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John Donvan:

Hi, everybody, John Donvan here. I’m going to be your host and your moderator for the upcoming debate; Amazon is Good for Small Business. And I just want to let you know right now that you are in the right place; we’re about to start the program up about a minute or two from now. So, you get set. Also, get tuned in because we want you to be part of this debate. We are asking again whether Amazon is good or bad for small business. Right over here, on the right side of the screen, you will see a chat room. And I’m pointing that out because we really do want you to jump in there and use it during the debate to comment on what you’re hearing and to ask questions, and just to say hi to our team. All right, that’s it. See you back in a moment when we start.

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What began as an online bookseller is now the world’s biggest internet-based company, Amazon. It’s a doorway to a truly global marketplace. Supporters hale Amazon as a boon for Main Street companies, allowing the little guy to compete with the big boys, but not so fast, exorbitant fees and practices that critics label anti-competitive might make Amazon a detriment. So, in the midst of this historic shift in how we buy and sell, we debate this question, is Amazon good for small business?

Hi, everybody, well, get ready for a debate about an enterprise that is most likely part of your life, Amazon; Amazon is sort of everywhere; it has definitely changed the way we shop; it has changed what we expect from the retail experience. It’s even changed what we mean by speedy delivery, a whole new retail landscape that came in sort of at one swipe. But what is happening behind that swipe? Well, that’s where it gets interesting, especially when it comes to small business.

Whether Amazon ultimately helps or hurts the little guy trying to make a go of it in business; that’s what we’re here to debate. I’m John Donvan, and this is Intelligence Squared.

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Okay, everybody, now you have a duty to perform here in this program; we want you to act as judges of this debate to tell us which side you feel has argued the best. We’re going to do that by asking you to cast a vote on our motion; Amazon is good for small business before you’ve even heard the arguments. And then we’re going to ask you to cast a second vote after you’ve heard what everybody has to say.

And here at Intelligence Squared, we name as the winner of the debate the team whose numbers go up the most in percentage point terms between the first and the second vote. The first vote, it’s right now; here’s what we want you to do; we want you to go to the tab located on the right of your screen that says voting, click on that, and then scroll downward. The other way to do this is to go to IQ2vote.org. That’s IQ2vote.org in a web browser. Either way, you’re going to get to a multiple-choice field, where you can tell us whether you are for, against, or undecided on the statement that Amazon is good for small business. So, one more time, it’s the voting tab, or it’s IQ2vote.org.

And just one more thing, we’re going to be keeping this vote open for the next seven days to give a broader audience a chance to watch and decide, and then we will be announcing the winner. All right, it is time to meet your debaters.

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Arguing for the motion, Amazon is good for small business, former Amazon executive, and leading tech and e-commerce entrepreneur Kunal Chopra. His partner, Mark Jamison, an economist with the American Enterprise Institute who served on the Federal Communications Commission transition team for President-elect Trump.

Opposing them, Rana Foroohar, Global Business columnist for The Financial Times and the author of “Don’t Be Evil: The Case Against Big Tech.” Her partner, Stacy Mitchell, a leading strategist working on issues related to Amazon, e-commerce, and small business in America today.

All right, and now here we all are together, our four debaters. I want to thank you at the very beginning for joining us for this Intelligence Squared debate.

Female Speaker:

Thanks. Great to be here.

Kunal Chopra:

Thank you for —

Mark Jamison:

— be here; thank you.

Female Speaker:

— John.

John Donvan:

It’s a pleasure to have all of you. Well, let’s get started with round one. And round one is comprised of opening statements from each debater; in turn, those statements will be four minutes each.

Our motion again is Amazon is good for small business, and first up to make an argument in support of that motion, Kunal Chopra. The screen is all yours.

Kunal Chopra:

Thank you, John. Amazon is not only good for small businesses but great for small businesses. And today, I’m going to give everyone four primary reasons as to why.

Well, reason number one, small business customers are shopping on Amazon, and regardless of size, every business can access these customers. Seventy-four percent of U.S. customers begin their product search on Amazon. Amazon has become a product research and brand-building tool more than it is just a shopping destination. These are small business customers who continue to flock to Amazon. Amazon has access to 150 million paid Prime members who are extremely engaged shoppers, and Amazon continues to pour millions to acquire new Prime members. As the penetration of online retail continues through Amazon and other channels globally, it is prudent that small businesses take advantage of this new digital age, and Amazon provides small businesses with a way.

Reason number two, Amazon presents a global opportunity; for the first time in history, a small store at the corner of the street or an entrepreneur from home can access a global audience and infrastructure that can support global scale. Entrepreneurs, for the first time in history, can focus on what they do best, which is build products to serve their customers. And now they have the backing of an extremely cost-efficient global infrastructure in Amazon to support them. Amazon shoulders the task of managing your website, processing payments, storing inventory, picking, packing, shipping items to fulfill orders. You know, some small businesses may not want to or able to do any of those or even afford to do any of those, not to mention access to new markets globally that they just couldn’t do on their own.

Reason number three, Amazon levels the playing field for all. Amazon has democratized retail. Think about your local mall where most people shop; how many small businesses do you think can afford stores there?

Most of that coveted space has really gone to big-name brands that can afford the rent. We tend to focus on Amazon as a business instead of focusing on Amazon as a platform. Think of Amazon as a digital mall, the new digital mall, but this time with millions of customers and has space for all. For the first time in history, small businesses can compete in space on the same platform as some of the biggest brands in the world.

And then finally, reason number four, the world is going digital. Amazon gives you the opportunity for diversification and for small businesses to build an online capability in their business. If there was one big shift that happened during the pandemic, it was the shift to digital. The pandemic showed us that businesses could suffer from having all their eggs in one basket. And that diversification is key to success; restaurants were shut down, small businesses struggled; but those who shifted online survived. Those who pivoted their businesses and their business models survived. Amazon provides businesses with that diversification model.

