Federal Reserve Chair Jerome Powell is grilled by Representative Katie Porter, a California Democrat, during his semi-annual congressional testimony Tuesday for his attendance at a party thrown by Amazon.com Inc. Chief Executive Officer Jeff Bezos last month.
Will you finally let your workers unionize?
As this was unfolding, most of Big Tech, including Amazon, sent white-collar workers home to “flatten the curve” and fight the pandemic. Tim saw company leadership go to great lengths to make sure this new system was working and actively seek feedback from the remote workers. Christy heard from a warehouse employee who said productivity targets made it difficult for workers to take a break even for hand washing without a mark on their record. Pay for warehouse workers starts at $15 an hour with minimal access to time off; in May Amazon ended the unpaid leave policy that for a few weeks allowed them to stay home if they had Covid-19 symptoms.The contrast in the treatment of knowledge and warehouse workers couldn’t be starker. Equally clear is the cause: One group has power, the other doesn’t.
Amazon’s decision to fire the activists was easy to make in the United States, where Amazon workers have no union and are left to fend for themselves. With no right to paid sick leave or protection from unfair dismissal, American workers are among the most vulnerable in the world to pressure from any employer, not just Amazon.
Union-represented Amazon workers in Spain, Italy, France and Germany initially failed to resolve their concerns through negotiation, but with court action, regulatory intervention and strikes, they got their needs addressed.
Let’s look at France: Unions there brought a civil case arguing that Amazon had taken inadequate steps to protect workers from infection risk and that it had sidestepped the unions’ statutory role. The court ordered Amazon to limit its sales to only “essential” items, or face harsh penalties until it could reach a safety agreement with the unions. Rather than negotiate, Amazon closed its French operations and appealed. But the appellate court also sided with the workers, who ultimately negotiated a settlement including mandatory union consultation over safety measures, union hiring of external experts to assess the measures’ effectiveness and a continued increase in workers’ hourly pay. The news from Europe shows that Amazon can work with unions and get good results.
Both of us want Amazon to share the wealth with workers and stop putting the relentless pursuit of revenue growth ahead of all other concerns. One way or another, this requires putting more power in the hands of workers. Regulation and legislation are part of the solution. But there’s no need to wait; power can be taken, not just given. That’s what unions are for.
Amazon is a data-driven company. It should recognize the evidence showing that countries with more collective bargaining have a stronger social fabric and better growth, and are more able to weather economic ups and downs. Businesses with collective bargaining relationships, including Auchan Retail and Carrefour, navigated the Covid-19 crisis with less disruption to their businesses and emerged with their reputations intact and even enhanced.
For its own future and the future of the global economy, Amazon should become more responsive to the women and men who’ve enriched shareholders and be willing to recognize and bargain with their representatives. When it comes to the rights of its workers, it should be a leader, not a laggard.
It’s not just Amazon: The need for more unionization is urgent across Big Tech. Amazon stands out because it combines the extraordinary profit margins of these companies with employing hundreds of thousands of front-line workers. There are fewer of these workers at the other iconic tech companies, but nevertheless their employees also deserve a voice over the issues that matter to them.
The question for Mr. Bezos and the billionaires of the world is: Are they ready to rise to the occasion? Will Big Tech listen to and work with its employees to help the world overcome the worst economic and social crisis in recent history?
Top executives at U.S.-traded companies sold a total of roughly $9.2 billion in shares of their own companies between the start of February and the end of last week, a Wall Street Journal analysis shows.
The selling saved the executives—including many in the financial industry—potential losses totaling $1.9 billion, according to the analysis, as the S&P 500 stock index plunged about 30% from its peak on Feb. 19 through the close of trading March 20.
The Journal examined more than 4,000 regulatory filings related to stock sales between Feb. 1 and March 19 by corporate officers of companies traded in the U.S. Avoided losses for the seller are based on the change in the value of each stock between when it was sold and March 20.
By far the largest executive seller was Amazon. AMZN +1.47% com Inc. Chief Executive Jeffrey Bezos, who sold a total of $3.4 billion in Amazon AMZN 1.32% shares in the first week of February, shortly before the stock market peaked, allowing him to avoid paper losses of roughly $317 million if he had held the stock through March 20, according to the Journal analysis.
The sales represented roughly 3% of Mr. Bezos’s Amazon holdings, according to the most recently available regulatory filings. He sold almost as much stock during the first week in February as he sold during the previous 12 months.
