O’Sullivan, the CIA’s director for science and technology said in 2006: “There is no technology out there that is not relevant to our mission.” (Shorrock p.145)
Citing In-Q-Tel as just one example of “private-partnerships” with the technology industry that serve as a “convenient cover for the perpetuation of corporate interests” Tim Shorrock in his book (p. 365) describes In-Q-Tel’s “partnerships” as “masking the fact that the CIA’s investments amounted to a hefty government subsidy that allowed companies to do things like hire lobbyiests to expand their market share.” And the companies with those expanded market shares are likely to get a pass for when the private surveillance they engage in may flout laws— Citing the defense cavalierly offered by the the Chamber of Commerce for AT&T’s secret spying on U.S. citizens, Shorrock writes that “the ultimate result of the privatization of intelligence activities” is that the Chamber’s an amicus defense brief ventures to describe as a “friendly `partnership’” a “secret alliance between business and government that may be one of the most egregious examples of a corporation skirting U.S. privacy and foreign intelligence laws” (p. 366)
In-Q-Tel, designed with a focus on incubating start-ups, is one end, the small company end, of the spectrum of the government as a presence injecting itself into the picking of winners and losers in the market place. And In-Q-Tel is only one of those government market influences out there; for example, there is also a cousin company of British Intelligence heritage, defense and intelligence research company, QinetiQ Group a privatizing ownership share of which was transferred to the Carlyle Group. Shorrock writes of George Tenet, former head of the CIA (under whom In-Q-Tel was launched) being on the QinetiQ board. The U-less Qs in the names of both these companies are intended to merrily invoke the Q of the James Bond films who equipped 007 with all his disguised tech gadgets. QinetiQ’s model and influence on the market is different from In-Q-Tel's, buying up other tech companies for Intelligence Community purposes after becoming a privatized part of the Carlyle Group. (One thing they like is robots.)
The other end of the spectrum of how the government is a presence injecting itself into the picking of winners and losers in the market place is the big company end. And obviously, Amazon is now a really big company. (For instance, circa 2014 Amazon was reportedly providing the CIA with cloud computing services pursuant to a $600 million contract.)
When the companies that the United States relies on to do its intelligence work are really huge, when those companies have most of the available experts with security clearances working for them (at higher salaries than individuals working for the government), when those companies have most of the collected data and most of the systems that are up and running that the government has grown dependent on them for, plus when those companies have huge government derived income streams that they can recycle into lobbying for the big shares of secret government budgets that they are allowed to know and can talk about, but that the public isn't allowed to find out about, there is a question of who is running the show. This question about contracting out is one that Tim Shorrock delves into and contemplates at length in his book mulling it over from many different perspectives. Finally, while government officials may or may not lose the upper hand, government officials can nevertheless direct huge influence about who amongst these big companies will be the winners or losers in the market.
The implications of huge private corporations having so much power in the Intelligence Community are more pronounced given that, when individuals work for such private corporations, unlike the individuals who work directly for government, loyalties run in the direction of making profit. By corporate law definition, that means profit first, not patriotism. Furthermore, loyalties can be bought or sold. And private corporations pursuing private profit are becoming increasingly multi-national in character and thus untethered from the patriotisms of any particular nations, including ours, that may hire them. Hiring out to other private firms or interests (not nations) as they are allowed to do, they may be acting with no national patriotism at all.
Bezos started with books, but in time expanded Amazon’s offerings beyond books, including, initially, to some of the other products he was supposed to have been considering early on, music, by selling CDs and videos. . . . Nowadays if you want to see a video, a movie, particularly anything you might consider vintage or historic, say you want to see something with a political message, like “Seven Days In May” (about a military coup against the U.S. President in the Kennedy era) it’s likely you may find that your best chance, your path of least resistance to easily view the film easily will be to pay for it to stream through Amazon. This is a far cry from the days when pretty much everyone’s Friday night film viewing came from their local, often independently owned, video store. In 1988, the year after the home video market surpassed box office revenues, with the number of stores leveling off, (the Blockbuster chain was simultaneously buying another chain to expand) there were 25,000 video stores nationally (about 45,000 other outlets renting tapes); in 1997 there were 23,036.
