We should be terrified. But no, we’re throwing money around all over the place.
This week I became genuinely scared for capitalism, democracy and freedom. And I’m not sure people really get how serious this is.
I’m talking about Amazon, and specifically Amazon’s announcement of their second American headquarters – HQ2.
They decided to split HQ2 into three actually – two major headquarters in New York and another in Virginia, and then a third auxiliary headquarters in Texas.
The thing was though that Amazon effectively created a bidding war for cities across America to try and woo them to their town. The literally travelled the country, like some tech version of the Olympics Hosting Committee.
And some cities were going to incredible lengths to try and land their headquarters (and seriously, if it can be split in three, it’s not a “headquarters” right? It’s a glorified office building.)
And this is the thing. The seductive package New York city and New York state ended up offering Amazon will cost tax-payers $3 billion dollars.
$3 billion fricking dollars.
Now the liberals are whining that this is money that should have been spent on schools and orang-utans or whatever, and they’re kind of right, but it’s also missing the point.
Think about what’s happening here. Amazon is effectively monster stomping through retail right now. Pretty much anyone who sells anything is feeling the hot breath of Amazon on their neck.
Marketing guru Scott Gallaway says he goes to 50 Board meetings a year, and right now, there’s only one question in every company he goes to – “what do we do about Amazon?”
Last week Roger David, which has been putting men into underpants for 70 years, announced it was going to close by Christmas. 500 jobs lost. Not the first and not the last.
So remember the Amazon phenomenon is a zero-sum game. For every job Amazon creates, it destroys at least one in the broader economy (and probably the ratio is higher than one because “efficiency”).
So this $3 billion dollars Amazon is getting is not about seeding new economic activity. It’s about transferring economic activity from traditional retail over to Amazon.
It’s about giving Godzilla a handout and a massive competitive advantage while the villagers are screaming and heading for the hills.
Why isn’t Roger David getting $3bn?
And don’t get me wrong. I’m not against the emergence of online. I’m worried about the emergence and total domination of just one company. That’s not good for competition, and it’s not good for capitalism.
Can I make this story worse?
Well, why did Amazon pick Virginia? Word is because it’s a short hop to Washington.
Amazon already has 77 full-time lobbyists and a $100m dollar budget.
Excuse me?!? I’m trained in the art of persuasion. Do you know what carnage I could wreak if I was working full-time on it, with 76 full time staff? Seriously? What the hell do they do all day? Oh, and give me a $100m dollar budget..? Forget it.
There’s also grumblings that a recent tender for American’s defence communications system (the Joint Enterprise Defence Infrastructure cloud, or JEDI – nup, really not making it up), was tailored made for Amazon to win it. Like, they were literally the only company who could fulfil all the criteria.
So yep, the biggest company in America now has control of Defence communications.
What could go wrong?
And this is the thing. Amazon started as a book store, then it moved into retail, now cloud services and tech…
Where does it stop?
Amazon’s aim is simple. To control commerce. To control trade. It’s not about the products. It’s about the trade itself. It sells the water but it wants to own the pipes.
All of them.
Fully realised, the economy will never have known another monopoly like it. It makes OPEC look like amateur hour.
Do you see it?
But maybe you think it can’t happen here? Maybe you think the fortifications around the Coles and Woolies duopoly are just too solid…
Here’s a scenario. Amazon gets $3bn from the government (because they’re idiots), Bezos himself tips in another $3bn, because to him its chicken feed. Then they go to the venture capital guys and say, we’re going to take over Aussie retail, because we can. They chip into a war chest of $50bn because everyone loves the smell of money, but they barely need to touch it. Amazon just sets up a rewards program so that for every $100 of groceries you buy, you get $10 worth of Amazonians (their patented crypto currency) to spend on literally anything on the planet.
Coles and Woolies are in receivership in six months.
At that point, it’s done and dusted. Everything bought and sold anywhere on the planet will be done through Amazon.
Amazon determines the price. Amazon determines the access. Amazon determines the range.
And there won’t be diddly squat we can do about it then. In the modern world, trade is life.
And Amazon will control it all.
So everyone’s worrying about totalitarian tendencies in Russia and China, but that’s not what we should be scared of.
We should be scared of Amazon.
But no, instead, we’re throwing money at them like it’s nobody’s business.