Amazon Changed Search Algorithm in Ways That Boost Its Own Products

The e-commerce giant overcame internal dissent from engineers and lawyers, people familiar with the move say

Amazon.com Inc. AMZN -1.87% has adjusted its product-search system to more prominently feature listings that are more profitable for the company, said people who worked on the project—a move, contested internally, that could favor Amazon’s own brands.

Late last year, these people said, Amazon optimized the secret algorithm that ranks listings so that instead of showing customers mainly the most-relevant and best-selling listings when they search—as it had for more than a decade—the site also gives a boost to items that are more profitable for the company.

The adjustment, which the world’s biggest online retailer hasn’t publicized, followed a yearslong battle between executives who run Amazon’s retail businesses in Seattle and the company’s search team, dubbed A9, in Palo Alto, Calif., which opposed the move, the people said.

Any tweak to Amazon’s search system has broad implications because the giant’s rankings can make or break a product. The site’s search bar is the most common way for U.S. shoppers to find items online, and most purchases stem from the first page of search results, according to marketing analytics firm Jumpshot.

When people search for products on Amazon*, nearly two-thirds of all product clicks come from the first page of results…

Row 1

2

3

4

5

6

7

8

First page

Other pages

0

20

40

60%

…so the proliferation of Amazon’s private-label products on the first page makes it more likely people choose those items.

Search for ‘men’s button down shirts’

Search for ‘paper towels’

Amazon private- label products

Sponsored content

*Based on a study in 2018 of anonymous consumer actions on mobile and desktop devices

Note: Product searches conducted Aug. 28

Source: Jumpshot

Angela Calderon/THE WALL STREET JOURNAL

The issue is particularly sensitive because the U.S. and the European Union are examining Amazon’s dual role—as marketplace operator and seller of its own branded products. An algorithm skewed toward profitability could steer customers toward thousands of Amazon’s in-house products that deliver higher profit margins than competing listings on the site.

Amazon’s lawyers rejected an initial proposal for how to add profit directly into the algorithm, saying it represented a change that could create trouble with antitrust regulators, one of the people familiar with the project said.

The Amazon search team’s view was that the profitability push violated the company’s principle of doing what is best for the customer, the people familiar with the project said. “This was definitely not a popular project,” said one. “The search engine should look for relevant items, not for more profitable items.”

Amazon CEO Jeff Bezos has propounded a ‘customer obsession’ mantra. PHOTO: JIM WATSON/AFP/GETTY IMAGES

Amazon said it has for many years considered long-term profitability and does look at the impact of it when deploying an algorithm. “We have not changed the criteria we use to rank search results to include profitability,” said Amazon spokeswoman Angie Newman in an emailed statement.

Amazon declined to say why A9 engineers considered the profitability emphasis to be a significant change to the algorithm, and it declined to discuss the inner workings of its algorithm or the internal discussions involving the algorithm, including the qualms of the company’s lawyers.

The change could also boost brand-name products or third-party listings on the site that might be more profitable than Amazon’s products. And the algorithm still also stresses longstanding metrics such as unit sales. The people who worked on the project said they didn’t know how much the change has helped Amazon’s own brands.

Amazon’s Ms. Newman said: “Amazon designs its shopping and discovery experience to feature the products customers will want, regardless of whether they are our own brands or products offered by our selling partners.”

Antitrust regulators for decades have focused on whether companies use market power to squeeze out competition. Amazon avoided scrutiny partly because its competitive marketplace of merchants drives down prices.

A majority of Amazon’s sales come from retail, but a majority of its operating profits come from its cloud-computing unit.

Retail, subscriptions,

advertising and services

Amazon Web

Services

Percentage of total sales

86.9%

13.1%

Retail sales and

commissions: 75%

Percentage of operating income

42.1%

57.9%

Note: First half of 2019; Amazon doesn’t break out operating income for retail.

Source: the company

Now, some lawmakers are calling for Washington to rethink antitrust law to account for big technology companies’ clout. In Amazon’s case, they say it can bend its dominant platform to favor its own products. Sen. Elizabeth Warren (D., Mass.) has argued Amazon stifles small businesses by unfairly promoting its private-label products and underpricing competitors. Amazon has disputed this claim.

During a House antitrust hearing in July, lawmakers pressed Amazon on whether it used data gleaned from other sellers to favor its own products. “The best purchase to you is an Amazon product,” said Rep. David Cicilline (D., R.I.). “No that’s not true,” replied Nate Sutton, an Amazon associate general counsel, saying Amazon’s “algorithms are optimized to predict what customers want to buy regardless of the seller.” House Judiciary Committee leaders recently asked Amazon to provide executive communications related to product searches on the site as part of a probe on anticompetitive behavior at technology companies.

Amazon says it operates in fiercely competitive markets, it represents less than 1% of global retail and its private-label business represents about 1% of its retail sales.

Amazon executives have sought to boost profitability in its retail business after years of focusing on growth. A majority of its $12.4 billion in operating income last year came from its growing cloud business.

