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  1. #1
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    [EN] Amazon’s Uneven Playing Field

    A core part of Amazon's strategy has always been taking advantage of public benefits not available to competitors.

    While Amazon often frames its tactics as competition, really many of them are a kind of graft, with smaller businesses and entrepreneurs left facing a company that gets to play by a completely different set of rules.

    Olivia LaVecchia
    Oct 19 2017

    Amazon is looking for a big subsidy to build its new headquarters—the latest move in the company’s long history of using the government to get favors its rivals can’t.

    In the hierarchy of the corporate world today, Amazon is near the top. It's one of the top five most valuable companies traded on the major exchanges, and founder and CEO Jeff Bezos is now the second-richest person in the world.

    People tend to think that Amazon has gotten there simply by out-competing everyone else. But there's another part of the story of Amazon's rise. From the very beginning, a core part of Amazon's strategy has been taking advantage of public benefits not available to its competitors.

    Now, bidding is set to close Thursday on the latest play in this strategy: Amazon's decision to launch a public auction for the location of its second North American headquarters. In that auction, Amazon is angling for such a substantial public handout that, as Amazon itself puts it in its Request for Proposals, the "magnitude may require special incentive legislation." Since Amazon opened bidding, more than 100 cities across the U.S. and Canada have publicly announced their interest in the Amazon sweepstakes, and have given over conference rooms and staff time to work on the bid, launched PR stunts, and started hashtags. Experts say that the end result of all of this hype could be a multi-billion dollar giveaway from taxpayers to Amazon.

    The process has unfolded like the work of a seasoned pro, and that's because it is. It started back in 1995, when Bezos was founding the company, and famously decided to base it in Seattle instead of the Bay Area. His reasoning, he told Fast Company a year later, was so that Amazon could avoid collecting sales tax in more-populous California, gaming a sales tax loophole that predated the rise of online shopping.

    Sales tax avoidance remained critical to Amazon's strategy—and its appeal to consumers—for years. As the company grew, it used increasingly elaborate tricks to hold onto its sales tax status, including outfitting employees with fake business cards when they travelled to certain states, strong-arming states into special deals that allowed it to remain sales tax-free, and, in Texas, using a warehouse-concealment scheme that later led the state to sue Amazon for $269 million in back sales taxes.

    All of this evasion gave Amazon a 6-to-10 percent, government-granted price advantage over its brick-and-mortar competitors in the form of being able to offer tax-free sales to its customers. Even as recently as 2011, when Amazon was already well-established, a study of 275,000 households by economists at Ohio State University found that that price difference was central to the company's appeal. When Amazon started collecting sales tax in a state, the economists found, household spending on its site dropped by 9.4 percent overall, and 29 percent for big-ticket items.

    Around 2005, Amazon also started using a new strategy to cut its costs. As it added more warehouses to its delivery network, it started to focus on extracting large subsidies for the facilities. The strategy has paid off for Amazon: The company has netted at least $1.1 billion in public incentives to fund its expansion, according to data compiled by the Institute for Local Self-Reliance and Good Jobs First. Between 2005 and 2014, Amazon received a subsidy on at least half of all of its new facilities.

    Today, Amazon's well-oiled subsidy-extraction machine includes in-house site location experts who travel the country negotiating with local and state officials for incentive deals, and region-by-region policy teams that coordinate its local and state lobbying efforts.

    "I effectively identify, negotiate, and implement economic development incentives," reads the LinkedIn page of one manager in Amazon's economic development department. Amazon is continuing to staff up these efforts. Its current job postings include those for lawyers and accountants who, as the job descriptions describe, will "support the site selection process including … execution of economic development, infrastructure, and tax related applications and agreements."

    The company's successes include those like a pair of deals in Joliet, Ill., where, despite a worsening state budget crisis, Amazon won a $10 million tax break for a new fulfillment center in 2015, and just the next year, an additional $20 million for a second facility next door. Amazon did not respond to a request to comment on this story.

    It's not just the state and local levels. At the federal level, Amazon relies heavily on tax loopholes, too. In one arrangement, Amazon decided to locate its European headquarters in the tax haven of Luxembourg, and then transfer profits from assets like software and trademarks into the tiny country, effectively slashing its income taxes in both the U.S. and the European Union. Earlier this month, the EU ordered Amazon to pay $295 million in back taxes over the scheme, in part because of the anticompetitive nature of a tax arrangement that's available to one company but not to others. "Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules," Margrethe Vestager, the EU Commissioner for Competition, told the Associated Press.

