Inside Amazon’s business tactics and company culture
When Jeff Bezos left Wall Street to start Amazon in 1994, the most common question he got was “What’s the internet?” Fast-forward to today, and Amazon is, of course, the country’s leading online retailer, as well as cloud services provider.
In 2022, the company controlled almost 38% of the U.S. e-commerce market. Walmart, its closest competitor, had just over 6%, according to Insider Intelligence. In her new book, “The Everything War,” The Wall Street Journal’s Dana Mattioli documents the tactics she says have enabled Amazon to dominate. The following is an edited transcript of her conversation with Marketplace’s Lily Jamali.
Dana Mattioli: The book chronicles pervasive situations where different teams at Amazon are helping themselves to data from sellers on the site, or others that they could then use to reverse-engineer their own best hits for Amazon’s brands. I could go into an example of that in what happened with Trader Joe’s.
Lily Jamali: Yeah, let’s talk about that. You write about a Trader Joe’s executive who moves over to Amazon, gets hired there, and is pressured to reveal trade secrets about that chain’s snacks, specifically which ones are the most popular. And you write, “For six months, the employee’s manager hounded her for information about Trader Joe’s best-selling products. She tried to deflect but the pressure kept ratcheting up.” There’s even a demand that the employee email documents she had retained from her old job. Is that kind of thing pretty common at Amazon?
Mattioli: The pressure that these employees are under at Amazon is at a level I haven’t seen anywhere else in corporate America. And I’ve covered companies in some respects for nearly 18 years at The Wall Street Journal, and employees on that private-label team tell me that this was pretty emblematic of the pressure they were under. And in this scenario, the employee that was hired wasn’t really told what she’d be working on when she was brought to Amazon. She starts at the job, and little does she know that before she’s even there the managers had pitched this new private-label brand that would copy the top 200 items at Trader Joe’s. But they couldn’t figure out what they were. So, her first week at headquarters, she kind of hilariously stumbled upon this conference room that has brown paper covering the windows and the doors. And it looks kind of cryptic, so she walks inside and sees all the Trader Joe’s food stacked up high. And to your point, yes, from there, she is pressured to share whatever she has retained from her prior employment, which is obviously a very uncomfortable spot to be put in.
Jamali: And one of those pieces of documentation is sales from her old job. And then it turns out someone at Amazon complains about the ethics of using that data, because of course it is the property of a different company in this case. So, Amazon actually fires the employees that were using this proprietary data. And while the company responded appropriately, as you write, in this case, I wonder what you think that incident says about the culture of the place, the pressure that you say executives placed on employees?
Mattioli: Yeah, you see time and time again, there’s some shocking anecdotes in the book, where it is the pressure of different mechanisms at Amazon, whether it’s staff ranking, where the bottom 6% of employees are cut every year. So, you’re kind of fighting to keep your job or getting to your restricted stock units because pay is backloaded that it causes some employees to do things or whatever they can to stay ahead and keep their jobs. And there’s examples of that throughout the company, for sure.
Jamali: What has been the defining feature, if there is one, of CEO Andy Jassy’s era at Amazon?
Mattioli: Well, [former Amazon CEO] Jeff [Bezos] and Andy are very different personality-wise. When we talk about the culture at Amazon, a lot of it stemmed from Jeff. There are examples in the book where he could be pretty pugnacious. He wants to fight back, he tells his team to punch back when the company is criticized by the media or government relations. And they had this kind of combative stance or scorched earth. Andy seems much more diplomatic. More measured and even-keeled. People view him as an operator, whereas Jeff was more of the visionary founder. So, we’re definitely seeing a different tone come from the top, even in the way that each of them has handled government relations very differently. Andy has made an effort with legislators; he’s done the rounds on the Hill. Jeff, early on in his career, told the head of government relations, “Hey, if I wanted to do these things, I wouldn’t have hired you.” So, there was just like an antipathy to D.C. relations from the company that didn’t really serve it very well. But you’re seeing some of those maybe on goals being reversed a bit.
Jamali: Yeah, well, it seems like it’s appropriate to have someone with a bit more of a knack for government relations at this moment in the company’s history. Of course, Amazon’s dealing with this antitrust crackdown from the Federal Trade Commission, which is now run by longtime Amazon critic Lina Khan. So, the FTC sued Amazon in September, alleging that the company is an illegal monopoly. And the company says these allegations are wrong. “Misleading” is another word that they use. They argue that these business practices have meant lower prices for consumers. But let me ask you this, has this legal action changed at all the way the company operates, from what you can tell?
Mattioli: Maybe around the margins. They’ve done some things to relax some of their practices. For instance, they got rid of a contractual obligation for sellers to have the lowest price on Amazon. People were fearful of having a lower price elsewhere and having punitive action taken against them. For the most part, I would say it’s business as usual. Andy Jassy, the current CEO, has told his team even though regulators are saying the company is too big, he’s telling them that “the company’s not big enough; we could be a $10 trillion company.” So, they’re still finding areas where they can grow into, things like [artificial intelligence] or health care or satellites that are newer areas for them where they think that they could continue growing.
Jamali: Yeah, growth is such a huge part of the theme at the company, but also in your book. And I actually got to speak with another avid chronicler of Amazon, Bloomberg’s Brad Stone, three years ago about the company’s next chapter. He told me then the future of Amazon is more Amazon. So, more Amazon trucks in our neighborhoods, more physical stores. That was in 2021. Do you think that’s still the case today?
Mattioli: This [FTC] lawsuit is the big X-factor. If they were not to succeed, then Brad’s absolutely right. And he was definitely prescient in saying that back then. This lawsuit won’t pan out for another few years. We won’t see it go to court until 2026. So yeah, I think Amazon would like to behave as if the future of Amazon is more Amazon, but it really hinges on whether the regulators here get their way. If the FTC is successful, if they could force a breakup of the company, the future of Amazon might not be more Amazon.
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