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CNN 10

CNN 10 Business-Themed Special; Exploring The Background, Growth, Criticism and Impact Of Amazon On The Retail World. Aired 4-4:10a ET

Aired November 01, 2019 - 04:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CARL AZUZ, CNN ANCHOR: Hi, I`m Carl Azuz. Kicking off something special for you today on CNN 10. Why? Because Friday`s are awesome and this

Friday`s show is centered on one big topic because in the business world there are fewer big topics than Amazon. In 1995, it had begun as a retail

website that sold books and not much else.

From there, well it`s grown a bit. Amazon sells most of the stuff you can buy at a mall, at a grocery store and many other types of stores too. It

offers online content, cloud computing and it not only still sells books it helps people publish them. Last year Amazon became the second company

behind Apple who`s total market value exceeded $1 trillion.

Amazon did that in 24 years, a relatively short amount of time to get that valuable. It`s founder Jeff Bezos is one of the two richest people on the

planet. He and Microsoft co-founder Bill Gates are each worth more than $100 billion but Amazon has seen its share of bumps in the road. The

company`s been criticized in the past for what it pays its employees. Two years ago for instance, half of its employees earned less than $28,000 that

was roughly $20,000 less than the average wage in America.

And thousands of retail stores have shut down in recent years with 10`s of thousands of retail jobs lost because Americans have been spending less

time shopping in stores and more time shopping on sites like Amazon. Also, privacy advocates have raised concerns about Amazon`s Echo and the other

smart speakers like it because they`re always listening. Who else could have access to your conversations besides Alexa? Amazon is massive. It

has more than 650,000 employees around the world. It`s complicated like some of the challenges its faced and created. It`s also changing the way

the world buys goods.

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UNIDENTIFIED MALE: Welcome. You want anything here?

UNIDENTIFIED MALE: Amazon is the ultimate grab and go shopping experience. You use the app to enter the store. Once you`re in, you can put the phone

away and you shop the rest of the store just like you would any other store with one key difference. When you`re done, you can just walk out.

UNIDENTIFIED FEMALE: Nothing is simple about the technology behind this cashierless store. The Amazon Go Market uses artificial intelligence to

monitor what you`ve reached for on the shelf and to make sure you`re charged for what you walked out with and nothing else.

UNIDENTIFIED MALE: Well we had to be unique in this years case is build a sensors, the cameras.

UNIDENTIFIED FEMALE: All these cameras and sensors are (inaudible)

UNIDENTIFIED MALE: The cameras - - the cameras in the ceiling, we had to build a specific machine running algorithms. The problem that we have to

solve in Amazon Go is who to what. When I take this item off the shelf it`s in my virtual cart. When I put it back, the item goes back. It`s an

easy problem to solve when you have a single person in the store but when there`s multiple people a lot of products if you look around look very

similar to each other.

UNIDENTIFIED FEMALE: Right.

UNIDENTIFIED MALE: So that`s where the challenge comes in.

UNIDENTIFIED FEMALE: The Amazon Go store is by no means the only place where Amazon uses AI.

UNIDENTIFIED MALE: We`ve got hundreds of teams working on artificial intelligence programs across Amazon. Artificial intelligence like machine

learning powers the simplicity that we always want to offer to our customers.

UNIDENTIFIED FEMALE: Whether it`s fulfilling orders or delivering packages, those teams are working constantly to improve the customers

experience. Inside Amazon`s warehouse it`s AI is hard at work.

UNIDENTIFIED FEMALE: These are Amazon robotics drive units. Once a customer actually purchases an item either on their mobile app or on their

computer or laptop, the system identifies the pod where the item is actually located in the field and the bot maps out the most efficient way

through using machine learning to get that pod which has that item that that customer purchased to the associate.

So there`s some people out there that will hear robots, machine learning, AI and think, jobs, they`re going to be gone. But we`ve actually

determined when we`ve actually deployed our solutions in their fulfillment networks is that (inaudible) are relying a lot more on our associates.

We`ve increased their efficiency and it really gives them the ability to work on different tasks and we`ve actually grown our associates employments

across the globe to date.

UNIDENTIFIED MALE: Alexa, order dog biscuits.

UNIDENTIFIED FEMALE: And of course, the AI tool you`re most familiar with is always learning new tricks.

UNIDENTIFIED MALE: Achieving what Alexa is right now is super hard challenge. Going from that to the future, I would like Alexa to respond to

the - - the - - your mood, your sentiment, your feelings as expressed in your speech. The one key advantage we have is we now have so much more

data. So is it a big challenge? Yes. Are we up to that challenge? Heck, yes.