It’s not an all-or-nothing argument, my friends; the world is moving online, consumers are shopping on Amazon, on Walmart, researching on social media, engaging in online communities looking for reviews online, et cetera, et cetera. We live in a connected world where consumers are omnipresent, online and physically. Amazon allows small businesses to build a digital capability in the operation. So, friends, today I appeal to you to join Mark and me to vote on behalf of Amazon being good for small business as we enable our small businesses for this new world which demands digital capabilities which gives small businesses access to a global audience and levels the playing field for all. We owe it to our small businesses. Thank you.

John Donvan:

Thank you, Kunal Chopra. Our next debater will be speaking against the resolution, Stacy Mitchell. The screen is now yours.

Stacy Mitchell:

Thank you. It’s lovely to be part of this conversation.

Amazon has cornered the online market. Maybe later, we’ll have a chance to talk about the predatory tactics it’s used to do that, but for now, let me offer two data points.

First, in 15 of 23 major productions categories, Amazon captures more than 70 percent of online transactions. And second, and many of you in the audience will relate to this, more than two-thirds of Americans, when they want to buy something online, no longer go to a search engine, where they might type in “toy truck,” and that might lead them to a local toy store. Instead, they start their search right on Amazon. This means that if you’re a small business, and you make or sell anything, and you want to reach the online market, and indeed these days, you have to reach the online market, you have two options, and they’re both bad. You can continue to hang — you can continue to sell on your own website, but that’s basically like hanging your shingle out on a dirt road that no one is walking down.

Or you can become a seller on Amazon. But if you sell on Amazon, you’ll be handing over the fate of your business, your livelihood, to your biggest, most aggressive enemy, an enemy that has every intention of eating your lunch. One risk is that you’ll wake up one day and find that Amazon has copied your bestselling product and put its own version at the top of the search results. This has happened to countless small companies. It happened to a company called FORTEM in Brooklyn, a firm that designed a very popular organizer for people’s car trunks. As the Wall Street Journal reported, Amazon employees spent months spying on FORTEM, gathering detailed data on its costs and customers, and then Amazon unveiled a nearly identical product.

Another risk is that Amazon’s algorithms will suddenly deactivate your account for no reason causing your sales to evaporate. When this happens, you will spend weeks desperately emailing Amazon’s automated system, all the while you’ll be losing money and risking bankruptcy.

Even if you somehow avoid these fates, what you won’t be able to avoid are Amazon’s steep fees; for small businesses, Amazon is a tollbooth, a monopoly tollbooth; it’s sitting between them and their customers. Seven years ago, for every $100 in sales a business made on Amazon’s site, Amazon took an average of $19 in fees. Today, that’s up to $34.

Amazon has us by the throat, said Steve [spelled phonetically], an entrepreneur in Arizona whose company designs hoodies and T-shirts. He’s tried to build up sales and other sites to reduce his dependence on Amazon but to no avail. One barrier he’s faced is that under Amazon’s pricing policy if its automated bots detect that he’s offering a lower price on another platform, it’ll penalize him by demoting him in the search results and tanking his sales. Steve asked me not to use his last name out of fear. Amazon, he correctly notes, has a long history of retaliating against small businesses that dare to push back.

The internet once opened vast new avenues for small businesses to succeed, but because of the failures of U.S. antitrust policy, those avenues have been cut off by Amazon’s stranglehold. As you think about how to vote on this resolution, I hope you’ll consider what small business owners themselves have to say. In 2019, my organization surveyed over 500 independent retail businesses nationally; 75 percent ranked Amazon as the top threat to their survival. With that, I ask you to please vote no on the resolution.

John Donvan:

Thank you, Stacy Mitchell.

So, you have now heard the first two opening statements. And now we go on to the third coming up on the screen. And speaking in support of the motion, Amazon is good for small business Mark Jamison. Mark, the screen is yours.

Mark Jamison:

Well, thank you very much. It’s an honor to be here.

Just picture yourself, let’s say about 20 years ago, trying to start a small business and think of the steps you would be going through, the things you’d be experiencing; you would spend a lot of time trying to find some commercial property; going to real estate agents, business offices, looking at different properties. And that rent would be escalating faster than your revenue in many instances. You could get the lawyers involved, et cetera; you’d have to figure out exactly what your customers are. And most of them would come from your local area. All you would ever know about those customers is that few moments of experience that you have with them. You will have to figure out your advertising, Bright Ads, work with local newspapers, maybe if you’re big enough, with local radios or something like that. And because all of that takes time, you’d also be worried about financing that business because you’re going to start spending money long before you ever see any revenues. And especially if you’re a female or minority, those steps sometimes didn’t go as well for you as they might for others.

But look at what it’s like today. Today you can start a business, maybe from your couch, maybe from your kitchen table; in fact, a lot of people are. When you’re starting a business that way, you can use Spotify to help develop your website. You can use services like Etsy, Amazon, eBay, others as well to help market your products, help deliver them sometimes, help with the transactions; you don’t need all that cash flow. You learn a lot about your customers from this because with your advertising using Facebook, Google, others as well, you get to understand; you know those customers before they ever arrive at your door if you will. And so, starting a business now is much faster; it’s much cheaper, much easier than it used to be. And a lot of that is because of Amazon.

Amazon has led the way in creating that opportunity and still does lead that way. We know that. Because if you look at surveys — now, different surveys give different answers. But this tends to be about right, that about 24 percent, almost 25 percent of all small businesses use Amazon. That’s pretty close to how many use eBay; eBay serves about the same number of small, medium-sized businesses, but Amazon has created a different environment than eBay. So, a lot of people find for different types of products, Amazon to be more valuable. Some prefer eBay; some use both. In fact, small, medium-sized businesses can use about five channels for their marketing and sales. There are others as well that you can use, Walmart, Target, in fact, that’s part of what Amazon’s effect has been is it forced a lot of those other providers, other retailers to step up and start providing services that, again, the third-party sellers, the small businesses, like you, can use.