Amazon didn’t immediately provide a comment on behalf of Mr. Bezos.Bezos’s Stock SalesIn 2020, CEO Jeffrey Bezos has already soldmore Amazon stock than in any prior year.Sales of Amazon stock by Jeff BezosSource: SEC filingsNote: 2020 sales through March 19.billionFebruary and MarchRest of the year2010’12’14’16’18’2001234$5
There is no suggestion that the executives sold shares based on any inside information. The stock market hit an all-time high in February, and executives often sell shares early in the year for tax and other reasons, including preset trading strategies. But the amount of stock sold by executives and officers of U.S.-listed companies was up by roughly one-third from the comparable periods in the previous two years, according to the analysis of regulatory filings and data from S&P Global Market Intelligence.Jeff Bezos sold a total of $3.4 billion in Amazon shares between Feb. 3 and Feb. 6.Amazon.com share priceSources: FactSet (Amazon); SEC filings (Bezos sales)Dec. 30Jan. 13Jan. 27Feb. 10Feb. 24March 9March 231,6501,7001,7501,8001,8501,9001,9502,0002,0502,1002,150$2,200
During the same period in February and March of 2019, corporate officers sold about $6.4 billion worth of stock
While Mr. Bezos’s sales accounted for more than a third of the 2020 sales, thousands of other insiders sold stock. More than 150 executives and officers individually sold at least $1 million worth of stock in February and March after having sold no stock in the previous 12 months, the Journal analysis found.
Wall Street executives also sold large dollar amounts, including Laurence Fink, CEO of BlackRock Inc., who sold $25 million of his company shares on Feb. 14, pre-empting potential losses of more than $9.3 million and Lance Uggla, CEO of IHS Markit Ltd., a data and analytics firm, who sold $47 million of his shares around Feb. 19. Those shares would have dropped in value by $19.2 million if Mr. Uggla had retained them. A spokesperson said the shares were sold under a preset plan.
A spokesperson for BlackRock said Mr. Fink’s sales were a small percentage of his holdings and that he sold $18 million in stock around the same time last year. The sales were about 5% or less of Mr. Fink’s holdings, according to his latest filing.
Some of the nation’s most vulnerable industries are reeling because of the coronavirus pandemic, and the trading by top executives meant less in the way of personal stock losses.
Recent state government orders to limit gatherings have all but shut down some industries, and it is unclear how the public will react even when those lockdowns ease.
Some of the selling was prompted by government-sanctioned trading plans, known as 10b5-1 plans, that allow corporate executives and directors to set in advance the sale of stock for certain prices or dates.
The stock market’s plunge may have triggered some plans, depending on the details, says Adam Epstein, who advises companies on corporate governance practices.
“What doesn’t change—even if there is such a plan—is that optically from an investor’s perspective it is always bad for investors when CEOs sell shares,” Mr. Epstein said. He advises chief executives to construct their investment portfolios so they aren’t forced to sell shares in order to raise cash if their company’s stock falls sharply.
Some of the executives who sold stock came from industries most battered by the economic crisis. James Murren, outgoing CEO of MGM Resorts International, sold $22.2 million of his company’s stock, staving off a possible $15.9 million loss. The company’s shares closed at $9.11 on Friday, down 73% from their February high.
Mr. Murren sold the shares, around the market peak, on Feb. 19 and Feb. 20. A spokesperson noted that the sales came one week after Mr. Murren announced he was leaving MGM. On March 22, Nevada Gov. Steve Sisolak tapped him to lead the state’s response to the coronavirus outbreak.
Among the executives who sold stock this year but not last year was Marc Rowan, co-founder and director of Apollo Global Management Inc. He sold $99 million in February and early March, avoiding paper losses of about $40 million. A spokesperson pointed to an Apollo public filing that described a plan, put in place last fall, allowing Mr. Rowan to sell shares.
Last week, several members of Congress, their spouses and investment advisers drew fire because they sold stock after the lawmakers met to discuss the threat of coronavirus.
Sen. Richard Burr (R., N.C.) sits on two committees that received detailed briefings on the epidemic. On Feb. 13, he and his wife sold as much as $1.7 million in stock. Sen. Kelly Loeffler (R., Ga.) also sold shares.
Ms. Loeffler said she was unaware of the trades and that they were handled by advisers. Mr. Burr said he relied on public news reports in making his trading decisions.
Ms. Loeffler’s husband, Jeffrey Sprecher, chief executive of Intercontinental Exchange Inc., owner of the New York Stock Exchange, sold $18 million in shares of the company he heads during the period, including $15 million in March. That compares with a monthly average off less than $2 million stock in 2019, according to the analysis.
If he had held the stock, it would have declined by about $3 million in value, according to the Journal analysis. Intercontinental Exchange said in a statement that Mr. Sprecher’s sales were part of a prescheduled trading plan.
