Amazon and Big Data

Jeff Bezos has the power to use data to shape public opinion
April 20, 2018 Updated: August 9, 2018

A controversy over the possible misuse of users’ personal data accumulated by Facebook has not yet subsided as another technology giant has drawn the attention of President Donald Trump.

Amazon.com Inc. controls some 45 percent of the online retail business in the United States (or about 4 percent of the country’s total retail sales) and has become a retail powerhouse in several other developed countries.

Trump has raised several issues with this company. One charge is that Amazon does not pay enough to the postal service for the delivery of its merchandise; another is that the retailer pays insufficient taxes; and another is that as online shopping expands, jobs are being lost in shopping malls and other traditional outlets.

Business Issue

While the matter of postage fees should be a business issue between the postal service and Amazon, it appears that the taxation issue is being addressed and the company is liable to pay taxes in nearly all U.S. states. The European Union, too, has looked into the matter, and Amazon is likely to be charged more for conducting business in Europe as well, at the expense of its profitability.

As part of natural market evolution, consumers increasingly do their shopping online, instead of driving to malls or visiting high street shops. Of course, a reduction of jobs in traditional retail most likely will follow, but new jobs are already being created elsewhere—in the distribution systems that service the online transactions.

Amazon is the front-runner in this field. This revolution in retail can be slowed down by protectionist regulations. But eventually, the new system will prevail if that is what the consumers want.

Real Issues

There are, however, two real concerns about the company that can’t be dismissed so easily.

There is Amazon’s near-monopolistic market position, which can be used to squeeze suppliers and to push possible competitors out of the market. It is up to the U.S. legal system to decide whether these circumstances justify putting in motion an antitrust procedure. In this context, it is not reassuring that Amazon has a strong lobbying team and a publishing platform with The Washington Post.

Another point of concern is data protection. In the process of doing business, Amazon collects a wealth of information on individuals, their spending attitudes, their likes and dislikes, and their behavior as consumers. This data is so comprehensive that Amazon’s algorithms can anticipate what people may order. Its pool of stored information is probably even bigger than the one Facebook has, and it covers a large part of the population in developed countries.

Data Risk

The biggest risk here is obvious: Is this information going to be put to other uses, to the detriment of Amazon’s customers? In this context, the coming update of the EU Data Protection Directive of 1995, which regulates the processing of personal data within the European community, may merit attention, despite its complexity, as a part of a possible solution.

The use of big data for business should not be a primary concern, but only as long as the objective is to improve services, not to acquire a dominating market position. Data misuse also becomes a threat when third parties trying to influence politics and media get hold of this valuable information.

To sum things up, the access to personal data by technology groups is a legitimate concern. It is especially dangerous now that governments are making broad demands for information about individuals, which is illicit, as it undermines the right to privacy, an essential ingredient of a free society. If accessible to the authorities or media, pools of information such as those collected by Amazon can facilitate damaging intrusions of citizens’ privacy.

Trump might be correct on another point as well. As the issues of Amazon’s data and its retail market position arise, it is a concern that the company’s founder and CEO, and one of the largest shareholders, also owns the Post, the U.S. capital’s most influential daily.

One would like to assume that neither the famous newspaper nor Bezos have the intention to misuse Amazon’s information through the Post. The advantages for both and the possibilities for abuse, however, make this scenario rather unlikely.

Prince Michael of Liechtenstein is the executive chairman of trust company Industrie- und Finanzkontor, and founder and chairman of Geopolitical Intelligence Services. This article was originally published by GIS Reports Online.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.