Pressure on engineers

An account of Amazon’s search-system adjustment emerges from interviews with people familiar with the internal discussions, including some who worked on the project, as well as former executives familiar with Amazon’s private-label business.

SHARE YOUR THOUGHTS

When you search for products on Amazon, how should it determine what listings to show? Join the conversation below.

The A9 team—named for the “A” in “Algorithms” plus its nine other letters—controls the all-important search and ranking functions on Amazon’s site. Like other technology giants, Amazon keeps its algorithm a closely guarded secret, even internally, for competitive reasons and to prevent sellers from gaming the system.

Customers often believe that search algorithms are neutral and objective, and that results from their queries are the most relevant listings.

Executives from Amazon’s retail divisions have frequently pressured the engineers at A9 to surface their products higher in search results, people familiar with the discussions said. Amazon’s retail teams not only oversee its own branded products but also its wholesale vendors and vast marketplace of third-party sellers.

Amazon’s private-label team in particular had for several years asked A9 to juice sales of Amazon’s in-house products, some of these people said. The company sells over 10,000 products under its own brands, according to research firm Marketplace Pulse, ranging from everyday goods such as AmazonBasics batteries and Presto paper towels, to clothing such as Lark & Ro dresses.

Inside an Amazon fulfillment center. PHOTO: KRISZTIAN BOCSI/BLOOMBERG NEWS

Amazon’s private-label business, at about 1% of retail sales, would represent less than $2 billion in 2018. Investment firm SunTrust Robinson Humphrey estimates the private-label business will post $31 billion in sales by 2022, more than Macy’s Inc. ’s annual revenue last year.

The private-label executives argued Amazon should promote its own items in search results, these people said. They pointed to grocery-store chains and drugstores that showcase their private-label products alongside national brands and promote them in-store.

A9 executives pushed back and said such a change would conflict with Chief Executive Jeff Bezos’ “customer obsession” mantra, these people said. The first of Amazon’s longstanding list of 14 leadership principles requires managers to focus on earning and keeping customer trust above all. Amazon often repeats a line from that principle: “Leaders start with the customer and work backwards.”

One former Amazon search executive said: “We fought tooth and nail with those guys, because of course they wanted preferential treatment in search.”

For years, A9 had operated independently from the retail operations, reporting to its own CEO. But the search team, in Silicon Valley about a two-hour flight from Seattle, now reports to retail chief Doug Herrington and his boss Jeff Wilke —effectively leaving search to answer to retail.

After the Journal’s inquiries, Amazon took down its A9 website, which had stood for about a decade and a half. The site included the statement: “One of A9’s tenets is that relevance is in the eye of the customer and we strive to get the best results for our users.”

Mr. Herrington’s retail team lobbied for the adjustment to Amazon’s search algorithm that led to emphasizing profitability, some of the people familiar with the discussions said.

When a customer enters a search query for a product on Amazon, the system scours all listings for such an item and considers more than 100 variables—some Amazon engineers call them “features.” These variables might include shipping speed, how highly buyers have ranked product listings and recent sales volumes of specific listings. The algorithm weighs those variables while calculating which listings to present the customer and in which order.

Nate Sutton, an Amazon associate general counsel, at a House Judiciary Subcommittee hearing on antitrust in July.PHOTO: ANDREW HARRER/BLOOMBERG NEWS

The algorithm had long placed a priority on variables such as unit sales—a proxy for popularity—and search-term relevance, because they tend to predict customer satisfaction. A listing’s profitability to Amazon has never been one of these variables.

Profit metric

Amazon retail executives, especially those in its private-label business, wanted to add a new variable for what the company calls “contribution profit,” considered a better measure of a product’s profitability because it factors in non-fixed expenses such as shipping and advertising, leaving the amount left over to cover Amazon’s fixed costs, said people familiar with the discussion.

Amazon’s private-label products are designed to be more profitable than competing items, said people familiar with the business, because the company controls the manufacturing and distribution and cuts out intermediaries and marketing costs.

Amazon’s lawyers rejected the overt addition of contribution profit into the algorithm, pointing to a €2.42 billion fine ($2.7 billion at the time) that Alphabet Inc.’s Google received in 2017 from European regulators who found it used its search engine to stack the deck in favor of its comparison-shopping service, said one of the people familiar with the discussions. Google has appealed the fine and has made changes to Google Shopping in response to the European Commission’s order.

To assuage the lawyers’ concerns, Amazon executives looked at ways to account for profitability without adding it directly to the algorithm. They turned to the metrics Amazon uses to test the algorithm’s success in reaching certain business objectives, said the people who worked on the project.

When engineers test new variables in the algorithm, Amazon gauges the results against a handful of metrics. Among these metrics: unit sales of listings and the dollar value of orders for listings. Positive results for the metrics correlated with high customer satisfaction and helped determine the ranking of listings a search presented to the customer.

Now, engineers would need to consider another metric—improving profitability—said the people who worked on the project. Variables added to the algorithm would essentially become what one of these people called “proxies” for profit: The variables would correlate with improved profitability for Amazon, but an outside observer might not be able to tell that. The variables could also inherently be good for the customer.