UNIDENTIFIED FEMALE: The evolution of Alexa is it`s still in its infancy? Is it a toddler now or is she a toddler now, an adolescent, teenager?

Certainly hasn`t graduated from college.

UNIDENTIFIED MALE: No, AI hasn`t graduated from college overall. I - - and I think AI as a field is in its infancy. Think of it as a older toddler,

you know, who`s going to grow up to be an adult that just stuns us with her brilliance, right, is where we are.

(END VIDEO CLIP)

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UNIDENTIFIED MALE: Is Amazon a monopoly? Well it`s not really an easy question to answer. First you have to understand what the core tenant of

Jeff Bezos` business philosophy is, patience. Go back to the original letter that Jeff Bezos wrote investors in 1997. He wrote that investors to

Amazon shouldn`t expect Amazon to operate like most companies because Amazon wouldn`t judge itself by short term profits.

You know, the thing that almost every other company cares about, only the long term and Bezos and Amazon`s stayed true to that. In it`s first few

years Amazon barely made a profit. It invested billions of dollars back into the business and it just kept growing and growing and growing and

growing and now that patience has paid off with incredible profits over the last few years.

We all know at some level what a monopoly is. We`ve played the game but in the context of anti-trust laws it`s a specific thing. It`s meant to stop a

company from forming that can dominate the market in such a way that competition is impossible. Those who do not think Amazon is a monopoly say

that because Amazon is offering its customers lower prices, it can`t possibly be an anti-trust case. Those low prices are a benefit to consumer

welfare and it would be impossible to regulate exactly how low is too low for prices.

UNIDENTIFIED MALE: The lone star of anti-trust enforcement is how are consumers effected. Do consumers pay more? Do they have less choice?

Than it`s time for the anti-trust cops to get on the beat.

UNIDENTIFIED MALE: This is David Balto (ph). He worked on anti-trust cases for the Justice Department and the FTC for years and is skeptical

about Amazon being a monopoly.

(DAVID BALTO): When consumers are paying less and have a greater amount of choice which seems to be the simple message from Amazon`s business model.

There`s not a reason for intense anti-trust scrutiny.

UNIDENTIFIED MALE: But some say that business model is a direct threat to customers. This is Lena Khan (ph). She`s a lawyer who has really helped

shape the debate around Amazon and anti-trust laws. That people like her, Amazon`s willingness to sustain massive losses isn`t just a savvy business

move. It`s an example of predatory pricing.

(LENA KHAN): So predatory pricing is when a company prices a good below cost and is doing so basically in order to drive out its competitors so

that it is able to, kind of, enjoy a dominant place in the market.

UNIDENTIFIED MALE: All of those things are a really high bar for the government to prove and because of that a successful case on predatory

pricing hasn`t been litigated in decades.

(BALTO): That`s not for a lack of will. We certainly at the FTC in the Clinton Administration had predatory pricing investigations but at the end

of the day you have to convince yourself that consumers would be better off if you stopped these practices, and that`s like looking for a unicorn.

UNIDENTIFIED MALE: But to those who do think Amazon right now is acting as a monopoly, the government`s view of predatory pricing is outdated.

(KHAN): The reality is with tech companies you have a market place where that is winner take all. So if you`re a Facebook or an Amazon or Google,

your main goal is to try and acquire as many users as possible at the very earliest stages. Because once you have a lot of users, it`s going to be

much more difficult for rivals to divert users away from you. And so in that scenario, predatory pricing actually becomes very rational.

UNIDENTIFIED MALE: It`s important to know that question of predatory pricing is really only one of the questions surrounding Amazon. There are

also concerns about just how large Amazon has become as a business.

(KHAN): So in addition to being an online retailer, it also is a huge content producer. It is a book publisher. It has a huge cloud computing

service. The fact that Amazon is involved in all these different lines of business positions it to use its dominance in the online space in order to

benefit its other lines of businesses. And I think that`s something that`s really problematic.

(BALTO): What we want from a consumer`s perspective is for those people who provide services for us to use the bargaining leverage of having all

those customers to lower costs as much as possible. And that`s fundamentally what Amazon has done.

UNIDENTIFIED MALE: So whether Amazon has an unfair advantage over competitors, whether it`s a monopoly. All those things are an open debate

but what is not a debate is right now Amazon is winning.

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