The Pandemic Has Gifted Amazon Record Profits

The Pandemic Has Gifted Amazon Record Profits

Amazon will use the crisis to consolidate its market power. The timing could not have been more serendipitous. The day after a long and discursive congressional hearing into the competitive practices of America’s tech giants, the big four (Amazon, Apple, Facebook, and Google) released their Q2 2020 earnings. If the reaction from the market was anything to go by, investors are not betting on Washington. Nor are consumers.

The Amazon app displayed on a smartphone

The timing could not have been more serendipitous. The day after a long and discursive congressional hearing into the competitive practices of America’s tech giants, the big four (Amazon, Apple, Facebook, and Google) released their Q2 2020 earnings. If the reaction from the market was anything to go by, investors are not betting on Washington. Nor are consumers.

Businesses might complain about the gangster-like behavior of Google and Facebook, who mercilessly shake down corporates for ad money, which gets siphoned into a black box of bids and target audiences. But for the average person who uses Google to search the net, and Facebook to see what their friends are up to, there is not much to complain about.

By now we are all used to seeing ads on social media. We tolerate them because they are necessary to maintain the service. We know we are the product and that businesses are paying for our attention. Why should we care if some businesses are being gouged for the right to pierce the social veil and sell to us while we are scrolling through posts from our friends and family?

Consumers struggle to see how their lives are adversely affected by the business practices of America’s tech giants. Most likely feel their lives are easier, more connected, and more affordable. Until consumers can draw a direct line between the market power of the tech giants and their own welfare, Congress will be pushing the proverbial uphill.

But as the pandemic catalyzes the merging of our physical and virtual worlds, it may only be a matter of time before consumers do start asking questions. As our behaviors are shaped by the pandemic, to what extent will these changes become entrenched? Before the Covid crisis hit, an online presence was critical for sellers but not their only channel (probably not even their biggest). Now, suddenly, it is the only game in town.

U.S. tech is immune to the levelling effects of Covid-19

The congressional hearings were described as “historical” with “exchanges likely to have lasting resonance”. Neither is remotely true. Industrial leaders and Wall Street oligarchs have invariably been dragged before congressional sub-committees to answer for their misdeeds. Often these hearings serve no other purpose than to draw public attention to conflicts of interest and dodgy practices that, while not strictly illegal, do perceptible harm to people on the street.

Red-faced executives bluster their way through rapid-fire questions from a few grandstanding members, promise to look into things and make some changes, then wait out the news cycle until the public moves on to something else. It captures our attention for a fleeting moment, then we all go back to what we were doing before (probably browsing Facebook).

For politicians, these hearings are an opportunity to attack a group of people who, at least for a few days, are less popular than they are. The only problem is, in the case of the tech giants, the average person on the street has little reason to feel aggrieved. Of course, if you ever wasted thousands of dollars on Facebook or Google ads and got nothing in return, you might think about getting these people alone with a blowtorch and pair of plyers. But for someone who simply enjoys posting on Facebook and sharing their photos on Instagram, they will not lose sleep over the fact that both platforms are owned by the same company.

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