Amazon commands more than one-third of U.S. retail dollars spent online.

Share of 2018 online retail sales

Amazon

36.5%

eBay

6.9%

Walmart

4.0%

Apple

3.9%

The Home Depot

1.6%

Source: eMarketer

For the algorithm to understand what was most profitable for Amazon, the engineers had to import data on contribution profit for all items sold, these people said. The laborious process meant extracting shipping information from Amazon warehouses to calculate contribution profit.

In an internal system called Weblab, A9 engineers tested proposed variables for the algorithm for weeks on a subset of Amazon shoppers and compared the impact on contribution profit, unit sales and a few other metrics against a control group, these people said. When comparing the results of the groups, profitability now appeared alongside other metrics on a display called the “dashboard.”

Amazon’s A9 team has since added new variables that have resulted in search results that scored higher on the profitability metric during testing, said a person involved in the effort, who declined to say what those new variables were. New variables would also have to improve Amazon’s other metrics, such as unit sales.

A review committee that approves all additions to the algorithm has sent engineers back if their proposed variable produces search results with a lower score on the profitability metric, this person said. “You are making an incentive system for engineers to build features that directly or indirectly improve profitability,” the person said. “And that’s not a good thing.”

An Amazon warehouse in Mexico in July. PHOTO: CARLOS JASSO/REUTERS

Amazon said it doesn’t automatically shelve improvements that aren’t profitable. It said, as an example, that it recently improved the discoverability of items that could be delivered the same day even though it hurt profitability.

Amazon’s Ms. Newman said: “When we test any new features, including search features, we look at a number of metrics, including long term profitability, to see how these new features impact the customer experience and our business as any rational store would, but we do not make decisions based on that one metric.”

In some ways, Amazon’s broader shift from showing relevant search results is noticeable on the site. Last summer, it changed the default sorting option—without publicizing the move—to “featured” after ranking the search results for years by “relevance,” according to a Journal analysis for this article of screenshots and postings by users online. Relevance is no longer an option in the small “sort by” drop-down button on the top right of the page.

Walmart Builds a Secret Weapon to Battle Amazon for Retail’s Future

The world’s largest retailer is using Jetblack, a money-losing personal-shopping service, to develop artificial intelligence to compete with e-commerce giant Amazon

Walmart is using Jetblack’s army of human agents to train an artificial intelligence system that could someday power an automated personal-shopping service, preparing Walmart for a time when the search bar disappears and more shopping is done through voice-activated devices, said Jetblack CEO Jenny Fleiss.

.. Walmart is competing with Amazon, which has $233 billion in annual sales, including web services.

.. Walmart is the world’s biggest retailer by revenue, with $514 billion in annual sales, but e-commerce makes up only a small percentage. That’s out of sync with where retail is growing fastest. Across the U.S., online shopping accounted for 9.7% of total retail sales last year and grew 14.2% from the previous year, according to the Commerce Department.

Walmart bought India’s biggest e-commerce site. It has been buying up small online retailers including men’s apparel company Bonobos and is testing autonomous cargo vans for home grocery delivery in places such as Surprise, Ariz.

.. it is one of the biggest gambles Walmart is making to attract wealthy shoppers and burnish its tech credentials.

Walmart primarily views the company as a research hub on AI and voice shopping.

.. Marc Lore, head of Walmart’s U.S. e-commerce business, had in mind a Jetblack-like service before Walmart bought his e-commerce startup Jet.com in 2016. That website sells products that appeal to urban shoppers, including higher-end brands that won’t sell on Walmart.com.

Mr. Lore was fascinated by the idea of a premium service that allowed shoppers to order products for speedy delivery by speaking into the air, said people familiar with his thinking. “This is a Marc Lore passion project,” said one former Walmart executive.

.. One former Walmart executive said Jetblack is “the first thing that we’ve tried that will unwind you” consistently from Amazon Prime. “The early indication is that it has legs,” even if the point isn’t earning profits, the former executive said.

Jetblack members are spending an average of $300 a week for products because the ease of the service encourages more frequent purchases ..

.. The average shopper is buying more than 10 items a week, said Ms. Fleiss. Average spending a week is higher than last September, said a company spokesman, but he declined to say how much Jetblack members spend a week or how many of those products come from Walmart.

.. Customer-service agents, often recent college graduates drawn to the startup culture of Jetblack, need to become experts on wealthy New York City moms. Agents have two weeks of training, in part to learn what products babies need as they move through different developmental phases so they can make better product recommendations.

.. Moms—the vast majority of members—sometimes text fast requests like “reorder cereal.” When a Jetblack member joins, an employee usually goes to the customer’s home to inventory the products the person uses, giving agents a database of frequent purchases. Software automatically suggests a product if it is a frequent purchase or was scanned in the customer’s home.

.. It takes agents slightly longer to place an order for “item requests,” when the shopper knows exactly what they want but hasn’t ordered it before. Even more time-consuming are “recommendations,” open-ended requests such as “I need a new yoga mat” or “I need a birthday present for a 9-year-old.”

