Front Burner - Taking stock of Amazon's enormous ambition

Episode Date: December 23, 2019

Amazon is a giant company, but in reality, it's probably far bigger and involved in far more activities than most people are aware — think cancer research and police surveillance. Today on Front Burner, Wired writer Louise Matsakis, explains just how vast Amazon is and helps us grasp the implications of such a giant business. She brings insight into challenges that face Amazon, how the company could evolve in the future and why owner Jeff Bezos wants to colonize space.

This is a CBC Podcast. Hello, I'm Jamie Poisson. This year, a chorus of voices demanding big tech reform seemed to hit a crescendo. Academic conversations about antitrust laws and competition went mainstream. Governments demanded reform, and Canadian politicians were among them. And I'm willing to bet that as I say all of this, you're thinking about Facebook. And you're not wrong. We've talked about that on the show this year a lot.

But one big tech powerhouse is often left out of those conversations. Amazon. The company that I'm going to bet is shipping a gift to your door right now. Today, we take a hard look at Amazon, its long-term goals, the criticism, and why it's comparatively immune from public scrutiny. I'm talking to Louise McSacca. She covers Amazon security and online platforms for Wired Magazine. This is FrontBurner. Hi, Louise. Hey, thanks for having me. Thank you so much for being here. We've spent a lot of time on this show talking about Facebook and YouTube and Google and Twitter, but we haven't yet taken a deep dive into Amazon. So

it's such a pleasure to have you with us. Yeah, for sure. It's kind of interesting because the number of people who work at all the companies you just mentioned combined probably doesn't actually make up the number of people who work at Amazon. It's so true. It's so much bigger than all of them. And yet, for some reason, it hasn't gotten the same kind of scrutiny or certainly scrutiny, but maybe not the same kind of level of scrutiny as Facebook. I want to ask you about that a little bit later as well. But first, most people think of Amazon as an e-commerce platform. I mean, I have and many of the people listening right now, if not most, have probably used Amazon to buy stuff online.

But e-commerce is really the tip of the iceberg here. And it's not how the company makes most of its money. Amazon's biggest business is cloud computing. Can you talk to me about what that actually means? What is Amazon actually doing with cloud computing? So I think it helps to know a little bit about how it started. So what Amazon did early on was they kind of figured out how to sell things online. The first thing that they sold was books.

The company debuted officially in 1995. And the very first book sold was Douglas Hofstadter's Fluid Concepts and Creative Analogies, colon, Computer Models of the Fundamental Mechanisms of Thought. And then they really realized, oh, we can teach other people how to build websites and sell things. And what that kind of developed into is, oh, not only will we help you run your website or your platform or your app, but we will handle all of the storage and all of the AI and all the tools on the back end of your online digital business. So what that means is that now so many websites that don't have Amazon logos on it or actually aren't associated with Amazon in a front end sense are running on Amazon servers. And how much cloud computing are they actually doing like on the whole internet? So much of the internet's backbone is run on AWS. For example, wire.com is run on Amazon web

services. So many websites, news websites, services that you use, apps on your phone, all of the data that you put on that app, the podcast you download, all of that is actually stored in an Amazon cloud computing server somewhere, potentially Virginia, which is where a lot of their cloud computing division is, but anywhere else in the world. So much of the internet is just supported by Amazon. And what does that actually mean? What is Amazon actually doing with the cloud computing? So what that means is that Amazon is storing a significant portion of all of the data on the internet. I So what that means is that Amazon is storing, you know, a significant portion of all of the data on the internet. I think that that's a really great way to think about it is that when you go on a website, chances are Amazon is actually behind

it. Amazon is where all that data is stored. And what are the implications of a single company controlling so much of that online world? Well, it's such a big business and it gives them a lot of market dominance. And what they're able to do is they can take the profit margins from Amazon Web Services, which is a really high profit business, and they can take that and push it into other areas. They can push it into their e-commerce business. They can push it into research and development, into becoming a pharmacy, research and development, into becoming a grocery deliverer. So they kind of have this really powerhouse of a business that allows them to spread their tentacles into so many other areas. There are also dangerous implications for the internet because so much of it is concentrated