    The EU decision underlines the fact that while Amazon often frames its tactics as competition, really, many of them are a kind of graft, with smaller businesses and entrepreneurs left facing a company that gets to play by a completely different set of rules. Some of Amazon's competitors do try to engage in the same tactics, including fellow tech giants Apple, Google, and Facebook, notably for their data centers. Amazon, however, has been among the most aggressive, and many of Amazon's other competitors don't have access to the same rulebook. Amazon's competitors are largely small independent businesses, while many other upstart tech giants were disrupting the businesses of other huge corporations. Even when economic incentive programs are ostensibly open to both small and large businesses, research by Good Jobs First found that large firms snapped up 90 percent of the incentives. Other research, meanwhile, finds that independent firms remain leading job creators.

    What's perhaps most remarkable about Amazon's long history of public handouts is that the public has stood for it. Especially at the local level, on top of its tax grabs and loopholes, Amazon's rise is leading to vacant stores and drops in property tax values that are threatening town and city revenue streams. And at the same time as Amazon's unfair playbook has increasingly impacted other businesses' ability to compete, the U.S. has also seen a stark drop in new business formation.

    Amazon is increasingly getting public policy to work for its own benefit. It's time for public officials to instead invest in broad-based economic development that benefits many types of employers—starting with passing on Amazon's second headquarters arm's race. Otherwise, before long, it will be Amazon's game that the public is playing.

    https://motherboard.vice.com/en_us/a...-tax-subsidies

  2. #2
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    Report: How Amazon’s Tightening Grip on the Economy Is Stifling Competition, Eroding Jobs, and Threatening Communities

    Olivia LaVecchia
    Nov 29, 2016

    For all of its reach, Amazon, the company founded by Jeff Bezos in 1995 as an online bookstore, is still remarkably invisible. It makes it easy not to notice how powerful and wide-ranging it has become. But behind the packages on the doorstep and the inviting interface, Amazon has quietly positioned itself at the center of a growing share of our daily activities and transactions, extending its tentacles across our economy, and with it, our lives.

    But describing Amazon’s reach in the retail sector describes only one of the company’s tentacles. Amazon is far more than a big, aggressive retailer. As we show in this report, Amazon increasingly controls the underlying infrastructure of the economy. Its Marketplace for third-party sellers has become the dominant platform for digital commerce. Its Amazon Web Services division provides the cloud computing backbone for much of the country, powering everyone from Netflix to the CIA. Its distribution network includes warehouses and delivery stations in nearly every major U.S. city, and it’s rapidly moving into shipping and package delivery for both itself and others. By controlling this critical infrastructure, Amazon both competes with other companies and sets the terms by which these same rivals can reach the market. Locally owned retailers and independent manufacturers have been among the hardest hit.

    Amazon’s bet is that as long as consumers are enjoying one-click ordering and same-day delivery, we won’t pay much attention to the company’s creeping grip. Even as consumers, Amazon’s dominance comes with significant consequences. The company uses its data on what we browse and buy to shape what we see and adjust prices accordingly, and its control over suppliers and power as a producer itself means that it’s increasingly steering our choices, deciding what products make it to market and what products we’re exposed to.

    But we’re also much more than consumers. We’re people who need to earn a living, who want to have meaningful jobs, who care about the freedom to build a business. We’re neighbors and we’re citizens, entrepreneurs and producers, taxpayers and residents, with needs and wants from an economy that go beyond the one-click checkout.

    Amazon’s increasing dominance comes with high costs. It’s eroding opportunity and fueling inequality, and it’s concentrating power in ways that endanger competition, community life, and democracy. And yet these consequences have gone largely unnoticed thanks to Amazon’s remarkable invisibility and the way its tentacles have quietly extended their reach.

    Our new report aims to pull back this cloak of invisibility. It presents new data; draws on interviews with dozens of manufacturers, retailers, labor organizers, and others; and synthesizes a broad body of previous reporting and scholarship.

    It’s organized into four main sections:

    In the first section, Monopolizing the Economy, we look at how Amazon is using its market power to eliminate competition and take control of one industry after another, leaving us with an economy that is less diverse and innovative, and which affords fewer opportunities for businesses to start and grow.

