The company that is the 12th biggest in the U.S., larger than all the big banks, is staunchly anti-union. It’s putting mom-and-pop retailers out of business and driving even big chains into bankruptcy.
It collects reams of data on its customers, resisted collecting state sales taxes for years, and has been accused of anti-competitive behavior.
Ordinarily, that resume would suffice to sound alarm bells among the anti-corporate crowd. Yet so far, politicians have largely avoided objections to the company’s mounting power and influence. Maybe this is progress—or at least what happens when Washington press-release writers are fixated on other topics.
The company, of course, is Amazon.com, which last week announced a deal to buy Whole Foods for $13.7 billion. The purchase is widely seen by analysts as a way for Amazon to beef up its burgeoning online grocery business. Delivering milk, meat and fresh vegetables is more logistically challenging than shipping books and non-perishables, so buying a grocery chain is seen as a way to move quickly into grocery delivery.
Just 1.4 percent of Americans buy groceries online, according to research firm Kantar Worldpanel. But that figure is expected to grow, much as the e-commerce sector has since the tech boom of the late 1990s. Grocery stocks plunged after the deal was announced on Friday.
Although regulators review any big deal, the purchase wouldn’t ordinarily raise antitrust concerns because the two companies’ market shares in grocery are so small. Whole Foods made up 1.7 percent of the food and beverage market last year, while Amazon accounted for 1.1 percent, according to the Wall Street Journal.
The acquisition, though, would add incrementally to Amazon’s dominance of online retailing. In 2016, Amazon accounted for an estimated 43 percent of online retail sales. That’s far from monopoly status, and consumers have plenty of choices. The deal should also push down prices, which benefits consumers. Whole Foods’ healthy and organic products are so expensive that the chain is sometimes referred to as “Whole Paycheck.”
Yet that market share in the huge retail category is still much larger than similar figures for the country’s top banks, which are routinely assailed by politicians. What explains the difference?
Well, it could be that these two companies—Amazon and Whole Foods—are darlings of the left, which can be selectively vociferous against the wealthy and powerful. When the “concentrations of wealth” are concentrated in politically liberal cities, critics seem to turn mute. Amazon chief executive Jeff Bezos personally donated $2.5 million in 2012 to support a gay marriage referendum in Washington state, and the company’s employees donated overwhelmingly to Democrats in the 2016 election cycle, according to the Center for Responsive Politics.
Whole Foods chief executive John Mackey has faced backlash for his anti-union stance but his libertarianism is countered by his advocacy for the idea that businesses shouldn’t focus merely on profits but have social responsibilities. The company’s core shoppers have, shall we say, a lot of overlap with the National Public Radio demographic.
The lone critic of the deal so far seems to be Rep. Ro Khanna (D-Calif.), who told Vice News that he is “concerned about what this deal means for suppliers and neighborhood grocery stores. … We also need to be mindful that concentrated industries stifle innovation. American markets work best when there is fair competition among many businesses—none of which have a dominant market share.”
Accusing Amazon and Whole Foods of stifling innovation sounds almost laughable. One almost singlehandedly revolutionized the way we buy books and now many other items, making the process cheaper and more convenient. The other started by selling organic food to hippies and grew by convincing consumers that they should pay a premium for healthier options. Both have changed their industries and customers’ experiences for the better.
Technology is moving rapidly. It has changed how we shop. That upends traditional industries. But we all benefit from new ways of doing things, greater selection, and lower prices. By all means, let’s discuss the pros and cons of a small number of tech companies pushing closer into our lives.
The administration has not weighed in on the proposed purchase, which must win approval from the Department of Justice and the Federal Trade Commission. As a candidate in February 2016, President Trump feuded with Bezos, who also owns the Washington Post: “I have respect for Jeff Bezos, but he bought The Washington Post to have political influence, and I gotta tell you, we have a different country than we used to have. He owns Amazon. He wants political influence so that Amazon will benefit from it. That’s not right. And believe me, if I become president, oh, do they have problems. They’re going to have such problems.”
After the election, the two made nice at a meeting Trump held with tech executives.
The Amazon-Whole Foods deal is expected to close in the second half of 2017—if nothing gets in the way.