So, Amazon has created opportunities. It’s opened doors for small businesses that did not exist before. And it continues to do that. But it’s not the only one. And like I said, it’s stimulated a lot of people and different businesses; different small businesses are taking advantage of those. So, when you hear things about the threat that people feel from Amazon, if you read behind the headlines and actually dig into the data, you’ll find that most of those aren’t using Amazon. They’re afraid of e-commerce, really, not just Amazon; they say Amazon because it’s one of the largest. But it’s really that e-commerce is about the future. And I hope that you think about how you’re going to vote on is Amazon good or not for small business that you take in mind that’s an important part of a small business future.

John Donvan:

Thank you very much, Mark Jamison.

And our final opening statement, it is against the motion; it comes from Rana Foroohar. Rana, the screen is yours.

Rana Foroohar:

Okay. Well, thank you so much, John. Thanks to all the other panelists. And thanks to the audience.

I think Amazon is bad for small business for three reasons. First and foremost, it offends the rules of normal capitalism, fair and free markets. If you go back to Adam Smith, the father of modern capitalism, he would have said that you need three things in order to have a fully functioning proper market. One is equal access to information on both sides. The second is a shared understanding of the transaction that’s being made. And three is a common moral framework. You had none of those things when you are a small business dealing with Amazon. That creates information asymmetry. And that’s a problem for markets. They simply don’t function fairly and efficiently by the rules of economics and capitalism when those things are in effect.

Now, one of the things that Amazon and other monopolists will argue is that they’re lowering prices. They’re making things cheaper and easier.

The problem is that we have had for several years monopoly laws that look at only pricing as a measure of consumer success. But when you look at the way in which Amazon does business, you’re not talking about prices; you’re talking about information barter; they have all the information, the small businesses doing business with them, both customers and competitors have far less; that’s a barter transaction. It’s not clear; it’s not fair.

Now, monopoly power is something that you have to consider very carefully when you look at the nefarious effects of Amazon. Lots of Economic Research shows that when you get companies like Amazon, five companies in our economy today, including Amazon that own about half of the entire stock market. That’s a big problem, not just for small businesses but for the economy as a whole; a raft of Economic Research shows that growth is slower. And in fact, despite what Mark said earlier, new business formation has been slower itself over the 25 years or so in which Amazon and other platform behemoths have grown.

So, this is bad for the economy. Why is that? The math doesn’t work; when you have a handful of companies owning most of the American and increasingly the global economy, you simply can’t grow. We are an economy in the U.S. based on consumer spending. When you have a few numbers of companies owning all the wealth, creating far fewer jobs than ever before, the math of growth stops working. And that’s the real problem here.

Now, there is a historical precedent for what to do when companies like Amazon come in with admittedly very interesting and great new technology and disrupt the market. We have a history of this; typically, a new breakthrough technology, like the internet, and like some of the technologies, including retail platforms like Amazon that are commercialized on it lead to monopoly power; but when that happens, they are regulated in the public interest.

Go back to the 19th-century railroads. The American government lays the foundation, private sector comes in and commercializes, you get giant monopolies; they’re eventually regulated, and in fact, this is exactly what Louis Brandeis, the famous Supreme Court judge, did with the railroad barons, he put them into a proper form, he broke them up, and he allowed these products to be used in such a way that people that create them can still be rich, and everybody else can thrive as well. That’s traditionally what happened; it happened in railroads, it happened in telecoms. It needs to happen now with Amazon and with other platforms.

And final point, Amazon is a surveillance capitalist, all right; that means that they have the data, you do not. They know way more about you than you know about them. Again, going back to these points about free and fair markets, when everybody has all the — one person has all the information and the other party doesn’t, you can’t have a free and fair market. Therefore, I would urge you to vote; no, Amazon is not good for small business.

John Donvan:

Thanks very much, Rana Foroohar.

And that concludes round one of our Intelligence Squared U.S. debate, where the resolution is Amazon is good for small business.

Now we move on to round two, and round two is where the debaters take questions from me and from also from one another; they can challenge and question one another. And what I want to look at is, as I hear in the opening statements, what we’re hearing is a sort of the argument that Amazon is really, really, really good at some things, and the things that it’s good at are having negative consequences; it is argued by one side, for small business. The good things that we’ve heard laid out is that Amazon has — makes — provides an opportunity to small businesses on a global scale as never before to reach a global audience that it could — that those businesses could never have reached before, supported by a platform that has the expertise and the tools that those businesses need to reach those audiences and in the best of all circumstances thrive.

The argument against is that Amazon is so good at all of those things that it becomes the only game in town or nearly the only game in town, that it’s effectively monopolistic, and that it can be fickle, bordering on malevolent in how it sometimes deals with those small businesses who in a certain sense are their customers. But the opponents of the motion are saying also become their competition.

So, I want to dig into a lot of that, but I want to bring to you, Kunal, one of the more interesting things I heard in the opening statement from both of your opponents is this notion that Amazon’s possession of information that it does not share that is proprietary and is not shared is not equally available to, accessible to all of the businesses who are its users of its platform. It’s a dangerous and harmful thing, and we would love to hear your take on that question, especially since you have worked inside that company. And I’m sure you’ve heard that criticism before. And I think it’s one of the more powerful points that your opponents are going to be bringing today.

Kunal Chopra:

Yeah, I mean, I’d like to just say that we tend to focus a lot on Amazon as a business and less about Amazon as a platform. Think about Amazon, really, as a digital mall. You know, how much access do you have if you’re a store owner in a mall to information? But that mall owner who has access to all the stores, knows traffic data that’s coming in and out of the mall can share that information with the different store owners and use that to better products and services, maybe give some information to the store owners on how they should be thinking about what’s next, what products and what kind of consumers are walking into the mall. So, Amazon is collecting information to be able to build the platform for the future to serve small businesses better.

I think we tend to focus a lot on while Amazon is collecting all this information. They’re using information from you and me to be able to better products and services better their platform for small businesses to better serve them. It’s no different than what a mall would look like.

John Donvan:

So, Stacy, what I hear Kunal saying is yes, they’re gathering information. They’re doing it for the benefit of not only of Amazon but for the small businesses who would be using its platform. What’s your response to that?

