Amazon is hungry for more

Here is a joke:

Question – Why did the online retailer renowned for its super cheap prices buy a brick and mortar grocery chain known for its ridiculously high prices?

Answer – Because it could.

Hilarious!

And yet, how else to make sense of the recent news that Amazon has decided to purchase the high-end grocery store chain WholeFoods? After all, the announcement did seem like a bit of a joke at first. While it is certainly true that, over the years, Amazon has grown from an online book retailer to an online everything retailer it still seems slightly odd that the tech company is choosing to purchase the church of all things kale. Many of Amazon’s past purchases have made sense in a simple sort of way: such as buying other online retailers (such as Zappos) that could eventually threaten Amazon’s dominance if not neutralized. Similarly, Amazon’s move into the tablet and Internet of Things (Amazon Echo) areas would make it understandable if the company had decided to snap up a handful of tech companies in order to secure their patents before one of their competitors could do so. But, were Amazon’s buys to be fed into Amazon’s own purchase tracking algorithms it is likely that the purchase of WholeFoods would stick out as somewhat odd. So is this some bold renegade move? The tale of Jeff Bezos being a retail maverick? Or, something much more prosaic?

Ultimately, it’s probably rather banal, if nevertheless still rather worrisome. Namely: when companies get really big, they just want to get bigger. And when such companies are sitting atop mountains of cash, one of the easiest ways to substantially grow is to buy other big companies. Furthermore, this is the sort of move that allows Amazon to grow without setting off a new front in the ongoing war between it and its rival massive tech companies (Apple, Google, Facebook). Still, one of the elements of Amazon’s recent purchase which may make it seem somewhat confusing is the way in which this is a tech company purchasing something that is decidedly not a tech company.

Granted, Amazon has already stuck its metallic toe into the world of retail, as it has now attempted to open some brick and mortar bookstores of its own. Bookstores which seem to have solicited a rather unimpressed response. Based on that it might be fair to hypothesize that Amazon has purchased WholeFoods in order to profit from its expertise in setting up physical stores. If Amazon had no interest in such physical spaces than why bother buying WholeFoods? After all, customers can already buy organic baby food, fancy tea, and non-GMO kale powder from Amazon. Instead of starting from scratch by launching its own stores, Amazon will now have a host of already established places in which to test out its ideas. Furthermore, it can easily alter things in one or two stores while leaving the others unchanged in order to gauge whether or not a given alteration is profitable. And it is fair to assume that the pain of many of Amazon’s experiments will largely fall on the shoulders of WholeFoods’ employees. One can, and should, reserve some empathy for these workers; the company which had once earned a reputation for treating its employees half-decently (emphasis on “half”) is being taken over by a company that has a reputation for treating its employees like robots even as it has desperately sought to replace them with actual robots.

And though this story may appear to be about the buying and selling of organic asparagus water for $50, at core this remains a story about technological control. All the stuff about organic foodstuffs is just a red herring. Though, incidentally, an organic red herring can be purchased at WholeFoods for $5 an ounce.

On the most basic level, one of the things that Amazon will get from this purchase (beyond the actual company) is access to a whole new stream of data. Amazon already knows a heck of a lot about its customers: it knows what they’ve bought, what they’ve searched for, what they’ve liked and disliked, what they’ve watched, what they’ve listened to, and much more. And it is worth bearing in mind that this information crosses multiple domains, thereby allowing Amazon to build up a substantial dossier on each of its customers. Based on your purchasing and browsing history Amazon can tell not just your cultural taste but also whether you have kids, or pets, or travel a lot, or re-read the racy parts of novels on your kindle, or have a health condition. To know more about its customers, Amazon needs a way to get even more information about its customers, and one way to do that is to get access to more buying data about those people – information which may have previously been owned by a different company. True, Amazon sells food, but if the company really wants to get data on the food people purchase, then buying a grocery chain is a pretty good way to do that.

Furthermore, insofar as WholeFoods has a (rather well-deserved) reputation for catering to a slightly higher-end clientele – this purchase means that Amazon is getting customer information about a set of people who have some disposable income. The question may be raised as to how Amazon will sync all of this information, but it seems rather obvious that one of the first changes Amazon will implement is encouraging people to pay at WholeFoods by using their Amazon Prime accounts. Or encouraging those who live in wealthy areas (where WholeFoods are generally found) to avoid the hassle of waiting in line by ordering home delivery of their groceries. Such a move could be framed as “making checking out easier” while the true goal is to simply gather more information about customers. And at the same time Amazon positions itself to take some of the wind out of the sails (and sales) of food/tech companies like FreshDirect and BlueApron that deliver groceries right to customer’s doors.

Amazon may be steadily securing a foothold in physical spaces, but the company remains a technology company. And insofar as Amazon is now buying up a chain like WholeFoods this highlights the way in which non-tech companies are becoming potential fodder for tech companies. Such places represent an opportunity for tech companies to gather more information on customers, but they also (and more importantly) demonstrate the ways in which tech companies are coming to occupy ever more powerful positions in the societies where their growth is allowed to continue unimpeded. Over the last few years Amazon has steadily assumed more and more dominance within the realm of online shopping (and online shopping has increasingly become the dominant mode of shopping), and the company is intent upon seeing that share continue to grow.

With the purchase of WholeFoods, Amazon is making it nakedly clear that it is dangerously reductive to think that tech companies are satisfied to only play in their technological sandboxes. Google doesn’t just want to be a search engine – it wants to be the key set of tools by which you navigate the world. Facebook doesn’t just want to be a social network – it wants to be the space in which the majority of your interpersonal relationships play out. And Amazon doesn’t just want to be the place where you buy a handful of things – it wants to be the place where you buy everything. Many people continue to write celebratory odes to the potential of the Internet to decentralize power – and many still argue that this was the Internet’s original intent – but it is becoming increasingly clear that the Internet is a space overwhelmingly dominated by a small handful of companies that are centralizing more and more power. And much of this battle for centralization takes place unseen as the major tech companies battle each other to construct the largest server farms. Indeed, one of the most unnerving aspects of watching the battle play out between Amazon, Google, and Facebook is to see the ways in which the companies seem to have steadily arrived at an uneasy détente. Having now ceded certain domains to one another (search, shopping, social networking) the companies are eager to find new areas that have not been truly claimed by any faction yet. And sucking up already existing companies is certainly one way to do that. Alas, it may well be past time to start considering whether all of the hopeful paeans to the Internet as decentralized utopia are simply fantasies for a technological state of affairs that never really existed in the first place.

Government officials with the power to enforce anti-trust and anti-monopoly laws have shown little interest in reining in the metastasizing growth of tech companies. And consumers who appreciate low prices and speedy delivery have been rather hesitant to call upon their elected officials to enforce such regulations. Granted, the tech lobby has been pouring money into the coffers of elected officials in order to ensure that such regulations are hardly even discussed. But as tech companies keep growing, and as they keep being allowed to hoard mountains of cash, it is inevitable that they will continue to grow. Or, to put it simply, WholeFoods isn’t the last thing that Amazon is going to add to its shopping cart. But this isn’t about kale or free range chicken – it’s about control.

For years WholeFoods has sold itself to consumers based on the premise that its products would be good for their health. And Amazon certainly thinks it will be good for its own health to buy up WholeFoods. But that is not the same as this purchase being good for a society’s health.

If you’re a fan of kale, it might be time to find a new place to buy it.

 

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About Z.M.L

“I do not believe that things will turn out well, but the idea that they might is of decisive importance.” – Max Horkheimer librarianshipwreck.wordpress.com @libshipwreck

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