(In These Times) -- The paper the forms are printed on at City Hall. The desk your child sits at in math class. The books in your local library. Amazon has begun to profit from all of these products, extending its business from consumer retail into government procurement, according to a new report released today.
As detailed by Stacy Mitchell and Olivia LaVecchia of the nonprofit Institute for Local Self-Reliance (ILSR), Amazon won a nationwide contract last year to supply up to $5.5 billion in commercial items for states, cities, and school districts through its Amazon Business platform. Already over 1,500 jurisdictions have adopted the contract, despite the fact that it doesn’t guarantee fixed-rate prices or volume discounts, as is typical with government purchasing agreements. This means cities and states could end up overpaying for basic supplies, with Amazon profiting on the back end.
Local and regional office suppliers (an under-the-radar industry that pioneered many customer conveniences, such as next-day delivery, more commonly associated with Amazon) can still sell to municipal governments under the deal—but only if they join Amazon’s platform, and pay the 15 percent share of revenue that Amazon takes for access. This underscores Amazon’s real goal—to levy a tax on all economic activity, as market analyst Ben Thompson put it last year. Businesses large and small are induced into joining the Amazon marketplace when there’s no other way to reach customers. Whoever makes the sale, Amazon takes a cut.
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