Stacy Mitchell:

You know, first of all, I think we have this, you know; I think both Mark and Kunal have, in various ways, sort of conflated the internet with Amazon. And the internet, you know, is a great technology that really has opened up a possibility for small businesses. But the problem is that you have this monopolist come along and take control of it and create this choke point. And so, you know, we shouldn’t muddle those two things because they’re really quite distinct. You know, the difference; I mean, you know, with a mall owner, they are not tracking every customer that walks through your door, which products they’re touching, which products they’re putting back, all of your sales, they’re not tracking your cost structure. They’re not tracking everything.

Amazon has a kind of God-like view of what is happening across a huge swath of the economy. And that is an incredibly powerful position to be in because it means that Amazon can pick off selective areas where it can make a profit.

And then it can let other businesses pick up the rest but effectively take a big cut of their revenue through the fees that it charges. So, Amazon wins coming and going, and small businesses that are on its platform are barely hanging on, and many are, in fact, failing.

John Donvan:

Mark, do you want to jump into the conversation?

Mark Jamison:

Yeah, I think there’s a couple of things that are important to keep in mind here. One is that when we think about the amount of information Amazon or anybody else might have, that is normal in business. I read Adam Smith’s book; he did not say everyone had to have the same information; that’s just not correct. Information asymmetry has been around for a long time; we’ve had four Nobel Prizes in economics dealing with poor people who specialized in that particular area. The grocery store knows more than does Libby’s about who’s buying what and what’s being sold.

Google knows more about what people are searching for and what they’re like than does anyone else advertising on Google or doing the searches on Google. This is normal. It’s been around for centuries that people have different sets of information. That’s all fine.

What I think it’s important to keep in mind here is when we talk about this, these businesses that feel that Amazon is damaging them, those are largely the ones when you dig into the data that aren’t on Amazon. That’s probably true; Amazon probably is a real challenge for them because it’s helping their rivals sell products. But those rivals that are selling on Amazon also are selling other ways; on average, business are using about five different channels, many of which are electronic; there’s Walmart, there’s Target, there’s eBay, there are many others that customers who are saying I want to use Amazon are doing so because Amazon is one of the very good choices that they choose to make.

John Donvan:

Rana?

Rana Foroohar:

Yeah, I’ll just say, first of all, to Mark’s point about Adam Smith, he wrote not just one book, but several books. And if anybody’s interested in exactly what he said about markets, they should look at my first book, “Makers and Takers,” which has his comments footnoted, and it’s all about the kind of asymmetries that we’ve been talking about in this case in the financial markets.

But you know, I want to bring in the financial markets to one of Kunal’s points. He talks about how we think too much about Amazon as a business and should really think about it more as a platform, which is quite an interesting argument because some of the regulators that would like to break up Amazon and put it into its proper position as a public utility would say, you’re right; it’s both the business and a platform. And in other markets, that’s not allowed.

Let’s look at the financial market, for example; some of our audience might remember that a few years ago, Goldman Sachs, JP Morgan, and a bunch of other banks came in for some trouble from the Federal Reserve and some other regulators because they were both owning commodities, like aluminum, for example, in some cases, so many hordes of it, that they actually had to throw tarps over it, in order to avoid confusing air traffic control, and trading in that market. Owning and trading, being in the market as a customer, and owning the platform on which the trading happens, not allowed. Not allowed in the financial markets, but because the regulators haven’t yet gotten out in front of this problem of monopolist and surveillance capitalism, it is allowed in these markets. But guess what, not for much longer because we are already on both sides of the Atlantic in the process of putting these companies in their proper place and helping them to abide by the rules of the old-line existing industries.

John Donvan:

Before we move into actually the policy implications of what you’re saying, and I’m sorry to interrupt. I just didn’t want to lose the point that you made in the middle there and bring it to Kunal; that Kunal, you’re hearing from Rana that it is a problem that Amazon is both a platform and frankly a retailer; that those two things have an inherent conflict of interest. And I want you to take that point on.

Kunal Chopra:

Yeah. So, one thing you must realize, and especially me being, you know, from Amazon, I can tell you right now that Amazon’s platform teams operate very differently from their business teams. So, if you have Amazon retail, which is one business that is working with certain brands acquiring inventory, it is utilizing the Amazon platform to be able to sell its products and our services. There is no information shared between the two; Amazon might have another private label —

John Donvan:

They really — you’re us —

Rana Foroohar:

Complete lie.

John Donvan:

— they really don’t talk to each other?

Rana Foroohar:

Complete lie.

Kunal Chopra:

There is a wall, a Chinese wall of sorts across the —

Rana Foroohar:

No, no.

Kunal Chopra:

— different companies —

Rana Foroohar:

There’s a major Reuters investigation, major Reuters investigation that just came out a few weeks ago; documents from internal Amazon documents that the people on the retail side, the Amazon product side, are going through all of that data from third-party sellers, mining it for their own insights and then creating products and insights to move into new markets with a built-in advantage.

That is well established, not only by Reuters but the Wall Street Journal and by a major Congressional investigation.

Mark Jamison:

But there’s a challenge, though. I’ve not read the Reuters study, but the Wall Street Journal study, the headline is very different than what the study actually says. The headline says, yes, they’re sharing information. But you read the actual article; it is saying that those were rogue employees, some of which had already left Amazon. And Amazon was investigated and doing some disciplinary action. That’s what the article said.

Rana Foroohar:

No. You know, I think that that’s not at all the case. There’s an extensive reporting out there. And I think, you know, Jeff Bezos is someone who has controlled his company with an incredibly, you know, minute attention to detail; the idea that there are rogue employees carrying this out and carrying it out at the scale that we can —

Mark Jamison:

That’s what the article said.

Rana Foroohar:

— is just really not at all true.

John Donvan:

Let me break it in since we have a disagreement about what the facts are; I want to sort of stick with the principle just for a moment. And I know at this point, Mark, you might consider it hypothetical.

Mark Jamison:

[affirmative].

John Donvan:

But would the problem that Rana is raising be a problem, the issue of Amazon being both the platform for retailers and a retailer itself?