.. Agents consult a file that combines past purchases, products agents have researched and recommendations made by Jetblack merchandising workers, then suggest around three items for the customer to choose from, current and former employees said. Sometimes agents head to Google to do research, said one of these people.

.. Through the dialogue, the system is learning which follow up questions to ask, said Ms. Fleiss. For example, if a shopper asks for a new stroller, the system might learn to next ask “For how many children?” and “Do you need your child to nap in the stroller?” Members buy one of the recommended products 80% of the time, she said.

.. Jetblack also learned it still needs traditional technology. It created a companion app because some shoppers don’t like to update credit card information or review past orders over text.

Workers stock up on frequently purchased items by taking a daily van to a Jet.com warehouse and Walmart stores in New Jersey, since New York City has no physical Walmart stores, ordering products online for pickup. Later this year Jetblack plans to use a new Walmart fulfillment center in the Bronx to collect some products faster, said a spokesman.

The Ethical Dilemma Facing Silicon Valley’s Next Generation

Stanford has established itself as the epicenter of computer science, and a farm system for the tech giants. Following major scandals at Facebook, Google, and others, how is the university coming to grips with a world in which many of its students’ dream jobs are now vilified?

At Stanford University’s business school, above the stage where Elizabeth Holmes once regurgitated the myths of Silicon Valley, there now hangs a whistle splattered in blood. More than 500 people have gathered to hear the true story of Theranos, the $9 billion blood-testing company Holmes launched in 2004 as a Stanford dropout with the help of one of the school’s famed chemical engineering professors.

When Holmes was weaving the elaborate lies that ultimately led to the dissolution of her company, she leaned heavily on tech truisms that treat dogged pursuit of market domination as a virtue. “The minute that you have a backup plan, you’ve admitted that you’re not going to succeed,” she said onstage in 2015. But Shultz and Cheung, who faced legal threats from Theranos for speaking out, push back against the idea of pursuing a high-minded vision at all costs. “We don’t know how to handle new technologies anymore,” Cheung says, “and we don’t know the consequences necessarily that they’ll have.”

The words resonate in the jam-packed auditorium, where students line up afterward to nab selfies with and autographs from the whistleblowers. Kendall Costello, a junior at Stanford, idolized Holmes in high school and imagined working for Theranos one day. Now she’s more interested in learning how to regulate tech than building the next product that promises to change the world. “I really aspired to kind of be like her in a sense,” Costello says. “Then two years later, in seeing her whole empire crumble around her, in addition to other scandals like Facebook’s Cambridge Analytica and all these things that are coming forward, I was just kind of disillusioned.”

..But the endless barrage of negative news in tech, ranging from Facebook fueling propaganda campaigns by Russian trolls to Amazon selling surveillance software to governments, has forced Stanford to reevaluate its role in shaping the Valley’s future leaders. Students are reconsidering whether working at Google or Facebook is landing a dream job or selling out to craven corporate interests. Professors are revamping courses to address the ethical challenges tech companies are grappling with right now. And university president Marc Tessier-Lavigne has made educating students on the societal impacts of technology a tentpole of his long-term strategic plan.

As tech comes to dominate an ever-expanding portion of our daily lives, Stanford’s role as an educator of the industry’s engineers and a financier of its startups grows increasingly important. The school may not be responsible for creating our digital world, but it trains the architects. And right now, students are weighing tough decisions about how they plan to make a living in a world that was clearly constructed the wrong way. “To me it seemed super empowering that a line of code that I wrote could be used by millions of people the next day,” says Matthew Sun, a junior majoring in computer science and public policy, who helped organize the Theranos event. “Now we’re realizing that’s maybe not always a good thing.”

.. Because membership costs $21,000 per year, the career fairs tend to attract only the most renowned firms.

Honestly, I think they’re horrific,” says Vicki Niu, a 2018 Stanford graduate who majored in computer science. She recalls her first career fair being as hectic as a Black Friday sale, with the put-on exclusivity of a night club. (Students must present their Stanford IDs to enter the tent.) But like other freshmen, she found herself swept up in the pursuit of an internship at a large, prestigious tech firm. “Everybody is trying to get interviews at Google and Facebook and Palantir,” she says. “There’s all this hype around them. Part of my mind-set coming in was that I wanted to learn, but I think there was definitely also this big social pressure and this desire to prove yourself and to prove to people that you’re smart.”

Stanford’s computer science department has long been revered for its graduate programs—Google was famously built as a research project by Ph.D. students Larry Page and Sergey Brin—but the intense interest among undergrads is relatively new. In 2007, the school conferred more bachelor’s degrees in English (92) than computer science (70). The next year, though, Stanford revamped its CS curriculum from a one-size-fits-all education to a more flexible framework that funneled students along specialized tracks such as graphics, human-computer interaction, and artificial intelligence. “We needed to make the major more attractive, to show that computer science isn’t just sitting in a cube all day,” Mehran Sahami, a computer science professor who once worked at Google, said later.