As the stock market fell, Marsh & McLennan Cos. CEO Daniel Glaser sold $26.5 million in stock, shaving $6.7 million in potential losses. Securities and Exchange Commission filings show the sales came under a preset plan and that he sold in March in the two previous years as well.
Bond-rating company Moody’s Corp. CEO Raymond McDaniel sold shares totaling $10 million, compared with his monthly average of $3.3 million in 2019. He spared himself about $2.7 million in paper losses through the trades, the Journal analysis shows.
A spokesperson for Moody’s said Mr. McDaniel’s sales were “carried out through an automated exercise of stock options pursuant to a Rule 10b5-1 trading plan put in place in November of last year.” The plan hasn’t been altered since that time, the spokesperson said.
Amazon is pointing the finger right at the president over the awarding of the JEDI military contract.
What did President Trump know and when did he know it? Whom did he pressure out of self-interest? Are there emails or tapes? And, maybe, let’s call some witnesses.
I am talking about a “Star Wars”-themed face-off between Mr. Trump and the Amazon founder and chief executive Jeff Bezos. Things got more problematic for the Trump administration last week when a judge ordered that work be stopped on a huge $10 billion, 10-year, cloud-computing project for the Defense Department called the Joint Enterprise Defense Infrastructure project, also known as JEDI.
The sealed opinion last week was a big initial win for Amazon, whose Amazon Web Services cloud-storage powerhouse division last year had called foul over the awarding of the contract to Microsoft. Amazon asserts that there were irregularities in the Pentagon procurement process.
Amazon is pointing the finger right at — you guessed it — Mr. Trump, who has spent a lot of time trashing Mr. Bezos along with his newspaper, The Washington Post, and the enormous company he founded, often conflating them all into one billionaire blob of a rival. The Grand Canyon-size gulf in business talent and wealth between the two surely is a factor here. There is a long history of petty comments by the commander in grief aimed at the internet legend.
And there was that report by a staff member for the former defense secretary, Jim Mattis, saying that Mr. Trump had expressed a desire to “screw” Amazon. (Even earlier, Mr. Trump declared during his campaign that the company was “going to have such problems” when he becomes president.)
The continuing public and private enmity is at least partly why Amazon is claiming it lost the bid. While Amazon had been seen as a front-runner for the contract, in October, it was awarded to tech’s other Seattle-based behemoth, Microsoft. Amazon sued in December.
Many think it’s an uphill battle for Amazon. But if the company continues winning legal motions, there is the possibility of a discovery process that could force the Trump administration to reveal what kind of pressure the president may have brought to bear to stop Amazon from winning the JEDI project. Some at Amazon believe the administration may have changed the terms of the proposal to advantage Microsoft.
Microsoft argues that it got the contract fair and square. Frank Shaw, a Microsoft communications officer, said the Defense Department “ran a detailed, thorough and fair process” and determined that its needs “were best met by Microsoft.” He said the company was “disappointed with the additional delay.”
For its part, the Pentagon is peddling the idea that the legal delay “deprived our war fighters of a set of capabilities they urgently need,” even though it was Mr. Trump who originally asked to have the bidding process reviewed last summer.
Some sources told me the government will seek to limit discovery to the technical record and rely on executive privilege to protect whatever Mr. Trump did or said related to the award (does the executive privilege excuse sound familiar?). That includes blocking testimony by Mr. Trump and Secretary of Defense Mark Esper.
The fact that Amazon has been hired by the federal government many times bolsters the company’s case that its loss of the JEDI project is part of the president’s vendetta against Mr. Bezos.
One oddity that Amazon will surely point out is that Mr. Esper recused himself from the process — citing a conflict of interest because of his son’s job at IBM. That’s unusual since IBM was not considered a top contender and weirder still since Mr. Esper did not step aside until the very last moment of deliberations. And he was the one who prolonged the bidding contest upon orders from Mr. Trump.
One of the most important factors in this battle — compared to a lot of other fights in which Mr. Trump delays and obfuscates and makes noise to muddy the waters — is Mr. Bezos’s tenacity. From my time spent with him in the days of Amazon’s founding, I know him well enough to say that he will fight as long as it takes, and he can outmaneuver any mud that Mr. Trump can throw at him.
Amazon has also been lucky since Mr. Trump’s behavior in the JEDI process seems to recall how he got into trouble with Ukraine and, more recently, with the Justice Department’s handling of the Roger Stone case (and really in so many instances). To that point, Amazon said in a statement, “President Trump has repeatedly demonstrated his willingness to use his position as president and commander in chief to interfere with government functions — including federal procurements — to advance his personal agenda.”