Mark Jamison:

Not if unless it is representing themself as having the Chinese wall. If a company is saying, I’m not gathering data on you; I’m not going to compete with you, and then turns around and does it, we have laws in place that can deal with that. Those are fraud and breaching contracts; what have you.

But I think what’s important to remember is that in the platform business, you build the platform to attract people; the more profitable you can make that, the better that platform gets. So, let’s step away from Amazon; just look at Google. If we said Google, you can’t sell products, when people search for them, that lowers the profitability of search, which means they invest less in search. So, the platform value is in part determined by that vertical integration. And it’s one of the things that has set these tech companies apart from some of their rivals.

John Donvan:

Stacy, go ahead.

Stacy Mitchell:

Amazon is now — you know that the volume of revenue that Amazon is taking from third-party sellers is double the revenue that it gets from AWS, its huge cloud computing division. It’s going to take in about $120 billion in seller fees this year. Just an extraordinary amount of money. And what Amazon is doing with that revenue is it’s funding a bunch of loss leader strategies to control the market. And it’s funding a bunch of loss leading expansion to control other industries. I mean, this is a monopoly; you create a gate, you demand fees in order to get through that gate. And you use that money to entrench your own market power and to ensure that there are no competitors that can come after you.

I mean, this is — you know, the future that this creates for small business is a pretty grim future. And we already see it in the data. I mean, small businesses are in decline. I mean, we have to, you know, reckon with that reality as part of this conversation.

[talking simultaneously]

Kunal Chopra:

I just want to add, you know —

John Donvan:

— yeah.

Kunal Chopra:

That’s just not true. Because, you know, the fact that third-party sales on Amazon continues to increase and it captures more of that market share on Amazon just shows that small businesses are getting more and more successful on Amazon. Look, only about 800 sellers or so drive the top 10 percent of volume; the top 10 percent of volume is only driven by the top 800 sellers on the platform; the remaining 350,000 sellers on the platform drive 90 percent of the volume. There are 6 million active sellers on the Amazon platform right now. Guess who those folks are? They’re small businesses.

To Mark’s point earlier, these businesses need the Amazon platform to give them a platform to be able to scale globally to start their businesses and to take away all the extra costs that come on initially to be able to go and scale. So, actually, Amazon is good to Stacy’s argument here around helping small businesses; we should continue to drive those third-party sales up.

John Donvan:

So, let me rephrase a little bit and shift the conversation slightly because we’ve been focusing on the against side’s arguments about what’s wrong with Amazon. So, to the against side, to Rana and Stacy, your opponents have been arguing that Amazon is letting these businesses reach audiences that they never would have before; that that would not have been possible. Yes, conceding — or the point is made, in which I think you would concede that there are other platforms like eBay as well, they might be challenging your notion that it’s monopolistic.

But what they would stick by, I think, is the argument that, you know, somebody with a business in Idaho can start selling things in Romania, thanks to Amazon. It’s a really, really big deal. And that the expertise will be there and that parts of the business that these small companies could not handle themselves will be taken care of for themselves. Is that not a good thing? Is that not good in itself? If you were to set aside the negatives you’ve brought in, is there a way that that could be a good thing?

Rana Foroohar:

Can I jump in on this point?

John Donvan:

Either of you, please. Yeah.

Rana Foroohar:

Okay. So, again, I think we’re confusing Amazon, the company, with the process of dissemination of a disruptive new technology. And I think it’s really important to go back again and learn from history. How does new technology spread growth? Typically, what happens is the governments set some kind of standard around a new disruptive technology; the railroad is a great example. You say, the government, all right, we’re going to have a narrow-gauge rail, we’re going to open up the West, go out and private companies and make these railroads. And then you’ve got various private companies, the sort of Bezos’s and Musk’s of their time, rolling out the railroads.

And that’s great. This is all part of the process of capitalism. But inevitably, when you have technologies like railroads, or like the internet that lends themselves to being natural monopolies, and anybody that disputes that can go back and read Hal Varian’s book “Information Rules.” Hal Varian is the chief economist of Google; he literally wrote the book on why platform technology is a monopoly and why the monopolists are happy about that.

That’s exactly why they wanted to grow these businesses; they get big, they own the territory, then they get too big in such a way that they are able to discriminate against customers and consumers alike, that they’re able to buy off politicians.

At that point, they become a detriment to both economic growth and society, and regulators bring them to heel and turn them into much more tightly regulated, and in some cases, public utilities. That’s what we should do with Amazon right now. Let Jeff Bezos have his profits on the retail end, in cloud, wherever. But let the network itself be fair and more transparent and open.

And P.S., there are a lot of examples of networks that are being run this way. I don’t want to take up too much airtime. But we can come back to this point if you’d like.

John Donvan:

Thanks very much, Rana. So, Kunal and Mark, Rana has just reiterated her point, which she summed up in her opening statement that Amazon upends the normal rules of capitalism, I believe is how she put it.

How do either of you respond to that?

Mark Jamison:

Well, it’s not true. It does disrupt how things have been done, but not the rules of capitalism at all. If you want to think about what the history really is, the government did not set standards on most of our innovations. It didn’t get into determining what rail gauges were until after most of the railroads had been — or a lot of the railroads had been built. It did not set the standards for the internet. It did not set the standards for telecommunications. It did not set the standards for —

Rana Foroohar:

It invented the internet [laughs].

Mark Jamison:

No. No.

Rana Foroohar:

Yes.

Mark Jamison:

No, no; much of the work was done in the U.K. and Europe. That is not true; what you just said.

Rana Foroohar:

Oh, my God.

Mark Jamison:

And what you talked about the development of railroads was wrong as well. Railroad regulation did not come from Brandeis. It came from Charles Adams; Charles Adams started railroad regulation because he wanted a job with the railroads. Brandeis was involved in breaking things up, Standard Oil and the railroads.

But if you look at the studies, it didn’t improve any of them. The oil industry improved because of new oil fields in the Midwest; that breaking up did not make hardly any difference at all in those instances.

John Donvan:

Stacy?