    In the second section, Undermining Jobs and Wages, we examine Amazon’s labor model and find that work inside its 190
    distribution facilities resembles labor’s distant past more than a promising future, with many workers performing grueling and under-paid jobs, getting trapped in precarious temporary positions, or doing on-demand assignments that are paid by the piece.

    In the third section, Weakening Communities, we explore how Amazon is upending the longstanding relationship between commerce and place, changing the way that our communities feel and threatening the revenue streams and social capital that they depend on to function.

    In the final section, The Policy Response to Amazon, we begin by looking at how Amazon’s rise has been heavily assisted by government support, including subsidies and tax advantages worth billions of dollars.

    And finally, we turn to what to do about it, sketching the steps policymakers should take to check the company’s power and bring about a more competitive and equitable economy.

    PDF (79p) https://ilsr.org/wp-content/uploads/...port_final.pdf

  3. #3
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    Dec 2010
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    Monopoly Power and the Decline of Small Business

    The view from the shop—antitrust and the decline of America’s independent businesses.

    Stacy Mitchell
    Aug 10, 2016

    The United States is much less a nation of entrepreneurs than it was a generation ago. Small, independent businesses have declined sharply in both numbers and market share across many sectors of the economy. Between 1997 and 2012, the number of small manufacturers fell by more 70,000, local retailers saw their ranks diminish by about 108,000, and the number of community banks and credit unions dropped by half, from about 26,000 to 13,000. At the same time, starting a new business appears to have become harder than ever. The number of startups launched annually has fallen by nearly half since the 1970s.

    As stunning as these figures are, there has been remarkably little public debate about this profound structural shift taking place in the U.S. economy. We tend to accept the decline of small business as the inevitable result of market forces. Big companies are thought to be more efficient and productive; therefore, although we may miss the corner drugstore or the family-owned auto repair shop, their demise is unavoidable, and it’s economically beneficial.

    But our new report suggests a different, and very troubling, explanation for the dwindling ranks of small businesses. It presents evidence that their decline is owed, at least in part, to anticompetitive behavior by large, dominant corporations. Drawing on examples in pharmacy, banking, telecommunications, and retail, it finds that big companies routinely use their size and their economic and political power to undermine their smaller rivals and exclude them from markets.

    These abuses have gone unchecked because of a radical change in the ideological framework that guides anti-monopoly policy. About thirty-five years ago, policy-makers came to view maximizing efficiency — rather than maintaining fair and open markets for all competitors — as the primary aim of antitrust enforcement. This was a profound departure from previous policy and America’s long-standing anti-monopoly tradition. Over time, this ideological shift impacted more than antitrust enforcement. It infused much of public policy with a bias in favor of big business, creating an environment less and less hospitable to entrepreneurs.

    This report presents three compelling reasons to bring a commitment to fair and open markets for small businesses back into antitrust enforcement and public policy more broadly:

    1. Small businesses deliver distinct consumer and market benefits, and in some sectors provide more value and better outcomes than their bigger competitors. And they often achieve these superior results because of their small scale, not in spite of it.

    2. An economy populated by many small, independent businesses produces a more equitable distribution of income and opportunity, creates more jobs, and supports an expansive middle class.

    3. Small-scale enterprise is compatible with democracy, while concentrated economic power threatens our liberty and our ability to be a self-governing people.

    To restore competition and America’s entrepreneurial tradition, we can draw on our own rich antimonopoly history. In the late 19th and early 20th centuries, reformers enacted policies to break up concentrated power and ensure a level playing field for small businesses. These laws are still on the books, and the principles they embody are still relevant. With a fresh look at how we enforce them, these policies can go a long way toward reviving competition and small business. This report concludes by outlining several specific steps for doing so.

    Download the full report.

    https://ilsr.org/monopoly-power-and-...mall-business/

  4. #4
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    Dec 2010
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    Not Everyone Is Happy About Amazon Building Its Second Headquarters In Their Towns

    Seventy-three civic groups sent a letter to Amazon Tuesday calling for the company to commit to paying taxes and hiring unionized workers in whatever city it chooses for its next headquarters.

    Leticia Miranda
    October 17, 2017

    As cities across the country beg and clamor to become the second headquarters location for Amazon, civic leaders in many places — including Chicago, Denver, Philadelphia, and Nashville — are calling for a more critical eye.