The change in curriculum coincided with an explosion of wealth and perceived self-importance in the Valley. The iPhone opened up the potential for thousands of new businesses built around apps, and when its creator died he earned rapturous comparisons to Thomas Edison. Facebook emerged as the fastest-growing internet company of all time, and the Arab Spring made its influence seem benign rather than ominous. As the economy recovered from the recession, investors decided to park their money in startups like Uber and Airbnb that might one day become the next Google or Amazon. A 2013 video by the nonprofit Code.org featured CEOs, Chris Bosh, and will.i.am comparing computer programmers to wizards, superheroes, and rock stars.

Stanford and its students eagerly embraced this cultural shift. John Hennessy, a computer science professor who became president of the university from 2000 to 2016, served on Google’s board of directors and is now the executive chairman of Google parent company Alphabet. LinkedIn founder and Stanford alum Reid Hoffman introduced a new computer science course called Blitzscaling and brought in high-profile entrepreneurs to teach students how to “build massive organizations, user bases, and businesses, and to do so at a dizzyingly rapid pace.” (Elizabeth Holmes was among the speakers.) Mark Zuckerberg became an annual guest in Sahami’s popular introductory computer science class. “It just continued to emphasize how privileged Stanford students are in so many ways, that we have the CEO of Facebook taking time out of his day to come talk to us,” says Vinamrata Singal, a 2016 graduate who had Zuckerberg visit her class freshman year. “It felt really surreal and it did make me excited to want to continue studying computer science.”

In 2013, Stanford began directly investing in students’ companies, much like a venture capital firm. Even without direct Stanford funding, the school’s proximity to wealth helped plenty of big ideas get off the ground. Evan Spiegel, who was a junior at Stanford in 2011 when he started working on Snapchat, connected with his first investor via a Stanford alumni network on Facebook. “Instead of starting a band or trying to make an independent movie or blogging, people would get into code,” says Billy Gallagher, a 2014 graduate who was the editor-in-chief of the school newspaper. “It was a similar idea to, ‘Here’s our band’s vinyl or our band’s tape. Come see us play.’”

..But it’s not just that coding was a creative outlet, as is often depicted in tech origin stories. Working at a big Silicon Valley company also became a path to a specific kind of upper-crust success that students at top schools are groomed for. “Why do so many really bright young kids go into consulting and banking?” asks Gallagher. “They’re prestigious so your parents can be proud of you, they pay really well, and they put you on a career path to open up new doors. Now we’re seeing that’s happening a lot with Google and Facebook.”

By the time Niu arrived in 2014, computer science had become the most popular major on campus and 90 percent of undergrads were taking at least one CS course. As a high schooler, her knowledge of Silicon Valley didn’t extend much further than The Internship, a Vince Vaughn–Owen Wilson comedy about working at Google that doubled as a promotional tool for the search giant. She soon came to realize that landing a job at one of the revered tech giants or striking it rich with an app were Stanford’s primary markers of success. Her coursework was largely technical, focusing on the process of coding and not so much on the outcomes. And in the rare instances when Niu heard ethics discussed in class, it was often framed around the concerns of tech’s super-elite, like killer robots destroying humanity in the future. “In my computer science classes and just talking to other people who were interested in technology, it didn’t seem like anybody really cared about social impact,” she says. “Or if they did, they weren’t talking about it.”

In the spring of her freshman year, Niu and two other students hosted a meeting to gauge interest in a new group focused on socially beneficial uses of technology. The computer science department provided funding for red curry and pad thai. Niu was shocked when the food ran out, as more than 100 students showed up for the event. “Everybody had the same experience: ‘I’m a computer science student. I’m doing this because I want to create an impact. I feel like I’m alone.’”

From this meeting sprang the student organization CS + Social Good. It aimed to expose students to professional opportunities that existed outside the tech giants and the hyperaggressive startups that aspired to their stature. In its first year, the group developed new courses about social-impact work, brought in speakers to discuss positive uses of technology, and offered summer fellowships to get students interning at nonprofits instead of Apple or Google. Hundreds of students and faculty engaged with the organization’s programming.

In Niu’s mind, “social good” referred mainly to the positive applications of technology. But stopping bad uses of tech is just as important as promoting good ones. That’s a lesson the entire Valley has been forced to reckon with as its benevolent reputation has unraveled. “Most of our programming had been, ‘Look at these great ways you can use technology to help kids learn math,’” Niu says. “There was this real need to not only talk about that, but to also be like, ‘It’s not just that technology is neutral. It can actually be really harmful.’”

Many students find it difficult to pinpoint a specific transgression that flipped their perception of Silicon Valley, simply because there have been so many.

The torrid pace of bad news has been jarring for students who entered school with optimistic views of tech. Nichelle Hall, a senior majoring in computer science, viewed Google as the ideal landing spot for an aspiring software engineer when she started college. “I associated it so much with success,” she says. “It’s the first thing I thought about when I thought about technology.” But when she was offered an on-site interview for a potential job at the search giant in the fall, she declined. Project Dragonfly, Google’s (reportedly abandoned) effort to bring a censored search engine to China, gave her pause. It wasn’t just that she objected to the idea on principle. She sensed that working for such a large corporation would likely put her personal morals and corporate directives in conflict. “They say don’t do evil and then they do things like that,” she says. “I wasn’t really into the big-company idea for that reason. … You don’t necessarily know what the intentions of your executives are.”