Video stores are vanishing practically to the point of non-existence, including in New York City. . . Amazon, with probably lower overhead and fewer employees involved, will charge you about as much, maybe more, than your local video store once charged. Did you once have a relationship with your local video store operator who knew your tastes, what to recommend intimately? Think of what Amazon knows about you, learning more each time you rent a film like “Seven Days In May.” Once Amazon just knew the books you read, but now as you might browse to look to possibly buy almost everything in your life through Amazon, Amazon now knows so much more.
In 1988, months after starting it's expansion into music, Amazon announced its expansion beyond books. At the same time it bought a service that would keep track of your friends and their birthdays, so, for example, Amazon could suggest when it was time to order them presents.
In November 2007 Amazon introduced its, three year in development, Kindle (continually connecting you to the Internet) to sell ebooks, staring with 90,000 books (more than four times as many as Sony offered at the time and 90 percent of the current best sellers) and vowing that its “goal” was “to have every printed book on earth available for instant download.” Of course, whatever their benefits, the ways in which e-books in contradistinction to physical books, are problematic are manifold, especially in terms of issues of surveillance.
By the beginning of 2010, hardly two years later, with the “nascent” ebook market still “only a few years old,” Amazon was clearly dominating it with an estimated “80 percent of e-book purchases” and by the end of 2010 a “full 50% share.” The difference in those two percentages offered (books vs. market share) may reflect the low price that Amazon was charging for every book.
Offering best sellers for $9.99, Amazon left no room for any profit margin as it sought to claim virtually the entire market. In 2013, author (and lawyer) Scott Turow said that Amazon was using “unfair tactics” trying to “monopolize” the e-book market. He said:
If you price e-books well below the cost, which is what they did for years, it both destroys physical book stores and drives the reading public into the e-book, which of course Amazon dominates.As the point is made in Scott Turow's quote above, Amazon's disruption of the market not only drove e-book competitors out of the e-book market, but also drove brick and mortar book stores and stores selling physical books into bankruptcy as well. Furthermore, publishers haven't liked Amazon very well either because they too have found themselves impoverished by Amazon's model. Their impoverishment can limit support given to authors.
Should we all just relax and surrender to the fact that Amazon dominates the market while pushing digital books? Citizens Defending Libraries reported last year how New York City library officials were partnering to further promote digital books in a program that featured prizes from Amazon. See: NYC Library Officials Partner To Promote Digital Books With Prizes From Amazon.
A New York Times Sunday Review Op-ed this week by sociologist and author Eric Klinenberg reminded us that this summer Forbes Magazine ran published an article arguing that Amazon should replace libraries with its own retail outlets, and claimed that most Americans would prefer a free-market option. But, the public response "was so overwhelmingly negative that Forbes deleted the article from its website."
Amazon has grown fast because its model is to grow fast. Although its valuation, its gross revenues and its market share keep growing dramatically, Amazon's net revenues have been nearly flat. Everything goes into expansion. There have been times in the past when that strategy was problematic and close to edge, a risk to have no profit going out to shareholders, but whatever threats that lack of net return seemed to pose to company or to Jeff Bezos as its leader financing always came to the rescue, and they both survived. . . . and continued to take over market after market.
Amazon should be a walking poster-child advertisement for antitrust litigation and legislation. Instead, Jeff Bezos owns the Washington Post, the newspaper for the national capital where such issues should be discussed and where the careers and day to day lives of the all the legislators and government officials responsible for the enforcement such antitrust measures are reported on.
The Washington Post has always had a special role in influencing the nation. We are pretty sure it was Peter Dale Scott, credited with coining the term the "deep state," who in one of his interviews said that the Washington Post along with the New York Times and the LA Times was a preferred outlet by the CIA when it wanted to get its stories out to the public (often without telltale fingerprints). Whether that's exactly the case, the Washington Post has certainly played an important role historically for the CIA in this regard.
If it all started with BOOKS, why Amazon? Why not Barnes and Noble? Why isn't Barnes and Noble now the second biggest company in the United States?
An interesting comparative analysis points out that as of Spring 2017 Amazon increases would have returned 48,197% since their May 15, 1997 (before their 1988 announced expansion beyond books) debut as a public company. Barnes & Noble would have only returned 26%. Borders went bankrupt! Some other comparatives: Walmart- +96%; Best Buy: +38% ; Macys:+19%: Target: +4%: Staples: -50%.
And Amazon has become the second trillion dollar company in the U.S. even as sales of the digital books it is pushing are dropping for years in succession.
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