Amazon is bigger than ever. As The New York Times reports, Amazon’s Kindle is at the top of the list for e-readers, the company launched new TV-streaming devices, and its Fire Phone was posed as a contender to the iPhone and other successful smartphones. But problems are piling up for the online retail giant. Wired Magazine declared the Fire Phone a failure and the new Fire TV Stick is backordered until January, according to CNET. Further, Amazon is in hot water with seemingly relentless criticism.

Literary agent Andrew Wylie recently denounced Amazon at a writers’ conference in Toronto, as the Guardian reports. Known to many as “the Jackal” for his business strategies, Wylie condemned Amazon’s powerful grip on distribution as being ISIS-like. A comparison of any organization to those radicals terrorizing Iraq and Syria is not an easy claim to substantiate, and hardly appropriate. Nonetheless, Wylie’s polemic rakes Amazon through the coals and foresees an end to its digital dominance. “I believe with the restored health of the publishing industry and having some sense of where this sort of ISIS-like distribution channel, Amazon, is going to be buried and in which plot of sand they will be stuck, [publishers] will be able to raise the author’s digital royalty to 40 percent or 50 percent,” Wylie said. While the Guardian writes that “Wylie said he believed Amazon’s digital monopoly could be weakened,” Amazon isn’t truly operating as a monopoly, or a seller with ultimate market power to set prices.

Nobel prize-winning economist Paul Krugman wrote about Amazon’s power earlier this month. The company, Krugman says, is not so much acting as a monopolist as “it is acting as a monopsonist, a dominant buyer with the power to push prices down.” Rather than sucking as much profit as possible from consumers, Amazon keeps “prices low, to reinforce its dominance. What it has done, instead, is use its market power to put a squeeze on publishers, in effect driving down the prices it pays for books.” Amazon’s dominance lies in its ability to demand extremely low prices from publishing companies so that its own resale prices are low for online shoppers.

Around the world, too, the company is facing trouble. This year, a German union has had ongoing disputes with Amazon. This shouldn’t be taken lightly, as “Amazon employs a total of 9,000 warehouse staff at nine distribution centers in Germany, its second-biggest market behind the United States, plus 14,000 seasonal workers,” Reuters reports. The union, called Verdi, is demanding greater pay for warehouse workers while the company “regards warehouse staff as logistics workers and says they receive above-average pay by the standards of that industry.” The contention of which industry the workers even belong to is central to the disputes. “The crux of the issue is whether the workers are operating in logistics or retail capacities,” according to a CNET article covering strikes. Verdi wants its workers classified in the retail and distribution sector, in which standard labor wages would be higher.

Amazon will not be able to keep up with these publicity attacks no matter the new products it releases, especially when the products’ quality is also poor. Whether criticism is coming from the polemic—if grossly hyperbolic—Wylie, the analytic Krugman, or the tenacious Verdi, Amazon needs to respond to its critics as soon as possible. Further, it needs to change its corporate structure: there need to be fairer deals with publishers and fairer negotiations with laborers. Without these concessions, Amazon will fall by the wayside; either it will succumb to competition that treats other businesses and workers more fairly, or to government intervention that forces it to behave better.

Jake Ephros

Jake Ephros is a native of Montclair, New Jersey where he volunteered for political campaigns from a young age. He studies Political Science, Economics, and Philosophy at American University and looks forward to a career built around political activism, through journalism, organizing, or the government. Contact Jake at staff@LawStreetMedia.com.

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I imagine the folks at places like Apple and Google have huge smirks on their faces as they watch the media frenzy Amazon Fire has caused. Why? Because companies like Apple and Google ARE technology, that’s their whole reason for existing. In contrast to them, Amazon is more like a digital supermarket with competitively priced inventory, and the added advantage of delivering its goods directly to consumers. Increasing Internet sales is its number one goal, so Amazon continually creates new apps and devices to achieve it. The difference between Amazon and a company like Google is that Amazon doesn’t have a passion for creating innovative technology for the sake of being a heavy hitter in the tech community. Due to this difference, Amazon Fire will be intriguing, until it is quickly replaced with a significantly better product.

What sets Amazon Fire apart from other smartphones is its built in and specialized Augmented Reality interface. Augmented Reality (AR) provides a connection between the real world and the digital world with overlays of video, audio, 3-D content, and location-based information. AR is what users experience with Google Glass and apps created by companies like Metaio, Layar, and Aurasma. When using the Fire phone’s firefly feature, the phone can instantly identify an object, price it,  and provide an option to buy through Amazon. This is most certainly convenient; however the phone’s built in capabilities aren’t much different from the Amazon Flow app, which is already available for both Android and iOS phones.  Although Amazon has used AR in its effort to increase sales, it definitely isn’t the first company to experiment with this technology, and it is actually behind in the ability to capitalize on all the known AR capabilities.

The use of this technology for marketing and ads as well as within specific industries like real estate has evolved since the early 2000s. Metaio is one of the first companies to promote the use of Augmented Reality through print campaigns and consumer usable home design and decoration AR solutions. Metaio, a German company, was founded in 2003 by CEO Thomas Alt. For Alt, the creation of AR stemmed from a project with Volkswagen. To build upon this technology, Metaio was awarded a German government grant to continue the work, which resulted in the creation of Augmented Reality. Since Metaio’s inception, it  has remained at the forefront of AR innovation and truly envisions AR as the new frontier. While companies like Google have partnered with Blipper to create real-time interactive image recognition Augmented Reality for Google Glass, Metaio is far more advanced.  It’s moved on to thermal touch, to make the whole world a touchscreen.

So what is my point?  Augmented Reality is the main selling point that Amazon is using to entice consumers to buy the Amazon Fire phone, but the company isn’t even using the feature its greatest abilities. Amazon Fire’s AR capabilities are basic compared to the new innovations that companies like Metaio are creating. On top of that, companies like Google have already released AR products and are continuing to push the limits of those capabilities. Google is just perfecting its established  AR and waiting to have a monster release of a product that’ll be too amazing for most people to ignore. Amazon is at a clear disadvantage due to the priorities established in its business model compared to the business models of actual tech companies. Because of this difference, technology companies can dedicate their time and resources to improving products while  Amazon is happy to have a hot product until it quickly becomes obsolete.

Think about it, when is the last time someone bought a Kindle e-reader? I imagine Amazon Fire’s product life will parallel that: big explosion and quick fizzle out.

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Teerah Goodrum (@AisleNotes), is a recent Graduate of Howard University with a Masters degree in Public Administration and Public Policy. Her time on Capitol Hill as a Science and Technology Legislative Assistant has given her insight into the tech community. In her spare time she enjoys visiting her favorite city, Seattle, and playing fantasy football.

Featured image courtesy of [Billy Brown via Flickr]

Teerah Goodrum

Teerah Goodrum is a Graduate of Howard University with a Masters degree in Public Administration and Public Policy. Her time on Capitol Hill as a Science and Technology Legislative Assistant has given her insight into the tech community. In her spare time she enjoys visiting her favorite city, Seattle, and playing fantasy football. Contact Teerah at staff@LawStreetMedia.com.

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