Jeff Bezos and Amazon are transforming the marketplace. He is doing what entrepreneurs do best: satisfy the consumer, improve current products and services, and continue to innovate. This has made Amazon is one of the greatest companies on the planet. Unfortunately, as have far too many other billionaire businessmen, Bezos has also metastasized into a crony for the state.
Last week, the House and Senate approved an unfunded $700 billion defense bill that is now sitting on President Donald Trump’s desk. Tucked inside this massive piece of legislation is a so-called Amazon Amendment that would essentially allow Bezos to control $53 billion worth of federal spending.
The Department of Defense wants to shift its purchases of commercial off-the-shelf products to online marketplaces. Although this could be any website that sells equipment the Pentagon needs, it will likely mean big business for Amazon Business.
If successful, it would just be one of many contracts Amazon has with the government.
Some critics warn that Bezos will maintain a monopoly in the free market. Perhaps it’s only a matter of time before this cronyism metastasizes into such. This is Bezos’ world and we’re only living in it.
The $53 Billion Amazon Amendment
Under Section 801 of the National Defense Authorization Act (NDAA), the bill requests the creation of an online marketplace platform that federal agencies and departments can purchase everything from computers to office furniture, from staplers to calendars. This further suggests that the government is searching for a management company that is large enough to maintain a plethora of suppliers.
Simply put: there would no longer be a need for government procurement officers to continually request competitive bids for commercial products. They would only need to take a gander at the marketplace, locate multiple sellers and then buy the products.
The only name that could manage such an immense task would be Amazon Business, a marketplace tailored for businesses. It launched just two years ago, but it already has mustered one million customers and generates approximately $1 billion a year in sales. The Daily Caller notes that it signed a hefty government contract earlier this year with U.S. Communities, a group of 90,000 local governments.
If it can nab federal procurement, then it would make this arm of Amazon a powerhouse.
Amazon hosts third-party vendors and collects as much as 20% from those sellers. At the same time, Amazon competes against those same entities. It’s a win-win situation, and if Amazon can obtain all federal procurement, then that means billions of dollars guaranteed every year for the juggernaut.
The company may give shoppers a great deal on everything, but it may not provide the taxpayers with that same great deal. The bill currently mandates dynamic pricing, which means that Amazon will have access to an incredible amount of data. For instance, if a procurement official avoids buying water bottles on Monday mornings and instead buys 100s of water bottles on Friday afternoons, then Amazon can raise prices higher on Fridays than what the market would offer on those days.
And this is why some, including Stacy Mitchell of the Institute for Local Self-Reliance, feel that Amazon penned the amendment. Mitchell told The Intercept:
“It will accelerate the transfer of more and more government spending to Amazon.
Don’t hand over all our purchasing to Amazon. The lack of transparency and accountability is astonishing. Whatever problems there may be with the GSA [Government Services Administration], this would only compound the same issues.”
In the end, striking such a deal with the most extensive buyer in the country will give Amazon a monopoly in federal procurement.
Amazon’s Other Big Deal
Amazon started off selling books at better prices than your local bookstore. Now it is getting into business with the government.
In 2014, Amazon signed a $600 million contract with the CIA to offer cloud computing services. This was a frightening prospect then, and it remains to be a chilling situation now. The company could extend an astronomical amount of data to the intelligence service, an organization that regularly spies on its citizens.
The possibility of this happening could even be found in Amazon’s “Privacy Notice”:
“We release account and other personal information when we believe release is appropriate to comply with the law; enforce or apply our Conditions of Use and other agreements; or protect the rights, property, or safety of Amazon.com, our users, or others.”
With 162 million unique visitors per month, that’s a lot of data to share with an espionage agency.
And it isn’t as if Amazon profoundly cares about privacy or the accuracy. In 2010, when a government transparency group posted ugly truths about Washington, Amazon stopped hosting WikiLeaks just 24 hours after being contacted by former Senator Joe Lieberman (I-CT), who was chairman of the Senate’s committee on homeland security at the time.
Bezos has gone political, too.
When Bezos bought The Washington Post a few years ago, analysts dismissed it as nothing more than another billionaire purchasing a newspaper. But the paper hasn’t only slanted even more to the left; it began parroting the neo-McCarthyism from the Democratic Party, publishing several fake news pieces.
Bezos: The Genius, The Crony
It is inevitable for a billionaire entrepreneur to get into bed with the state. These individuals are granted special privileges, or receive handouts directly or indirectly.
We saw this in the 1990s when Microsoft co-founder Bill Gates tried to fight Washington, but ultimately conceded defeat and became one of its biggest cheerleaders. We see this today with Tesla founder Elon Musk, who has seeped into every level of government in the U.S.
Warren Buffett, Michael Bloomberg, Mark Zuckerberg and even Donald Trump have, at one point or another, had their dalliance with the state.
Now it’s Jeff’s turn. Bezos is a genius at satisfying market demands. But he is also a genius who is partnering with the swamp. The fears that Amazon will control the free market with a monopoly are unfounded – there will be at least some competition. However, concerns about Amazon’s relationship with the government, either in the U.S. or elsewhere across the globe, should only be exacerbated.
Remember, cronyism is an aggressive affliction. When you get into bed with the government, you should always anticipate the disease.
Are you worried about the Amazon Amendment? Let us know in the comments section!