Stacy Mitchell:

I mean, Rana is right; we have a, you know, Amazon seems like this new thing. But we have a history of this. And the railroads are a perfect example. I mean —

John Donvan:

Well, Stacy, can I —

Stacy Mitchell:

Yeah.

John Donvan:

— break-in for a second because Rana made that point. So, we heard from Mark in the beginning; I challenged — you and Stacy — you and Rana are both talking about monopolistic type of enterprise that needs to be regulated. Mark made the point in the beginning that Amazon is not the only game in town; that there is eBay, that there’s Etsy, that there are other ways to sell. And so, they’re challenging your presentation of a sort of monopolistic nature. So, I wanted to ask you to take that on.

Stacy Mitchell:

Yeah, yeah. I mean, many businesses that I’ve interviewed were doing sales on their own website before Amazon really became the first place that people started going when they wanted to search for something. And that was a function of Prime. You know, Amazon has used Prime; they sell it at a loss in order to sign people up —

John Donvan:

But can you remind people? People who might not know what Prime is [laughs]? I think mostly —

Stacy Mitchell:

Sure, yeah. Amazon has used Prime, which is its annual membership program; you pay $119, and you get free shipping for the year. Amazon loses a ton of money on Prime. But they know that once they get you to pay that fee, your natural inclination is to try to maximize the value you get out of it. And so, you kind of want to go to Amazon to shop for everything because then you get more free shipping. It’s a basic psychology. And as Amazon grew the number of Prime members, many independent businesses that were doing good business on their own websites suddenly found that their traffic dropped right off. And they had to make this terrible choice about whether to sell on Amazon with all the problems that come with it.

The idea that there are competing platforms, you know, that are an option is just really not true. Those other platforms do a trickle of the business, and try as they might; I mean, believe me, small businesses would love to diversify to other places. But try as they might, they cannot do that; Amazon is so dominant in control of that traffic that they are really stuck using Amazon.

Kunal Chopra:

Not true; 60 percent of online traffic on marketplaces goes through Amazon, 40 percent goes through other marketplaces. So, that’s almost a good 50-50, close to a 50-50 percent split on where other opportunities exist for different small businesses to sell as well.

To the point on acquiring customers using Prime, that is exactly the point of any good business is to acquire customers and then engage them, serve them. Guess what? Those are small business customers. What Amazon is spending on Prime it is to serve the business, the brand on the other side to help them get more sales.

The sales eventually get passed on to the customer through the brand, and Amazon keeps a small fee in the middle. That’s the value of the service that they provide.

Stacy Mitchell:

No, no, no; Amazon uses loss-leading on Prime to create a gate and then to levy tolls on sellers. So, because of changes in antitrust law, they don’t raise prices on consumers necessarily; they raise prices on small businesses. That’s how their system works.

And Kunal, just, you know, you run a company that advises sellers on how to navigate platforms. And when I, you know, read your website, you know, 90 percent of your blog posts are about Amazon because 90 percent of what sellers are dealing with is Amazon; they are so dominant. You say, you know, in regard to Amazon’s own listing of its own products, the house always wins. I mean, this is true, you know, the advice that you’re giving really speaks to the power that Amazon has.

Kunal Chopra:

Yeah, yeah, absolutely. So, just to be very specific on what Kaspien does, we position ourselves as a one-stop-shop marketplace growth platform, not an Amazon growth platform. And we do sell on Walmart, on eBay, on Target, on Kroger, and we have a long lineup of international as well as other marketplaces that we plan to help our brands sell on. So, yes, we started off as an Amazon shop. But as the world continues to evolve to be more omnipresent and omnichannel, we continue to serve our brands there because we know that that’s the future.

John Donvan:

Kunal, I don’t think that Stacy was challenging in any way the integrity of the operation of the company; she was just saying that 90 percent of it is about Amazon, making the point that that’s where small business is kind of captured by Amazon, 90 percent of it.

Kunal Chopra:

Today, yes, at some level, right. Like, again, I want to be made clear on the point made, we, 90 percent of our business goes through Amazon, but if you look at the data, 60 percent is only driven through Amazon today; 40 percent is driven through these other marketplaces.

And so, we have seen that data and saying, look, we’ve got to support our brands, move them outside of Amazon and diversify into other channels as well. So, that’s the point I’m trying to make here is diversification online, outside of Amazon, across multiple channels is really the future.

John Donvan:

Okay. Rana, you were very patient in waiting to jump in. So, come on in.

Rana Foroohar:

Oh, okay. Well, I was just struck by Stacy’s reading from the comments and having people say things like the house always wins, or the house always rules. This is exactly the kind of language that antitrust regulators look for when they’re deciding whether a company is a monopoly or not when they use language like that to describe their behaviors. One of the things and I’m literally talking to regulators that are working on these cases, you know, as we speak, in my capacity as a journalist, one of the things they’re looking for is behavior that couldn’t have been done unless the company had a monopoly.

And let’s go back a few years and just recount one of the more famous incidents; when Hachette, a big publisher, was brave enough to take on Amazon over book pricing and Amazon has completely transformed and crushed much of the book industry; certainly, a lot of small, independent publishers. Amazon overnight took their books off of Prime placement and essentially cost them millions of dollars in sales. This is well documented, and it’s not alone. If you go and look at the current FTC Chairman, Lina Khan’s very famous paper on Amazon called the “Amazon Antitrust Paradox,” lots of examples of this kind of behavior. This is what monopoly behavior is legally defined as; it’s not good for small businesses; it’s not good for any business.

John Donvan:

I would like to refer, in that case, to a debate that we held in the winter of 2015, in which our resolution was Amazon is good for readers; in which we took on the tensions between Amazon and the publishing industry at the time.

But Mark, I want to take, in the little bit of time we have left, a little piece of information that Stacy brought into the conversation in her opening statement that I wanted to circle back to, which was her survey showing that 75 percent of small business owners, 75 percent, call Amazon a threat to their businesses. And threat is a very strong word that does not sound like they’re happy about it, and I wanted your response to that.