    In an open letter to the Amazon CEO sent Tuesday morning, 73 civic groups from cities and towns around the country say that in its quest for a new headquarters outside Seattle, the company is demanding too much in terms of tax breaks and not making enough promises to the communities under review.

    "So last month, Amazon announced that you are looking for a location for your second headquarters (HQ2), and cities across North America jumped at a chance to submit proposals," the letter says. "You have your list of things you’re looking for from cities — but we live in these cities, and we’ve got some expectations of our own for Amazon."

    Signatories to the letter called for the company to hire locally for construction jobs, improve conditions for warehouse workers, contribute to affordable housing developments, and decline tax incentives that allow it to sell off its corporate income tax credits.

    "Amazon has a history of getting a lot of corporate welfare in cities where it’s built warehouses and data centers," Erin Johansson, research director with Jobs With Justice, a workers' advocacy group in Washington, DC, that has signed the letter, told BuzzFeed News.

    "They’re a highly profitable company and shouldn’t need a handout, but they take advantage of cities' willingness to do that," she added. "That’s been their M.O. We see an opportunity to say, 'We don't want a repeat of that.'"

    The groups that signed the letter have a long list of demands for Amazon, including that it employ "a substantial percentage" of people from disadvantaged communities, limit the use of temporary agencies to staff its warehouses, and make a "significant" annual contribution to support affordable housing.

    "We love jobs, we love technology, and we love convenience," the letter says, "but what you’re looking for will impact every part of our cities. We built these cities, and we want to make sure they remain ours. "

    The community groups also want Amazon to pay all its property taxes and sales tax on any equipment or building materials it will used during construction. And they ask that the company collect sales tax on sales by its third-party merchants, an issue that has heated up as some states start to collect taxes on sales by Amazon merchants.

    While Amazon is still in the early stages of the proposal process, the groups' demands may be a hard sell. Amazon seems to expect an incentive package beyond a "business-friendly environment and tax structure," according to its request for proposals released in September.

    It asks city applicants to outline an incentive package that could include anything from tax incentives for land to site preparation, tax exemptions, relocation grants, workforce grants, and fee reductions. It even anticipates some cities may have to create "special incentive legislation in order for the state/province to achieve a competitive incentive proposal," it writes in its request for proposals.

    In return, Amazon plans to invest over $5 billion in construction and operation of Amazon HQ2 and bring as many as 50,000 high-paying jobs to the selected area.

    The company's record in Seattle has cities looking to boost their local economies buckling at the knees. Amazon estimates its investments in Seattle, where it is currently headquartered, from 2010 through 2016 resulted in an additional $38 billion to the city’s economy. For each dollar Amazon invested, Seattle generated an additional 1.4 dollars for the city’s overall economy.

    But where smitten cities see dollar signs, some housing and worker advocates see warning signs.

    "This may be be one of the biggest deals any of our city officials will ever negotiate," said Nikki Fortunato Bas, executive director of Partnership for Working Families, a federation of regional advocacy groups.

    Bas, whose organization signed the letter, told BuzzFeed News: "We want to make sure that we’re using all the brainpower of everyone in our community to make sure our communities get what they need and thrive in this deal."

    https://www.buzzfeed.com/leticiamira...ast-jeff-bezos

  5. #5
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    Dec 2010
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    Nokia-Amazon Partnership Signals Public Cloud Telecom Takeover

    Nokia's deal with Amazon to help carriers use the retail giant's AWS cloud computing signals a long-term shift by telecom to public cloud.

    Tiernan Ray
    Oct. 20, 2017

    Nokia’s “strategic collaboration” with Amazon, announced yesterday, shows that Amazon is moving “full speed ahead” to put phone companies’ network infrastructure in its AWS public cloud, according to communications tech analyst Dmitry Netis of William Blair.

    Nokia said it would “support service providers in their migration to AWS,” through a variety of different measures.

    This could be a major transformation of telecom, as it gets absorbed in the cloud, writes Netis, and he thinks Amazon should consider buying Broadsoft to enhance Amazon’s offerings for telcos.

    Writes Netis, "There should be little doubt at this point that Amazon AWS is full speed ahead on telecom network transformation."