in one company. We've had a couple of incidents where things have gone wrong with AWS and so many different parts of the web all go down at once because they're all relying on that same backbone that Amazon controls. You mentioned that this allows them to get into like other businesses. Can we talk about some of those for a minute? So cloud computing isn't the newest or most surprising of Amazon's business ventures. The company is now in the pharmacy, as you mentioned, and surveillance business. But let's start with its pharmacy. What do those activities consist of? So last year, Amazon bought this huge pharmacy business called PillPack, and they basically want to do online pharmacy sales. So, you know, you might buy your diapers and your home goods and stuff

on Amazon.com. And then at the same time, you could check out also get your prescriptions delivered. That's kind of the hope that they have. And OK, so so there's that. And then we also talked about surveillance. So what about its role in surveillance, which comes via its home security business Ring Inc.? And what are Ring's products and how are they being used in police surveillance? So last year, Amazon bought this company called Ring, which was this startup that made these doorbell cameras. So there are a number of other companies, including Google-owned Nest, which also make cameras that you put outside your home that are motion activated.

But what's different about Ring is that Ring has hundreds of relationships with police departments around the country where, let's say, there's a crime that happens in a neighborhood, police can actually push out a request to all of the Ring owners in that area who can then share their footage. And there's also an app called Neighbors that Ring runs where you can share footage about, you know, quote-unquote suspicious activities happening in your neighborhood. Ring Neighborhoods takes security beyond the home and connects you to what's going on in your neighborhood. A new neighborhood watch for the digital age. Layering smart, proactive security throughout your home and around your neighborhood. So it's basically a countrywide and now growing internationally surveillance network that is an interconnected

network that is connected through people's front doors and through police departments and through this app. It's really incredible what they've done so quickly. And there's been a lot of criticism and a lot of pushback against it. Tell me a little bit more about this criticism. I know civil rights groups across the U.S. have been calling for governments to put an end to these agreements between the police and ring. And so are their concerns one of the fundamental criticisms is that amazon was able to go around some of these traditional democratic checks so instead of having to you know go before a city council or to have you know members of the community debate these partnerships before they happen most of them were brokered in secret so amazon didn't have to you know talk to communities

before they they partner with their police department. That's one of the fundamental criticisms. And another criticism is that a lot of this is racial profiling. So if you go on Neighbors, you see, you know, a person of color who is quote unquote suspicious for just walking around their neighborhood. And a lot of the filming is not just people's front doorsteps, their property, but the cameras actually film public space. So a lot of the time, these activities that are happening are people just walking on public roads. So it's not just filming their own property. And what are the implications of that when there's this

private surveillance network that is surveilling public spaces that people can't control or consent to? Right. And we might not know what that could be used for in the future. Right, exactly. And it really goes around these democratic checks and there's no accountability from the police department. There's no accountability from the homeowners who are filming people without their consent. It's all really being done in secret. And the only reason we really know about these partnerships to the extent that we do is because of Freedom Information Act requests made by journalists and investigative reporting. It's not because Ring or Amazon was very forthcoming about what they were doing here.

Right. Okay, so look, we've talked about some of what Amazon is up to, e-commerce, cloud computing, surveillance, pharmacy activities. And can you help me understand to what degree all of these activities are integrated? I mean, I'm going to guess Amazon just isn't buying up a random assortment of successful businesses. You know, there's got to be some sort of strategy here. And if so, what is it? So there are two parts. I think that Amazon traditionally has been this company of boom and bust. And what they've done is that they've taken all the money that they've made from profits. And instead of like, you know,

pushing that back to shareholders or, you know, actually paying taxes and all that profit, what Amazon traditionally has done is just pushed almost all of their profits into new research and development in tons of different areas and kind of seeing what sticks. So I think to some degree, they are kind of just like, let's try this, let's try that. But also, I think that Jeff Bezos and Amazon does have this kind of unified vision for this fully Amazon optimized home. So your ring camera will integrate with your Alexa Echo smart speaker, which will then allow you to order stuff from amazon.com, including your pharmacy. And then, you know, the video game player in the house will go on twitch.com and use, you know, there's kind of this fully integrated vision where the future of the, you know, household is completely Amazon

integrated. And they're competing against other players like, you know, household is completely Amazon integrated. And they're competing against other players like, you know, Facebook wants you to be on WhatsApp and Facebook and Instagram and have your Facebook portal. Google wants you to have a Nest camera. But I think that that's Amazon's vision is that you will have this fully integrated experience where every part of your buying and your data will all be on Amazon's platform somehow. And so intuitively, this does sound kind of cool, right? The idea that, you know, you would have this fully integrated home. But can we talk about what some of the concerns are around this? What kind of concerns have people raised?

