How the Justice Department is Missing the Point About Amazon
The Justice Department announced last week that it is opening a broad inquiry into the competitive practices of large technology companies, including Amazon. While they may or may not find illegal practices in their review of Amazon and other tech Giants, they seem to be missing the major problems that require no investigation because they are right in front of our noses.
It is absolutely no crime to grow a successful business so long as anti-trust and other laws are not broken. Amazon, like most large companies these days, have found themselves in trouble before and have been made to atone.
In 2014, for example, a class action lawsuit was filed against Amazon because of it’s devious prime shipping practices. As is the case today, customers paid for Amazon prime in order to get free shipping, and when purchasing products directly from Amazon this was fairly straightforward. When purchasing products from third-party sellers — who make up roughly half of the products sold on Amazon — it was found the sellers were being instructed to simple “tack on” the shipping charges to the price of the product. Therefore, customers were paying for Amazon Prime and still paying for the shipping charges.
Still, I think one of the biggest problems with Amazon today that is visible is actually the result of the actions of the federal government and the U.S. Postal Service. Amazon pays a tiny fraction of postage costs that other businesses pay. As someone who owns a (very) small ecommerce business, I am very aware of postage costs and have frequent dealings with postal workers. Many postal carriers have told me in frustration that they feel like they now work for Amazon. They are overtaxed with the constant influx of Amazon packages, and the USPS is receiving far less money for the work.
The alarming and telling side of the story is that these postage price negotiations are kept sealed as if they were Top Secret classified documents. You can find negotiated contracts online, but all you will see is that a contract was made on a certain date, and that a request that the contract remain sealed was granted. You will not find what company the contract was made with, nor what the negotiated rates were.
The purpose of government has always been to collect money for community resources that are used by the whole community. This started out in simple ways. If a community of ten houses are built, and a road is needed, it makes sense for the cost of the road to be shared. Today, the postal service is one of the major community services that we share. While it makes perfect sense for documents and information related to national security or intelligence to be classified and kept from the public eye, postage contracts do not fall into this category.
Hiding contracts the postal service makes on behalf of the government — OUR government — is a blatant move to avoid outrage or embarrassment over how ridiculously low these rates are. Amazon is a large, powerful corporation, but we should not allow them to hold hostage a basic, essential service such as our mail service.
To give you an idea at how ridiculously low these rates likely are, I refer back to the days when I used Amazon Fulfillment Services. I would frequently ship large, 30–50 pound packages to Amazon, and because they were going to Amazon warehouses I would get Amazon shipping labels at Amazon rates. I was shocked to find that getting Amazon rates, I was paying $5–7 to ship packages that would cost me $80–100 to ship under my own account. Spending up to $20,000 a year on postage, I do get a discount, but this tiny fraction Amazon pays is obscene, and can’t possible cover the costs of the postal workers doing the work.
I applaud the Justice Department for taking the initiative to look into the practices of tech companies. I find it unlikely their search will be in vain. That being said, it is outrageous how far we have already gone to give them an advantage over small and even many large businesses, at the expense of tax-payers and hard-working postal workers.
