This is the second part of our analysis of Amazon’s rise to 1 trillion. Today, we look at the changing relations between Amazon and the US political circles.
When a company registers £178 billion revenue and employs 560,000 people, it does not go unseen in Washington’s, London’s or Brussels’ corridors of power. Amazon is no exception. The online retailer’s relation with politics is complex, being alternatively cooperative or detached, but is always functional to profit maximisation.
As the company’s size got exceptional and its plans bolder, Amazon’s executives felt the necessity to gain some visibility in Washington, aligning their presence to the other tech giants. In a few years the annual lobbying expenditure went up from less than $5 mln to more than $13mln, a sum second only to Google’s $18+ mln in 2017. The 28 in-house lobbyists at Amazon’s pied-à-terre in the Capital – up from 14 before Trump’s elections – pursue different objectives at an increasing number of government agencies and institutions, ranging from the Senate and the White House, to the Federal Aviation Administration (FAA) and the Postal Service.
Arguably, the central battle for Amazon’s staff in D.C. is taking place on Capitol Hill, where they are pushing for Federal standards for online sales tax collection. At the moment, consumers are supposed to declare their online purchase on their tax forms, a practice leading to high avoidance rates and which is quite different in each state. A federal law regulating the issue and setting standards would simplify Amazon’s business and possibly increase online sales tax collection, yet, to Bezos’ repeated disappointment, this win-win reform is being delayed constantly.
In Washington, Amazon is also battling against other tech giants for multi-million government contracts. Unsurprisingly, Amazon is leading the way in this field as well, having secured a 10-year deal with the CIA for cloud computing services worth $600mln annually. For some observers, Amazon is now the primary cloud infrastructure provider to government.
While sliding doors at Amazon have always been open – James Mattis, Obama’s White House Press Secretary and current senior vice president of worldwide corporate affairs at Amazon is just the last of a long list of civil servants who joined the team – relationships with the current occupant of the most famous House in Washington have been rapidly going South. During the campaign, Trump attacked Bezos-owned Washington Post for spreading fake news (since then the newspaper has adopted the motto “Democracy Dies in Darkness”). Yet, in December 2016, Bezos, along with the CEOs of the world’s largest tech companies, accepted the invite from the then-President elect to his NY Trump Tower. The meeting, probably an attempt to build ties with liberal-minded business leaders after an unconventional campaign, must have not brought the desired the results. After the inauguration, the 45th President has been frequently attacking the company, accusing it alternatively of job destruction and tax avoidance at the expense of taxpayers (more on this in Part 3 of the series). Amazon has opted for a quiet response and Mr Bezos, who had been invited to join the Department of Defense Innovation Advisory Board, declined without any comment. A silence that is revealing of the dismal relations now connecting Seattle and the Oval Office.
by Giovanni Pierdomenico
N.B. This article reflects the author’s opinions only.