It was hard to miss the fact that Amazon Prime had a sale this week. Newspapers and magazines covered the event as a celebration of consumption. This on top of a coronavirus pandemic that has accelerated the collapse of already struggling bricks-and-mortar retailers.
It is not surprising that so many of us shop with Amazon. The prices seem low. Purchases arrive promptly. But an examination of this gift horse’s mouth also raises serious concerns. Even before the pandemic Amazon’s aggressive pricing strategies made it difficult for smaller companies to compete. This is exacerbated by the fact that the company does not pay enough back to the state. In 2018 it paid £14.3m in corporation tax on £13.7bn in UK revenues. Without shops on the high street, it pays less in business rates than more traditional competitors such as Tesco.
It is an intolerable situation that a company that depends on the public services run by the state does not pay an appropriate level of taxes. To add insult to injury, this week it was reported that Amazon will also not be paying Britain’s new digital services tax because the US won’t do a trade deal if the UK were to impose such a levy. Instead small traders and advertisers using the site will be taxed. The issue is one of fairness, and making sure big tech is taxed properly needs urgent government attention.
Amazon has been one of the rare companies to take on new workers during the pandemic, but its employment practices need close scrutiny. A comprehensive new report published by the Trades Union Congress describes 10-hour working days, with 300 items picked and packed each hour, and workers penalised or even sacked for not keeping up. It describes a culture of fear, and notes that ambulances have been called to Amazon warehouses in Britain 600 times in three years. Drivers are thought to deliver 200 parcels a day; they are also self-employed, meaning Amazon is not liable if anything goes wrong. This pressure has only increased with Covid-19, and reports have emerged of inadequate social distancing and a lack of PPE. This week the company confirmed a Covid-19 outbreak at its Coventry plant. By contrast Jeff Bezos, the founder and chief executive of Amazon, saw his wealth increase by $74bn this year. This is wrong on so many levels.
A report by the New Economics Foundation (NEF) earlier this year found big tech pushing to use a World Trade Organization e-commerce agreement “to tighten their grip on the global economy and squeeze yet more out of consumers and working people”. Control of data is at the heart of the WTO proposals, and through that control of data, companies like Amazon, say NEF, would reach new heights. Recently, Amazon’s use of data to track consumer shopping habits and preferences suggests that investors are not wrong to bet it will be one of the world’s top 10 food retailers within a decade.
Amazon’s dominance means it already has too much sway in many marketplaces. This is a matter of political choice. We have to make different choices. The bigger Amazon becomes, the more it will be able to manipulate the tax, data, employment and consumer regulatory frameworks to its advantage. Governments must ensure fair levels of scrutiny, taxation and competition and let Amazon be in the spotlight for all the right reasons.