  • ..Google has hardly been the most damaged brand during the techlash. (The company says it has not seen a year-over-year decline in Stanford recruits to this point.)
  • Students repeatedly bring up Facebook as a company that’s fallen out of favor.
  • Uber, with its cascade of controversies, now has to “fight to try and get people in,” according to junior Jose Giron.
  • And Palantir, the secretive data-mining company started by Stanford alum Peter Thiel, has also lost traction due to Thiel’s ties to Trump and worries that the company could help the president develop tech to advance his draconian immigration policies. “There’s a growing concern over your personal decision where to work after graduation,” Sun says.

There’s a lot of personal guilt around pursuing CS. If you do that, people call you a sellout or you might view yourself as a sellout. If you take a high-paying job, people might say, ‘Oh, you’re just going to work for a big tech company. All you care about is yourself.’”

Landing a job at a major tech firm is often as much about prestige as passion, which is one reason the CS major has expanded so dramatically. But a company’s tarnished reputation can transfer to its employees. Students debate whether fewer of their peers are actually taking gigs at Facebook, or whether they’re just less vocal in bragging about it. At lunch at a Burmese restaurant on campus, Hall and Sun summed up the transition succinctly. “No one’s like, ‘I got an internship at Uber!’” Sun says. Hall follows up: “They’re like, ‘I got an internship … at Uber …’”

The concerns are bigger than which companies rise or fall in the estimation of up-and-coming engineers. Stanford and computer science programs across the country may not be adequately equipped to wade through the ethical minefield that is expanding along with tech’s influence. Sahami acknowledges that many computer science classes are designed to teach students how to solve technical problems rather than to think about the real-world issues that a solution might create. Part of the challenge comes from computer science being a young discipline compared to other engineering fields, meaning that practical examples of malpractice are emerging in real time from today’s headlines.

Vik Pattabi, a senior majoring in computer science, originally studied mechanical engineering. In those classes, students are constantly reminded of the 1940 collapse of Tacoma Narrows Bridge: A modern marvel was destroyed because its highly educated engineers did not foresee all the possible threats to their creation (in that case, the wind). Pattabi’s CS coursework hasn’t yet included a comparable example. “A lot of the second- and third-order effects that we see [in] Silicon Valley have happened in the last two or three years,” Pattabi says. “The department is trying to react as fast as it can, but they don’t have 30 years of case studies to work with.”

Another issue is the longstanding divide on campus between the engineering types—known as “techies”—and the humanities or social sciences majors, known as “fuzzies.” Though the school has focused more on interdisciplinary studies in recent years, there remains a gap in understanding that’s often filled in by stereotype. This sort of divide is a common aspect of college life, but the stakes feel higher when some of the students will one day be programming the algorithms that govern the digital world. “There’s things [said] like, ‘You can’t spell fascist without CS.’ People will tell you things like that,” Hall says. “I think people may feel antagonized.”

The school’s deep ties to the Bay Area’s corporate giants, long a much-touted recruitment tool, suddenly look different in light of the problems that the industry has created. At the January career fair, members of Students for the Liberation of All Peoples (SLAP), an activist group on campus that aims to disrupt Stanford’s “culture of apathy,” handed out flyers that urged students not to work at Amazon and Salesforce because of their commercial ties to ICE and the United States Border Patrol. (Employees at the companies have raised similar concerns.) “REFUSE to be part of the Stanford → racist tech pipeline,” the flyer reads, in part.

Two students in the group said they were asked to leave the career fair by Computer Forum officials. When the students refused to comply, they say they were escorted out by campus police under threat of arrest for disrupting a private event. A Stanford spokesperson confirmed the incident. “The protesting students were disruptive and asked by police to leave,” the spokesperson said in an emailed statement. “The students were given the option to protest outside the event or in White Plaza. They chose to leave.”

For members of SLAP, the exchange reinforced the ways in which Stanford institutionally and culturally cuts itself off from the issues occurring in the real world. “You might hear this idea of the ‘Stanford bubble,’ where Stanford students kind of just stay on campus and they just do what they need to do for their classes and their jobs,” says Kimiko Hirota, a SLAP member and junior majoring in sociology and comparative studies in race and ethnicity, who participated in the career fair protest. She said many of the students she talked to had no idea about the tech firms’ government contracts. “To me the amount of students on campus that are politically engaged and are actively using their Stanford privilege for a greater good is extremely small.”

The computer science major includes a “technology in society” course requirement that can be fulfilled by a number of ethics classes, and teaching students about their ethical responsibilities is a component of the department’s accreditation process. CS + Social Good has expanded its footprint on campus, teaching more classes and organizing more events like the Theranos talk starring the whistleblowers. Yet the flexibility of the CS major cuts both ways. It means that students who care to take a holistic approach to the discipline can combine rigorous training in code with an education in ethics; it also means that it remains all too easy for some students to avoid engaging with the practical ramifications of their work. “You can very much come to Stanford feeling very apathetic about the impact of the technology and leave just that way without any effort,” Hall says. “I don’t feel as though we are forced to encounter the impact.”