And that was the nicest part of the statement. Mr. Trump’s supporters may think that he brings it all and more when he is attacked. But I’d say Mr. Bezos brings it all to a fight — and also a drone howitzer, an army of lawyers and a huge wallet. And if Mr. Trump is already rattled politically by the willingness of the real billionaire Michael Bloomberg to go to the mattresses using his $62 billion fortune, remember that Mr. Bezos is more than twice as wealthy as that.
Mr. Bezos did just that this week with the announcement that he would devote $10 billion of his own money to fund climate change initiatives under the Bezos Earth Fund. Even as some denounce Amazon’s toll on the environment and call for taxing the company more, this laudable initiative was a smart move for Mr. Bezos and will burnish his reputation. It will also irritate Mr. Trump, no friend to climate change solutions.
Unfortunately, what is getting lost in these clashes of titans is that it is critical that the Pentagon modernize its tech as quickly as possible, as it faces challenges across the globe, most especially from China. Right now, the Defense Department is working with patched-up systems from the 1980s and 1990s.
So, given that both Microsoft and Amazon are U.S.-based giants, the mess that Mr. Trump has created with his careless words — and perhaps with his actions — only hurts the security of this country. So, while it might be called JEDI, it feels an awful lot more like “Spaceballs.”
Not surprisingly, American billionaires have dismissed recent wealth-tax proposals as an affront to the entrepreneurial spirit to which they attribute their massive wealth. But the ultra-rich never would have their great wealth without legal subsidies from the state and reliable enforcement by the courts.
NEW YORK – Economic inequality has moved to the top of the political agenda in many countries, including free-market poster children like the United States and the United Kingdom. The issue is mobilizing the left and causing headaches on the right, where wealth has long been viewed as worthy of celebration, not as demanding justification.
But today’s concentrations of wealth do demand justification. In 2018, Forbes listed three billionaires among its top ten most powerful people in the world. Next to the heads of states of Chinese President Xi Jinping, Russian President Vladimir Putin, US President Donald Trump, and German Chancellor Angela Merkel, one finds not only the Pope, but also Amazon founder Jeff Bezos, Microsoft co-founder Bill Gates, and Google co-founder Larry Page. All three owe their power not to public position or spiritual influence but to private wealth.
As contenders in the Democratic primary for the 2020 US presidential election, Senator Bernie Sanders of Vermont and Senator Elizabeth Warren of Massachusetts have promised to impose new taxes on the super-wealthy. Warren’s wealth-tax proposal – a levy of 2% on every dollar of net worth above $50 million, rising to 6% for fortunes greater than $1 billion – has ruffled billionaires’ feathers. According to Gates, he has paid more in taxes than almost anybody – some $10 billion. And while he would consider it “fine” if that figure had been doubled to $20 billion, he believes a much higher tax would threaten the incentive system that led him (and others) to invest in the first place.
For his part, Michael Bloomberg, the founder of the Bloomberg news empire, a former mayor of New York City, and now a Democratic presidential contender himself, argues that a wealth tax might be unconstitutional, and that it would turn the US into the likes of Venezuela. And not to be outdone, Facebook founder and CEO Mark Zuckerberg has suggested that taxing billionaires’ wealth would lead to worse outcomes than leaving it where it is, implying that the ultra-wealthy know better than the peoples’ elected representatives how tax revenues should be spent.
Note the sense of entitlement underlying each of these reactions. Each man’s billions, we are told, belong to him; he earned the money and should therefore get to decide how to spend it, be it on philanthropic projects, taxes, or neither. The billionaires tell us that they are willing to pay a fair share of taxes, but that there is some undefined threshold where the incentives to innovate and invest will be thrown into reverse. At that point, apparently, the ultra-wealthy will go on strike, leaving the rest of us worse off.
But this perspective ignores the fact that accumulated wealth is largely a product of law, and by implication of the state and the people who constitute it. As economist Thomas Piketty demonstrates in his 2014 book, Capital in the Twenty-First Century, the rich today hold most of their wealth in financial assets, which are simply legally protected promises to receive future cash flows. Take away legal enforceability, and all that remains is hope, not a secure asset.
Moreover, the private empires over which today’s billionaires preside are organized as legally chartered corporations, which makes them creatures of the law, not of nature. The corporate form shields the personal wealth of the founders and other shareholders from the corporation’s creditors. It also facilitates the diversification of risk within a company, by allowing discrete pools of assets to be created, each with its own set of creditors who are barred from making claims on another asset pool, even though the parent company’s management controls all of them.