So year after year, Amazon is always rated as one of the most trustworthy companies. Consumers love them. They love the convenience. But I think it's really important to realize that that convenience comes at a cost. So Amazon has been criticized over and over again for the way that it treats the workers in its warehouses. Pickers like Stephen Abedeli walk 15 miles or more each day to retrieve as many as 200 items an hour. A handheld device dictates every move and counts down tasks to the second. I would say I need to be in aisle 54, get this item, and then suddenly you're going to aisle 72 and you have 10 seconds. And more recently, they've been criticized for how they've treated

the contractor drivers who actually deliver those packages to your door. You know, there's been a number of accidents and these drivers have said that they're worried about how fast they're expected to make these deliveries and how many they're expected to make in a day. So I think those are some of the concerns is that sure, it'll be really great if you can get that spatula to your house in 12 hours, but at what cost is that really happening? Not only for the workers doing it, but also for the environment and also I think for your, for your privacy. Do you really want to give up everything about yourself, your purchasing habits, who's at your door every day, what websites you go to, all to this one company that is just so relentlessly pursuing growth at

almost all costs? Can we talk about that for a minute? Because another obstacle that Amazon has faced are these antitrust investigations that have been launched in the U.S. and the EU, you know, essentially questioning if they've become too big. And so what prompted these investigations? So a number of things. It's both Amazon's dominance in the cloud computing sector, and it's also their dominance in the retail sector. And I think that the catalyst for a lot of these investigations was a number of acquisitions that Amazon's made. For example, Democratic presidential candidate Elizabeth Warren has really called out Amazon's acquisition of Whole Foods, which really pushed them into the grocery sector. So not only are they now trying

to dominate online commerce, but also IRL, you know, food shopping. What this is about is about competition. It's about all those little businesses and startup businesses and entrepreneurs who want to put their products on Amazon or on Google and who are at an enormous competitive disadvantage because Amazon or Google... So I think that was one thing. And also just, I think a lot of grassroots activism has kind of pushed lawmakers to consider this more. There are a number of groups who are worried about competition among small businesses, who are worried about Amazon's environmental impact. And I think that it was kind of a combination of things that all of a sudden people are like, wait, how big is this company really become? Right, right. And what are sort of the unforeseen consequences here? In the Dragon's Den, a simple pitch can lead to a life-changing connection.

Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization. Empowering Canada's entrepreneurs through angel investment and industry connections. Surveys have shown that Amazon has garnered a lot of public trust. Other big companies like Facebook have had a tough time with that. Why do you think Amazon has cultivated this kind of trust when other big tech companies have struggled? I think it's the convenience that they provide. It's just, it's incredible to see people who in one breath will say like, oh, you know, I deleted my Facebook account. I don't trust Google, but an Amazon package comes to my house every other day. I think that they've really just

been able to show customers how convenient and useful their services are. And people also think that they provide a lot of value and that's really hard to argue with. I think that people go on Facebook, for example, and say, oh, I just spent 20 minutes scrolling on Facebook and I feel kind of bad about that. Whereas I feel really good about the fact that I ordered this stuff on Amazon that was cheap and came in a day. Right. The idea that like, you know, we talk a lot about how Facebook is maybe muddying democracy, just making the conversation so much worse and the discourse so much worse, sort of beyond the very obvious scandals like the Cambridge Analytica scandal. I do think I was aware of Cambridge Analytica as an entity earlier. I just, I don't know if I was tracking how they were using Facebook specifically.

When was the issue discussed with your board member, Peter Thiel? Congresswoman, I don't know that often. You don't know? This was the largest data scandal with respect to your company that had catastrophic impacts on the 2016 election you don't you don't know well congresswoman or you know people talk about youtube and how it's a recruiting tool for white supremacists and so we haven't had that same conversation about amazon no i think there have been a lot of reports but it's's really hard to argue with. You see this report about how badly the workers are treated on TV or something, but then you go home and your