On a Wednesday afternoon, students spill into a lobby in front of a standing-room-only auditorium in the School of Education, where Jeremy Weinstein is talking about the promise and perils of using algorithms in criminal justice. Next year Californians will vote on a bill that would replace cash bail with a computerized risk-assessment system that calculates an arrested person’s likelihood of returning for a court appearance. The idea is to give people who can’t afford to make bail another way to get out of jail through a fairer policy. But such algorithms have been found to reinforce racial biases in the criminal justice system, according to a ProPublicainvestigation. Instead of being a solution to an unfair process, poorly implemented software could create an entirely new form of systemic discrimination. Students were asked to vote on whether they supported cash bail or the algorithm. The class was evenly split. Unlike in most CS classes, Weinstein could not offer students the comfort of a “correct” answer. “We need to deconstruct these algorithms in order to help people see that technology is not just something to be trusted,” he says. “It’s not just something that’s objective and fair because it’s numerical, but it actually reflects a set of choices that people make.”

Though Weinstein is a political science professor, he’s one of three educators leading the new version of the CS department’s flagship ethics course, CS181. Teaching with him are Sahami, the computer science professor, and Rob Reich, a political science professor and philosopher. The trio devised the course structure over a series of coffee-fueled meetings as the tech backlash unfolded during the past year and a half. After discussing algorithmic bias, the class will explore privacy in the age of facial recognition, the social impacts of autonomous technology, and the responsibilities of private platforms in regard to free speech. The coursework is meant to be hands-on. During the current unit, students must build their own risk-assessment algorithm using an actual criminal history data set, then assess it for fairness. “We run it like a talk show,” Weinstein says. “There’s a lot of call-and-response, asking questions, getting people to talk in small groups.”

While Stanford’s computer science program has had an ethics component for decades, this course marks the first time that experts in other fields are so directly involved in the curriculum. About 300 students have enrolled in the course, including majors in history, philosophy, and biology. It provides an opportunity for the techies and fuzzies to learn from one another, and for professors removed from the Valley’s tech culture to contextualize the industry’s societal impacts. In the course overview materials, the moral reckoning occurring in the tech sector today is compared to the advent of the nuclear bomb.

The course’s popularity is a sign that the gravity of the moment is weighing on many Stanford minds. Antigone Xenopoulos, a junior majoring in symbolic systems (a techie-fuzzie hybrid major that incorporates computer science, linguistics, and philosophy), is a research assistant for CS181. She wasn’t the only student who quoted a line from Spider-Man to me—with great power comes great responsibilitywhen referencing the current landscape. “If they’re going to give students the tools to have such immense influence and capabilities, [Stanford] should also guide those students in developing ethical compasses,” she says.

 ..While the early years of the decade saw prominent tech executives like Holmes and Zuckerberg teaching students how to lifehack their way to success, the new ethics course will bring in guest speakers from WhatsApp, Facebook, and the NSA to answer “hard questions,” Sahami says “I wouldn’t say industry is influencing Stanford,” he says. “I would say the relationship with industry allows us to have more authentic conversations where we’re really bringing in people who are decision-makers in these areas.”
.. Some of the more critical voices from within the industry are also taking on more permanent roles at Stanford. Alex Stamos, the former chief security officer at Facebook, taught a “hack lab” for non-CS majors last fall, helping them understand cybersecurity threats. He’s now developing a more advanced computer science course, to be piloted later this year, that explores trust and safety issues in the era of misinformation and widespread online harassment. Stamos led Facebook’s internal investigation into Russian political interference on the platform and clashed with top executives over how much of that information should be made public. He left the company in August to join Stanford, where he hopes to impart lessons from his time battling a digital attack that was waged not through hacking, but through ad purchases, incendiary memes, and politically charged Facebook events. “One of the things we don’t teach computer science students is all of the non-technically advanced abuses of technology that cause real harm,” Stamos says. “I want to expose students to [things like], ‘These are the mistakes that were made before, these are the kinds of problems that existed, and these are the company’s reactions to those mistakes.’”

Stamos rejects the idea that ethics is the correct framework to think about addressing tech’s most pressing issues. “The problem here is not that people are making decisions that are straight-up evil,” he says. “The problem is that people are not foreseeing the outcomes of their actions. Part of that is a lack of paranoia. One of our problems in Silicon Valley is we build products to be used the right way. … It’s hard to envision all the misuses unless you understand all the things that have come before.”

While he says that Stanford bears some responsibility for the Valley’s tunnel vision, he praises the school for welcoming tech leaders with recent, relevant experiences to help students prepare for emerging threats. “When I was going to school, computers were important, but we weren’t talking about building companies that might change history,” Stamos says. “The students who come to me are really interested in the impact of what they do on society.”

Stamos regularly fields questions from students about whether to work at Facebook or Google. He tells them that they should, not in spite of the companies’ mounting issues, but because of them.If you actually care about making communication technologies compatible with democracy, then the place to be is at one of the companies that actually has the problems,” he says. “Not working at the big places that could actually solve it does not make things better.”

