Amazon CEO Andy Jassy is inheriting a behemoth that is under siege

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From Yahoo Finance:

Jeff Bezos is out of a job. The former head of Amazon Web Services, Andy Jassy, has taken Bezos’ place as Amazon CEO, leaving the world’s richest human to his rocket company Blue Origin, the Bezos Earth Fund and, of course, his role as chairman of Amazon’s board.

Jassy, meanwhile, takes over at a time when Amazon faces its biggest existential challenges yet. There are ongoing antitrust investigations; battles with labor advocates; and increased competition in the lucrative cloud space from the likes of Microsoft and Google.

“Amazon has been under siege from different quarters,” Ari Ginsberg, professor of at the NYU Stern School of Business, told Yahoo Finance.

But Jassy, who’s worked for Amazon since 1997 and ran its most profitable business, may be the perfect person to guide Amazon through its most tumultuous era yet.

“You want somebody who has the confidence of the chairman and the board,” said Harvard Business School professor of business administration Rosabeth Moss Kanter. “You want somebody who understands the strategy, and was part of it, and knows where the bodies are buried, and the mistakes that have been made and how to move forward.”

Still, the road ahead for Jassy will be tough.

The antitrust suits are coming

While Amazon started out as an online bookseller, it’s now a gargantuan business with its tendrils in everything from cloud computing to groceries, entertainment, pharmaceuticals, and even physical stores. It now has a market capitalization of nearly $2 trillion.

And now the regulators are circling.

“Probably, the most important at this point is the antitrust regulation issue, because that threatens the continued stability and growth of Amazon as this huge corporation,” Ginsberg explained.

Amazon has already been sued by Washington, D.C. Attorney General Karl Racine, who accused Amazon of violating the District of Columbia Antitrust Act by forbidding third-party sellers from offering cheaper rates for their products on competing websites.

Federal regulators may be coming soon, too. It doesn’t help Amazon that the FTC’s newly appointed chair, Lina Khan, is a fierce critic of the e-commerce giant who made a name for herself by publishing an article for the Yale Law Journal titled “Amazon’s Antitrust Paradox” calling for changes in the current antitrust regulatory framework.

Then there are the six antitrust bills targeting Big Tech working their way through the House.

“The intensity of the spotlight on Amazon from an antitrust perspective is only going to increase,” said Christopher Krohn, adjunct associate professor of marketing at the University of Chicago Booth School of Business. “So that’s an area for Andy as a CEO that he’s going to face, much more so than Bezos ever did in the past.”

Amazon’s labor relations problem

Amazon is one of the largest employers in the U.S., and after years of complaints from warehouse workers, labor unions are beginning to take action.

The International Brotherhood of Teamsters recently announced it will begin working to organize Amazon workers, an effort that could succeed where an earlier campaign to unionize a warehouse in Bessemer, Alabama, failed.

“They’re going to have tons of political pressure, pressure from their customers, pressure from their employees, and I would not be surprised at all to see a continued drive toward unionization,” Krohn said.

Amazon has responded to criticism of its workplace practices by pointing out that it offers warehouse workers starting pay of $15 per hour plus benefits. But the pandemic saw increased calls for Amazon to treat its workers better, especially as they helped keep Americans’ cupboards full when the aisles of traditional brick and mortar stores were running bare.

. . . .

“[Jassy] needs to deal with this perception…that has been reported in the media that Amazon kind of dehumanizes or mistreats its workers in the warehouses,” Ginsberg said.

To cut off that criticism, Amazon recently made an addition to its famous Leadership Principles that guide the company, which calls on the e-commerce giant to “Strive to be Earth’s Best Employer.”

Link to the rest at Yahoo Finance

PG points out that Amazon has been depicted as on the brink of destruction by various journalists over a period of many years.

Perhaps PG is wrong, but he doesn’t think the latest rounds of criticism are going to knock the Zon off its position.

He will mention a few items:

  1. The horrors of Amazon’s warehouses have been publicized for a long time. There is little doubt that the Teamsters Union and other unions that wish to unionize Amazon employees have been the source of a large number of these horror stories. In long-past lives, PG worked in more than one place doing heavy manual labor for low wages and a lot of people continue to do the same type of labor. Had he been able to grab a job as an Amazon warehouse worker during that time, he would have instantly accepted it. Unions dramatize working conditions that shock subscribers to The New York Times. The people who actually do this type of manual labor aren’t dumb and they can easily distinguish the difference between working under typical manual labor conditions and working in an Amazon warehouse.
  2. Speaking generally, labor unions have been on a long downhill slide for many years. The simple fact is that, other than employers that were unionized decades ago, unions have not had any big successes in expanding their membership into major new employers in a very long time. PG points out the long and unsuccessful effort to unionize Walmart employees which has gone effectively nowhere. Additionally, a great many Amazon warehouses are located in states which have very few unionized employers. Nothing prevents Amazon from closing down warehouses in places that are hostile to its anti-union stance.
  3. Antitrust cases take years and years and years to work their way through the US court system, including trials and appeals. If the Justice Department filed an antitrust case against Amazon tomorrow, Amazon would almost certainly be rolling along in about the same way it does today in 2031. Additionally, there is a lot more turnover among low-paid Justice Department attorneys and the premier law firms Amazon would likely hire to defend itself. For a great many low-level Justice Department litigators, experience at Justice often leads to transition into private practice.
  4. Significant changes in antitrust laws have been very rare and taken a great deal of time to work themselves through Congress. If, as many political observers are speculating, there is a good chance that control of the US Senate will revert to the Republicans in the 2022 election cycle, such a change is likely to kill antitrust legislation in its tracks. The idea that any sort of antitrust legislation which targets Amazon, Google and Facebook would not generate a lot of opposition from companies other than those three is fantasy. A great many different businesses, including competitors to those three companies, would worry about the potential impact of such legislation on them. Once they make their way through the legislative meatgrinder, major new antitrust laws are like unguided missiles which can go off in all sorts of directions and impact companies no one in Congress thought about during the process of drafting, revising and amending that any major legislation goes through before it becomes law.

PG isn’t saying that Amazon should take these threats lightly and PG doubts anyone at the company is doing so. PG does say that the author of OP seems to be pretty naïve about the realities of big-time antitrust litigation and way too accepting of labor union talking points and manufactured quotes.

2 thoughts on “Amazon CEO Andy Jassy is inheriting a behemoth that is under siege”

  1. Offering my opinion as a now retired state employee, about the only places that unions are making any gains is in the public sector. Unlike the private, where you can do strikes, recruiting, etc. etc., in the public sector you don’t have the right to strike. In fact, the only thing that the unions really do is negotiate lopsided contracts that often have no basis in reality and are often approved by state legislatures with nary a vote on them. Additionally, in my home state of CT, the public sector unions (known as SEBAC), are trying to do an end around the Janus v AFSCME decision that came out a few years ago, because that one hit them where it hurt them the most: the wallet. Public sector unions don’t really care about their members, only about their members wallets.

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