Amazon package is there. It's exactly what you wanted. I think it's really hard to argue with that convenience for consumers. And I think also, one of the reasons I think that Amazon is so trusted is that consumers are working harder than ever for lower wages. You know, goods are only getting more expensive. So I think that Amazon really fits the sweet spot for a lot of people where it's something that they can afford. I think that's a big part of it. And figuring out how to criticize Amazon and push back against them while also acknowledging the reasons why someone might use this company so much has been a big theme in my reporting about being kind of empathetic to those reasons, but also trying to, you know, push back against this company and hold them accountable. Speaking of accountability, I've read that it's hard to hold Amazon accountable. Like if you got counterfeit or defective goods that you ordered on Amazon, is that because it sees itself as a

platform and not a brick and mortar store? Exactly. Yeah. So Amazon is a marketplace and it's a normal store. So you can actually buy things directly from Amazon on Amazon. But a lot of the time what you're actually most of the time you're actually purchasing from a third party and Amazon kind of makes that hard to see sometimes because, you know, you feel trustworthy when you buy something from Amazon, you just press that, you know, buy with one click button. But in reality, so easy. Yeah. Yeah. But in reality, you know, and I think this is much more obvious on Etsy or eBay or some of these other marketplaces where it's very clear, OK, there's this third party who I have to trust. It's not just trusting the platform, but on Amazon, that's more obfuscated. But they argue that we're not responsible. We are just the

platform. We are the intermediary. Right. It's not our fault who you buy from. And there have been a number of legal cases where people who have gotten really hurt or their houses are burned down, they've lost significant property, have tried to sue Amazon. Ryan and Megan Fox bought their kids the hoverboard for Christmas last year and say a few weeks later it burst into flames, destroying their home. The Fox family is seeking $30 million in damages, claiming Amazon knew the dangers of the product. And a lot of courts have thrown out those arguments and said, you know, Amazon is not the liable party here. But if you bought something from a small seller in China who then just disappeared, you can be left in a situation where no party can be held accountable.

Sort of not unlike the argument that Facebook has been making for the content that is published on its site. Exactly. It actually all rests on the same law. So yeah, it is actually exactly the same argument. I think that that's become kind of problematic. But at the same time, it's great that you can, I can go on eBay tomorrow and sell something if I want, right? And eBay doesn't have to come to my house and say, you know, is this really the t-shirt you say it is? So it is hard to figure out how do you kind of, when should a platform be liable for what's on their platform and what they sell? I think that's a huge question in not just Amazon, but in tech more broadly right now. I'm curious to get your perspective because you spend so much time looking at this company. Do you have any idea what Jeff Bezos' long game is for the future of Amazon? Has he ever made his long-term goals known?

Jeff Bezos has been extremely careful about his communication with the press. A lot of the interviews that he does do are either very short or they're very controlled. He's an incredible master of protecting his own reputation. And I think that it's kind of hard to tell, but I think that Jeff has always wanted to dominate as much as possible and to grow as much as possible. And they talk about being customer obsessed kind of at any cost. And I think that that's always on Bezos's mind. How can we prioritize customers and prioritize their needs? And I think it's kind of obvious from looking at Amazon's website and some of their other ventures that they're not really trying to be super cool

or super futuristic. They're really just kind of ruthlessly trying to be as optimized as possible to get you the lowest prices. You know, I kind of joke sometimes that Amazon's website's really bad and ugly, but it's really easy to use and it's really easy to find what you want. The search function is really great. And I think that easy to find what you want. The search function is really great. And I think that those kinds of features really exemplify what their vision is. It's just being as ruthless and as optimized as possible and getting things to you as quickly as possible. What about his ambitions in space? I find this so interesting. I wonder if it's a bit of a hobby for him.

Yeah, I think that one of the reasons that he hasn't poured much money into charities here on Earth is that he wants to spend a lot of his money on Blue Origin, which is his space exploration company. I think that he really wants to be known as one of the pioneers who got us to live in space. I think that's a big part of his personal mission and what he really cares about. So over many decades, I believe, and I get increasing conviction with this with every passing year, that Blue Origin, the space company, is the most important work I'm doing. Which is very different from someone like Bill Gates. You know, the Bill Gates and Melinda Gates Foundation has donated, you know, billions

of dollars to charitable efforts in Africa to cure diseases. It's very different from someone like Jeff, who was like, I want to explore space, right? I think you can kind of see where his motivations lie, just kind of in how he spends his money. Okay. Louise Mitsakis, thank you so much for this conversation. It was so interesting. Thank you so much for having me. That's all for today. I'm Jamie Poisson.

Thanks so much for listening and see you all tomorrow. For more CBC Podcasts, go to cbc.ca slash podcasts.