Further, the company’s own shares can be used as currency when acquiring other companies. When Facebook bought WhatsApp, it covered $12 billion of the $16 billion purchase price with its own shares, paying only $4 billion in cash. And, as with Facebook, corporate law can be used to cement control by founders and their affiliates through dual-class share structures that grant them more votes than everyone else. As such, they need not fear elections or takeovers of any kind.
Finally, companies whose assets take the form of intellectual property (IP) and other intangibles tend to rely even more on the helping hand of the law. As of 2018, 84% of the market capitalization of the S&P 500 was held in such intangible assets. It takes a legal intervention to turn ideas, skills, and knowhow – which are free to be shared by anybody – into exclusive property rights that are enforced by the full power of the state. And in recent years, Microsoft and other US tech companies have boosted their earning power significantly by promoting US-style IP rules around the world through the World Trade Organization’s body for Trade-Related Aspects of Intellectual Property Rights (TRIPS).
To be sure, there are good reasons for states to adopt laws that empower private agents to reap the rewards of organizing businesses and developing new products and services. But let’s call a spade a spade and a (legal) subsidy a subsidy. While Bezos, Bloomberg, Gates, and Zuckerberg may well be savvy entrepreneurs, they also have benefited on a massive scale from the helping hand of legislatures and courts around the world. This hand is more contingent than the invisible one immortalized by Adam Smith, because its vitality depends on a widely shared belief in the rule of law. The erosion of that belief, not a tax, poses the greatest threat to billionaires’ wealth.
WASHINGTON— Amazon.com Inc. said President Trump exerted “improper pressure” on the Pentagon to keep a lucrative cloud-computing deal from going to his perceived enemy, company founder Jeffrey Bezos.
In a complaint filed in the U.S. Court of Federal Claims in Washington, Amazon said the president “launched repeated public and behind-the-scenes attacks” on the contract and the company to steer the contract away from Amazon and Mr. Bezos, according to the complaint, which was made public Monday.
Amazon was long considered the favorite to win the Joint Enterprise Defense Infrastructure, or JEDI, contract, which is valued at as much as $10 billion over the next decade. The company’s bid was clouded by conflict-of-interest allegations, however, which are still under investigation by the Pentagon’s inspector general.
While the Pentagon initially concluded that the alleged conflict didn’t affect the integrity of the procurement process, it nonetheless ruled in the end that Microsoft Corp. was more qualified for the job.
In its newly public bid protest, Amazon says that Pentagon officials made numerous missteps in evaluating its application because of pressure from Mr. Trump.
The president on July 19 called for an investigation of the Pentagon contract, before the award. “I’m getting tremendous complaints about the contract with the Pentagon and Amazon,” Mr. Trump told reporters at the time. “I will be asking them to look very closely to see what’s going on.” Mr. Trump also issued tweets in which he complained about the process.
Mr. Trump has blamed Mr. Bezos for unfavorable coverage of his administration in the Washington Post, which Mr. Bezos bought in 2013 for $250 million. The Post says its editorial decisions are independent.
In recent congressional testimony, a top Pentagon technology official, Dana Deasy, denied that Mr. Trump or the White House influenced the JEDI selection process.
But Amazon’s protest argues: “Rarely, if ever, has a President engaged in such a blatant and sustained effort to direct the outcome of a government procurement—let alone because of personal animus and political objectives.”
The White House referred questions to the Pentagon, which in a statement said the “selection decision was made by an expert team of career public servants and military officers from across the Department of Defense and in accordance with DOD’s normal source-selection process.”
“There were no external influences on the source selection decision,” the statement said. “The department is confident in the JEDI award and remains focused on getting this critical capability into the hands of our warfighters as quickly and efficiently as possible.”
Microsoft, which has intervened in the Amazon lawsuit to defend the award, didn’t immediately comment.
Among other evidence for Mr. Trump’s alleged bias, Amazon’s complaint cites a passage of a recent book by a former speechwriter for Jim Mattis, a former Trump defense secretary. Author Guy Snodgrass says in the book, “Holding the Line,” that Mr. Trump directed Mr. Mattis to “screw Amazon” out of the JEDI contract by blocking its chance to bid on the JEDI deal. “Mattis demurred,” he added.
Amazon also says the Defense Department took “numerous actions” during the evaluation process that disadvantaged Amazon.
For example, Amazon says that the Pentagon “at the eleventh hour” changed its interpretation of the bid criteria, rejecting Amazon’s plan to use existing data centers to help fulfill the contract requirements. That—along with other unfair actions by the Pentagon—resulted in increases in Amazon’s total evaluated price, the company said.
Politicians want to rein in the retail giant. But Jeff Bezos, the master of cutthroat capitalism, is ready to fight back.