The tech giants continue to consolidate power even as they face withering criticism. Facebook’s user base growth accelerated last quarter despite its scandals. Uber will go public this year at a valuation as high as $120 billion. Apple, Amazon, and Google are all planning to open large new offices around the country in the near future. And for all the optimistic talk of working at ethically minded startups among students, creation of nascent businesses is at roughly a 40-year low in the United States. Small firms that enter the terrain of the Frightful Five are typically acquired or destroyed.

It is hard to find a Stanford computer science student, even among the ethically minded set CS + Social Good has helped cultivate, who will publicly proclaim that they’ll never work for one of these dominant companies, as all of them offer opportunities for high pay, engaging individual work, and comforting job security. International students have to worry about securing work visas however they can; students on financial aid may need to make enough money to support other family members. And for many others, it’s not clear that anything that’s happened in the Valley is truly beyond the pale. In that sense, the engineers are just like us, aghast at the headlines but still clicking away inside a system that’s come to feel inescapable. “These events feel too big for most students to take into account,” says Jason He, a master’s student in electrical engineering. “At the end of the day, I think for a lot of students who have been paying a lot of money for their education, if the six-figure salary is offered, it’s pretty hard for students to turn down.”

There is still an opportunity, the thinking at Stanford goes, for every company to do good. Nichelle Hall, the senior who declined the Google interview, landed a job working on Medium’s trust and safety team. But she recognizes that she may have set her qualms aside if Google had been her only employment option. “Some of the feedback that CS + Social Good gets is, ‘Oh, the members end up working for Facebook, they end up working for Google,’” says Hall, who’s been involved with the organization since 2017. “People who care about this intersection of social impact and computer science will go to these companies and do a better job than if they weren’t interested in this stuff.”

Impact is the word that I heard more than any other while on campus. It’s how students framed their decision to go to Stanford, to pursue a career in computer science, to do good in the world after graduating. It’s a word that Hoffman used to describe his Blitzscaling class, and one Holmes used to explain to students why she dropped out of school. “I had the tools that I needed to be able to go out and begin making this impact,” she said. It’s the currency of Silicon Valley, that people spend for good and for ill.

The ability to create impact with a few lines of code has long been what separated software engineers from the rest of us, and turned the Valley into a self-proclaimed utopia of young rebels using technology to save the world from its older, antiquated self. But that’s not the image anymore. Now aspiring engineers draw a comparison between their chosen profession and investment banking. The finance industry wrecked the world a decade ago because of its misunderstanding of complex, automated systems that spun out of control—and its confidence that someone else would ultimately pay the price if things went wrong. You see this confidence in Zuckerberg’s incredulous response when anyone suggests that he resign, and in Google CEO Sundar Pichai’s initial refusal to testify before Congress. And you can see it at Stanford, where the endowment has never been higher, the fundraising has never been easier, and the career fair is still filled with slogans vowing to make the world a better place.

Perhaps this entire strip of land known as the Valley will fully calcify into a West Coast Wall Street, where the people with all the insider knowledge profit off the muppets who can’t stop using their products. If today’s young tech skeptics turn to cynics when they enter the working world, such a future is easy to imagine. But—and this is the hopeful, intoxicating, dangerous thing about technology—there’s always bright minds out there who think they can build a solution that just might fix this mess we’ve made. And people, especially young people, will always be enthralled by the romance of a new idea. “We’re creating things that haven’t necessarily existed before, and so we won’t be able to anticipate all the challenges that we have,” says Hall, who graduates in just four months. “But once we do, it’s important that we can reconcile them with grace and humility. I’m sure it will be a hard job, but it’s important that it’s hard. I’m up for the challenge.”

Brands Invent New Lines for Only Amazon to Sell

Amazon gets exclusive products, while brands receive faster customer feedback, marketing support and increased sales

Manufacturers would profit more from selling their products through a range of retailers, but they say they are eager to offer up their concepts solely to Amazon. In exchange, brands get help launching their products on Amazon.com, faster customer feedback when testing new products, marketing support and revenue from the sales. They also can appear at the top of search results—a big draw, given Amazon’s platform lists an estimated 550 million items.

.. Amazon, on its own, also has been quietly growing the number of its in-house brands in recent years. Analysts estimate they now have more than 100. Those include the more obvious AmazonBasics brand, which makes everything from suitcases to batteries; the Happy Belly brand of foods; and the Mama Bear baby products brand. Amazon sometimes promotes its own brands higher in search results, like “Amazon’s Choice” and sponsored items, or default results in voice searches using Amazon’s Alexa virtual assistant.

In-house brands often generate a higher profit margin for retailers, including Amazon, and can draw in customers because they can’t find those brands elsewhere. But developing a new brand and formulating products takes time. Amazon spent several years crafting and launching brands like Happy Belly and Mama Bear. By getting other brand manufacturers to do that work instead, Amazon can ramp up its private-brand offerings faster and at a lower cost, people familiar with the program said.