This article is taken from the October 2024 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.

What’s not to like about Amazon? The company brings the world’s goods to our door, at ever lower prices. We may grumble, but can’t resist. As president, Donald Trump regularly goaded Amazon from the Oval Office, but when the pandemic struck, his White House was obliged to order the FEMA agency to buy $13 million worth of thermometers from the online giant.

Behind the logistics miracle are some troubling stories, however, which the Wall Street Journal reporter Dana Mattioli tells in a new book, The Everything War. Amazon is a subject as vast and hard to map as the rainforest itself, and so much of what it does is out of sight. It’s a giant logistics network, a movie studio, and provider of the computing infrastructure that underpins a million and a half businesses, from startups to the CIA.

Much of this is the result of the sharpest minds focusing very hard on a specific problem. For example, Amazon Web Services (AWS) was devised to solve the problem of disparate Amazon teams duplicating their work. The result was infrastructure to spare, so it became a service for the world to use: a new utility.

Not all of the projects succeed: Kindle peaked some years ago, as readers stubbornly continue to buy printed books, and Amazon recently made hundreds of staff at its Alexa voice assistant division redundant.

What really fascinates Mattioli, and should concern us, is its invisible role as the guiding hand of a vast marketplace. Today’s technology platforms silently watch billions of transactions take place, giving them access to vast quantities of data on both sides of the deal. They can therefore shape both supply and demand, something no entity in history — not even the East India Company — has ever been able to do before.

“A wildly unfair information advantage — access to data that simply nobody else could have. It was the textbook definition of an uneven playing field,” Mattioli observes. It’s a superpower the planners at the USSR’s Gosplan agency wished they had.

Amazon accounts for only five per cent of all US retail, but 80 per cent of online marketplaces, so suppliers must tread carefully. Mattioli describes how it has flexed its muscles. Suppliers who lost visibility were obliged to advertise, helping raise Amazon’s margins to 45 per cent. Amazon has teams dedicated to copying popular items and launching rivals, under its “Amazon Basics” label. We hear tale after tale of Mom ’n’ Pop shop suppliers whose private data formed the basis for a competing product. (The author was nominated for a Pulitzer Prize for exposing this.)

When the US Congress enquired into Basics, it’s remarkable how many businesses who provided evidence wished to remain anonymous. Just as disturbing are the fake and counterfeit goods that proliferate on Amazon Marketplace. Peter Navarro, Trump’s trade czar, estimated that one in ten goods was counterfeit, dangerous or posed health risks.

Amazon’s defence is persuasive: it provides incredible consumer convenience and ever-lower prices. In this way it conforms perfectly to the competition theory pioneered by economist Robert Bork, which became dominant in the 1980s: lower prices trump all other considerations. This has become enshrined in US law as the “consumer welfare standard”.

But there are consequences. The company’s influence extends far beyond Basic-branded products. Amazon spearheads China’s industrial strategy to extinguish Western manufacturing. There are geopolitical consequences to ridding ourselves of this capacity. How long will small entrepreneurs play the game?

Mattioli relates the work of legal scholar Lina Khan, the London-educated daughter of Pakistani immigrants: “It is as if Bezos charted the company’s growth by first drawing a map of antitrust laws, and then devising routes to smoothly bypass them,” wrote Khan in a 2017 Yale Law Review paper. Now at the Federal Trade Commission, Khan leads a new US antitrust movement that has found strong bipartisan support in a nation that still cherishes the role of small business.

Our own think tanks and policy elites, much less so: the Panglossian view prevails that, if prices are falling, all is for the best. Yet historically markets have always been regulated to some extent, to ensure suppliers can provide the goods. The combination of Bork’s economic theory, Amazon and China puts that in peril.

Today we hear the complaint that, with globalisation, governments abandoned sovereign policy-making to the markets. In reality, they abandoned markets to gigantic private entities, who instead provide us with an ersatz version: socialism-in-one-company. What’s not to like about Amazon?