    Netis argues that "a 'telco cloud' hosted on AWS is potentially the ultimate vision for Amazon,” and that “by hosting their telecom network infrastructure in AWS cloud, carriers would be able to be more agile in their battle with over-the-top operators and deliver next-generation connectivity services to their enterprise end-customers."

    He sees reasons for Amazon to consider buying Broadsoft:

    This, we believe, is yet another indication that the potential combination with BroadSoft would fill an important hole in AWS portfolio—a carrier-grade voice and call routing engine (i.e., a cloud PBX service), which is built for public cloud, wireless (VoLTE/ VoWiFi), and wireline networks. Ultimately, service providers will be able to resell IP-based communication services hosted by AWS with applicability across many verticals and industrial use-cases, fitting the needs of their enterprise customers.

    http://www.barrons.com/articles/noki...air-1508533793


    Nokia announces strategic collaboration with Amazon Web Services to enable easier transition to the cloud

    19 October 2017

    • Nokia will support service providers in their migration to AWS with a complete suite of services
    • Nokia and AWS to collaborate on 5G use cases for service providers
    • Nokia to bring disruptive IoT applications for large enterprise customers using AWS services
    • Nokia and AWS to bring Nuage Networks SD-WAN services to AWS enterprise customers

    Espoo, Finland - Nokia today announced a strategic collaboration with Amazon Web Services, Inc. (AWS) that will accelerate the migration of service provider applications to the cloud and drive digital innovation for large enterprise customers.

    On their journey to achieve the performance and flexibility brought by cloud technologies, Communication Service Providers (CSPs) and Enterprises need solutions to address the connectivity needs of cloud-based applications such as optimizing latency, virtualized network and routing services, and solutions for the Internet of Things (IoT). Nokia and AWS are working together to bring a unique and powerful set of solutions that will enable service providers to implement cloud strategies faster leveraging Nokia's expertise in wireless, wireline and 5G technologies. Large enterprises require fully managed connectivity to access cloud infrastructure, and fully integrated IoT and analytics solutions to enhance their productivity and ease of digitalization. The two companies will work to deliver differentiated solutions using Nokia SD-WAN and its IMPACT IoT platform in combination with AWS Greengrass, machine learning and artificial intelligence services.

    The scope of the agreement announced today covers four areas of collaboration:


    • Nokia will support service providers in their AWS implementation strategy with a complete suite of services including consulting, design, integration, migration and operation for infrastructure and applications.
    • Nokia and AWS will work together to generate new 5G and Edge Cloud strategies and guidance for customers including reference architectures that enable both service providers and enterprises to benefit.
    • Nokia and AWS are working to bring an improved user experience for Nuage Networks SD-WAN customers who use AWS. Enterprises can benefit from this seamless integration with AWS and launch secure branch connectivity in hybrid environments with "Single Pane of Glass" capabilities.
    • Finally, the companies are commercializing IoT use cases with AWS Greengrass, Amazon Machine Learning, Nokia Multi-access Edge Computing (MEC) and Nokia IMPACT platform.


    Kathrin Buvac, Nokia's Chief Strategy Officer, said
    : "The 4th Industrial Revolution requires a tighter integration between the IT and networking infrastructure worlds. Our collaboration with AWS will accelerate the migration of service provider applications to the cloud and enable us to forge new opportunities together by delivering on next-generation connectivity and cloud services. This is a wide-ranging collaboration, spanning our services capabilities in application migration, SD-WAN from Nuage Networks, 5G, and IoT, allowing new growth opportunities for our top customers across both the service provider and large enterprise market segments."

    Terry Wise, Global Vice President of Channels and Alliances, Amazon Web Services, Inc., said: "Service providers are accelerating their migration to AWS in order to drive innovation for their customers and deliver lower total cost of IT to their organizations. We are excited to partner with Nokia to accelerate cloud transformation for service providers, and enable the digital transformation journey for our mutual large enterprise customers."


    About Nokia
    We create the technology to connect the world. Powered by the research and innovation of Nokia Bell Labs, we serve communications service providers, governments, large enterprises and consumers, with the industry's most complete, end-to-end portfolio of products, services and licensing.
    From the enabling infrastructure for 5G and the Internet of Things, to emerging applications in virtual reality and digital health, we are shaping the future of technology to transform the human experience. nokia.com

    https://www.nokia.com/en_int/news/re...n-to-the-cloud

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