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CNN 10

A Special Edition On Amazon, The $1.5 Trillion U.S. Company That Has Changed The Retail Landscape. Aired 4-4:10a ET

Aired April 18, 2022 - 04:00   ET


CARL AZUZ, CNN 10 ANCHOR: Hi. I`m Carl Azuz for CNN 10.

We`ve got something special lined up for you today. This show is centered on a single big topic because in the business world, there are few bigger

topics than Amazon. In 1995, the company had launched 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 a lot of other types of stores too. It offers online content, cloud

computing, movies, music, and it not only still sells books, it helps people publish them.

Today, Amazon is one of the top five most valuable companies on the planet. It`s worth more than $1.5 trillion, and it grew that big in a relatively

short amount of time. Its founder, Jeff Bezos, with a net worth of more than billion dollars according to the "Forbes" business magazine.

However, the company he founded has seen its share of bumps in the road. Amazon has been criticized in the past for what it paid its employees.

Three years ago, the average salary for an Amazon employee was $28,000 per year. That was $20,000 less than the average yearly salary in America.

Amazon has raised its minimum wage to fifteen an hour for all employees since then.

As people spent more time shopping online and less in retail stores, the infamous Amazon effect occurred in America, with thousands of physical

stores shutting down and tens of thousands of retail jobs lost. And while Alexa, Amazon`s virtual artificial intelligence assistant has found a place

in many homes in recent years, privacy advocates have raised concerns about smart speakers because they`re always listening.

As a company, Amazon is massive. Even as other businesses laid off employees because of the effects of the coronavirus pandemic, Amazon grew

tremendously, hiring half a million people in 2020, increasing its workforce to more than one million two hundred thousand.

It`s a complicated company like some of the challenges it`s faced. It`s also changed the way the world buys goods.


DILIP KUMAR, VP, AMAZON GO AND AMAZON BOOKS: Welcome. So I`ve been here. Amazon goes the ultimate grab-and-go shopping experience.

RACHEL CRANE, CNN CORRESPONDENT: Right. It`s, literally, grab it off the shelves and go.

KUMAR: 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 could just walk out.

CRANE (voice-over): Nothing is simple about the technology behind this cashier-less 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.

KUMAR: What we had to do unique in this use case was build the sensors, the cameras.

CRANE: All these cameras, the sensors --

KUMAR: The cameras -- the cameras in the ceiling. We had to build a specific machine learning algorithms.

The problem that we have to solve in Amazon Go is who took what? When I take this item off the shelf, it`s in my virtual cart. When I put it back,

the item goes back.

CRANE: Uh-huh.

KUMAR: 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.

CRANE: Right.

KUMAR: So that`s where the challenge comes in.

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

PETER LARSEN, VP, AMAZON DELIVERY TECHNOLOGY: 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.

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

Inside Amazon`s warehouses, AI is hard at work. These are Amazon robotics drive units.

BELINDA WORLEY, SR. PRODUCT MANAGER, AMAZON ROBOTICS: 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 a 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.

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

WORLEY: What we`ve actually determined when we`ve actually deployed our solutions in our fulfillment networks is that we actually 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 associate employments across the globe to date.

UNIDENTIFIED MALE: Alexa, order dog biscuits.

CRANE: And, of course --

ALEXA: One moment.

CRANE: The AI tool you`re most familiar with --

ALEXA: Here`s what I found.

CRANE: -- is always learning new tricks.

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

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.

CRANE: An evolution of Alexa, is it 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, right? 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.



JON SARLIN, CNNMONEY PRODUCER: Is Amazon a monopoly? Well, it`s not really an easy question to answer.

First, you have to understand what the core tenet of Jeff Bezos`s 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 stayed true to that. Its 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


We all know on some level what a monopoly is. We`ve played the game, but in the context of antitrust law, it`s a specific thing it`s meant to stop a

company from forming they 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.

DAVID BALTO, FORMER FTC ASSISTANT DIRECTOR: The load star of antitrust enforcement is how are consumers affected? Do consumers pay more? Do they

have less choice? Then, it`s time for the antitrust cops to get on the beat.

SARLIN: This is David Balto. He worked on antitrust cases for the Justice Department and the FTC for years and is skeptical about Amazon being a


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 antitrust scrutiny.

SARLIN: But some say that business model is a direct threat to customers.

This is Lina Khan. She`s a lawyer who has really helped shape the debate around Amazon and antitrust law.

To people like her, Amazon`s willingness to sustain massive losses isn`t just a savvy business move. It`s an example of predatory pricing.

LINA KHAN, DIRECTOR OF LEGAL POLICY OF OPEN MARKETS INSTITUTE: 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.

SARLIN: 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 and 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 stop these practices, and that`s like looking for a unicorn.

SARLIN: 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 marketplace where that is winner take all. So if you`re a Facebook or an Amazon or a 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.

SARLIN: It`s important to note that the 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 be an online retailer, it also is a huge content producer, 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.

SARLIN: So whether Amazon has an unfair advantage over its 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.