Mark Jamison:

Well, [unintelligible] happy that I have to compete as well; I’d love to be a monopoly. But if you read the survey, and I did, and, you know, most surveys, if you’re the next academia like I am, you have to lay out all your questions, you have to provide all your data. Most organizations don’t do that. So, I could not look at her data; I could not look at her actual survey questions. But what I could glean is that that 75 percent are people who compete with Amazon, not use Amazon; because in the survey, only 17 percent of the small businesses were actually using Amazon; there could be only a very, very small overlap.

So, what she’s telling us or what — not her specifically; what the survey is telling us is that the offline world is competing with the online world, and the offline world is making good progress. That also then tells us that if you take that offline world and online world and the competition between them and say, does Amazon have market power? You conclude that it does not because, in that space, Amazon is only 6.5 percent of that. And while market share doesn’t tell you about market power, per se, it’s pretty tough to have market power with only 6.5 percent of the market.

John Donvan:

Stacy, where do you think we would be in a world without Amazon? Where — and my question goes to where would small businesses trying to reach large markets, the largest markets they can, be without Amazon?

Stacy Mitchell:

I think we would have a much more diverse online economy. You know, I think that we would have seen lots of different companies, you know, companies that Amazon aggressively and predatory acquire like Zappos and diapers.com grow, we would have seen other platforms that aggregate small businesses grow.

And that would, you know, solve a lot of the negative behaviors that we see on Amazon’s platform; if they face competition, if these small businesses could say, I’m going to take my business elsewhere, then the market would actually work.

But right now, you know, we have this dominant company that just controls things, and we don’t have that diversified economy. And you know the broader effects of this, you know, we’re focused on small business, but it’s really important to just step back and say, this is the source of a lot of our innovation; this is about the wellbeing of our local economies; it’s about job creation; it’s about democracy. I mean, this really goes to a whole deeper set of economic issues.

And I also just want to say, you know, if you look at the census data, between 2007 and 2017, independent retailers with fewer than 100 employees, and that includes online-only businesses, fell by 65,000.

We also lost 40 percent of the small brands that manufacture clothing, toys, sporting goods; we lost one-third of all small book publishers as well. That’s a period of time in which Amazon grew 12-fold. And it’s not the only cause of those losses, of course, but it is a significant cause.

John Donvan:

Kunal, this is going to be the last word in this section. The same question to you, though, where would small businesses be without Amazon? If there were no Amazon.

Kunal Chopra:

If there was no Amazon, we wouldn’t see this change that we have seen on online commerce when it comes to taking advantage of the internet. Amazon has led the way, let’s be direct about it, in transitioning our economy into a digital economy. And it’s given a platform to small businesses to be able to do that. We just wouldn’t have that; we would still be living brick and mortar, another pandemic would hit, and more businesses would be shut down.

In the data that Stacy put out there, we are ignoring a fact that how many of those businesses even were on Amazon. So, if they diversified their model outside of brick and mortar to Amazon and other marketplaces, including their own website, we will probably have more businesses and a much more successful economy. And so, my firm belief is Amazon is to lead the way to what the future for our digital economy looks like.

John Donvan:

All right, that concludes round two of this Intelligence Squared U.S. debate, where our resolution is Amazon is good for small business.

Kunal, you got the last word in that section, but that’s not the last word in this debate because now we move on to round three; and round three is comprised of brief closing statements from each debater, in turn. Those statements will be two minutes each; this is their last chance to try to persuade you to vote for their side; because remember, after this round, you will be asked to vote for a second time, and your votes will determine our winner.

So, round three, closing statements on the resolution, Amazon is good for business; our first speaker is Kunal Chopra.

Kunal Chopra:

Great. Well, thank you, John. Friends, earlier, I gave you four reasons as to why you should support Amazon for small businesses; and I’m going to take a moment now to highlight those for you.

Reason number, one small business customers, are shopping on Amazon, and regardless of size, small businesses can access these customers: 150 million Prime members and growing, 74 percent of U.S. shoppers researching on Amazon. It’s a brand-building tool as well. Reason number two, Amazon presents a global opportunity, you can be the smallest of businesses, and now you can sell with a click of a few buttons to a global audience. Reason number three, Amazon levels the playing field for all; for the first time in history, you can share digital mall space with some of the biggest brands in the world. And reason number four, the world is going digital; Amazon gives you the opportunity for diversification, building an online capability in your business. Once you start an Amazon, you can add other channels like eBay, Walmart, your own website, and manage your customers across this entire digital spectrum.

So, I’m going to end today by telling you a little story. Look, the pandemic was rough on many, especially for the restaurant industry; many restaurants just had to shut down completely.

This affected many other businesses as well, those who were suppliers to restaurants. And there was one such company in Spokane, Washington, where my company is where they would sell spices to restaurants and overnight really found their business in trouble. They were selling directly to chefs in a wholesale-like model. Sales just vanished, and, well, because of the shutdown of the restaurant industry.

And guess what? This business decided to pivot. They said, we’re going to expand online, we’re going to start selling directly to the consumer, we’re going to use Amazon, and then we’re going to also set up our own website to start driving sales. Sales started picking up, and today they are thriving; this direct-to-consumer model now supports 80 percent of their revenue and growing at 100 percent year over year. So, if it wasn’t for Amazon, we would only see this company flounder, as many others did.

And ones who didn’t pivot, who didn’t diversify, who didn’t have the capability to sell on Amazon would probably fail. So, I’d encourage you today to vote that Amazon is good for small business. As with COVID, Amazon can be a critical lifeline for small businesses when the next crisis or pandemic hits.

Thank you, John.

John Donvan:

Thank you, Kunal.

And our next closing statement is against the resolution. Here again, is Stacy Mitchell.

Stacy Mitchell:

Well, thank you so much; and thanks, Kunal, and Mark, and Rana, and John, for this debate; it’s been really wonderful to be part of this conversation.

I believe that anyone who wants to start a business should be able to succeed on their own merit; that their ability to ply their trade should not be subjected to the whims and dictates of a company with outsized market power. As I was preparing for this debate, I thought about businesses like Gazelle Sports, a running retailer in Michigan that I wrote about in 2018. Gazelle Sports is incredibly popular and award-winning; it has over 100 employees and five locations. It’s deeply involved in the local running community, organizing races and workshops.

Up until about 2014, Gazelle Sports was doing a brisk business on its own website. As its customers had moved online, it had been there to meet them.

But in 2018, Amazon’s growing dominance had created a deeply uncertain future. Traffic on its own website had fallen, and selling on Amazon had proved to be a no-win situation.

I also thought about Top Shelf Brands, a startup in Michigan founded by a former barber and an online company selling hair care products. In 2018, with $23 million in sales and nearly 50 employees, Top Shelf appeared on Inc Magazine’s list of America’s fastest-growing and private companies. But Amazon’s increasing fees, its shifting rules, soon pulled the rug out. This year, Top Shelf Brands filed for bankruptcy.

By voting no on this resolution, you will not only be standing up for the independent small businesses, but you’ll also be standing up for all that they represent; our values of liberty and democracy, the idea that we are a free people, that we create and govern our own markets, and that we are subject to no master. Thank you.

John Donvan:

Thank you very much, Stacy.

And our next debater will be speaking in support of the resolution that Amazon is good for small business; here again is Mark Jamison.

Mark Jamison:

And again, thank you for much for allowing me to be part of this. I always love meeting, talking with very intelligent, very passionate people.

I’ll take you back to a woman named Morgan [spelled phonetically]; I won’t go into her last name. So, Morgan grew up in a trailer park. She waited tables. At about the age of 13, she started picking up pieces from yard sales and selling them on eBay and making a little money that way. And then she came across a YouTube video about how to do things on Amazon. She watched this video, and she watched a few others. She went on to Amazon’s website and used all the business development tools that Amazon had there.

And then within a year and a half, she had made $750,000 in revenue; that’s half a million dollars of revenue a year.

That’s quite a job. That was 2018. By now, she has $4.5 million of revenue working on Amazon. That’s quite a story. If we want more Morgan’s, if we want you to be a Morgan, then we need to vote; yes, Amazon can be really good for small businesses.

It’s not for everyone. That is certainly true. But we do know that people who use Amazon are hiring employees four times the rate of comparable businesses that are not using Amazon. We know that if you follow that path of high regulations, that that favors the large businesses, that’s what’s killing off small businesses; not the large ones, it’s the amount of regulation. The studies have pretty conclusively shown that. So, vote that we want Amazon to be an opportunity. Otherwise, the world will be pretty much using eBay or Walmart, or maybe a Target, but primarily eBay.

John Donvan:

Thank you very much, Mark.

Finally, making a closing statement against the resolution, Amazon is good for small business; here is Rana Foroohar.

Rana Foroohar:

Well, thanks so much. Thanks to all the brave panelists, and thanks to everybody for listening to both sides.

Let me just say, you know, capitalism is great; it’s disruptive. We have seen the cycle that Amazon presents, again and again; companies come in, they do great things, then they get too big, then governments break them up, and it leaves room for the next generation of innovators. There probably wouldn’t have been a Google in the form that there is now if Microsoft hadn’t been curbed. If telephony hadn’t had been broken up, we wouldn’t have got mobile phones as fast as we do. If railroads hadn’t have been broken up and railroad barons hadn’t have been curbed, we wouldn’t have gotten better pricing and more myriad different kinds of businesses than we had previously.

So, what we’re going through now is just the latest iteration of history.

Governments started the internet; taxpayers funded it, big companies came in and commercialized it with cool new things. When they got too big and they became a headwind to other businesses, it was time to regulate them and curb them. And that’s what needs to happen to Amazon today.

It does great things as a platform, it can do awesome things as a retailer, but it shouldn’t be allowed to do both. No other businesses in any other industry, and Amazon is not special. Okay? So, I hope that you will vote with Stacy and I that, no, Amazon is not good for small business.

John Donvan:

Thanks very much, Rana.

And that concludes round three. And now it is time for our second vote. Remember the way we do this; it’s the side that sways the most minds between the first and the second vote that will be declared our winner. We’re going to ask you again to vote the same way you did the first time by clicking on the voting tab and scrolling down or going back to IQ2vote.org; you might still have that URL open on your browser; it’s the same one.

You can do it from any web page on your cell phone, IQ2vote.org. When you’re there, once again, you’ll be presented with the choices to vote for, against, or undecided on the statement that Amazon is good for small business.

I want to let you know we’re going to be leaving this vote open for the next seven days to allow a broader public also to watch the debate and to vote so that we can reach more people and get a broader sampling of how people were swayed by the arguments on both sides. And then, at the end of those seven days, we will be announcing the winner on our website IQ2us.org.

So, that is it for the competition part of this program. This has really, really been a very interesting, well-argued debate. We love the topic. It’s something that touches on all of us whether we’re in business or whether we’re customers of Amazon. So, many of us, I guess, are Prime. And we have a stake in it, one way or the other.

The way that our debaters came to this, so well prepared, having given so much thought to this, showing so much respect for one another, that’s what Intelligence Squared is all about. So, I just want to thank all of you, Kunal, Mark, Stacy, and Rana, for bringing an excellent debate to our program at Intelligence Squared.

Kunal Chopra:

Thank you, John, and thank you, everyone.

Rana Foroohar:

Thank you so much.

Mark Jamison:

Thank you.

Stacy Mitchell:

Thank you so much. Great to be here.

John Donvan:

And I want to thank you, our audience, for tuning in. We do appreciate your support and your commitment to good discourse, to good debate; that’s what we work out at Intelligence Squared. We are, as I say, at the end of every debate, a philanthropy; we put these debates on and put them out to the world for free. We would deeply appreciate your support if you like what we do by going to our website, IQ2us.org, where you will find ways to support us.

Thanks so much to, again, all of you, for taking part in this debate. And to all of you who are watching the debate. And to those of you who are watching the debate, I want to tell you that now we are shifting to the live round table portion of the program. So, just wait for a moment for your screen to refresh, and then you’ll have an opportunity to ask questions of the debaters in the chat room. We’ll see you there.

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