Amazon tax boycott

A few weeks ago a senior Google spokesperson was asked about the tax affairs of Google. By funnelling money through Bermuda the multinational was able to significantly reduce their corporation tax bill. His reply was something along the lines of  ‘well that’s Capitalism. If we can avoid paying tax, why shouldn’t we?” To the pros …

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The monopoly power of Amazon

In the late nineteenth century, firms with great monopoly power were the US railroads and oil companies. These days we have a new set of monopolies, companies like Google, Amazon.  For example, Amazon has over 30% of the online retail of books and DVDs.  Also, a firm with a monopoly selling power like Amazon can often create monopsony buying power. If you are an author, there are only a limited number of firms who will take your e-book and sell it for you. Given the little choice of firms to retail your product, puts authors and publishers in a weak position, meaning Amazon can dictate the amount they pay to authors – especially small independent authors.

Amazon market share of books in US

If you want to sell e-books, Amazon is a dominant firm. In 2012 in the US, Amazon has 27% of the market share for selling book units (traditional and e-books). (book publisher).

Share of online books, DVDs & music

Online Books DVDs & Music Sales
Source

For online sales, Amazon’s position is greater. With online sales, rising to 36% of the market.

Market Share of e-Book sales

For sales of e-books, Amazon’s share of the market is 60% in 2012 – (down from 90% in 2007). (link) Apple has 10%, and Barnes & Nobel 25%.

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Would People Boycott Google and Amazon over Tax?

Following on from a recent post about companies who avoid paying tax. It’s interesting to try and understand why some companies have been much more vulnerable to protest about the issue – but some companies seem almost insulated from protest.

For examples, Starbucks has been hit by high profile boycott. Protesters from UK Uncut have been making their voice heard both outside and inside Starbucks across the country. (It has proved good news for Costa, who have recorded a record jump in sales over recent weeks – Costa attract 4m customers a week at Guardian)

It seems there is a certain receptivity to boycotting a high street coffee shop like Starbucks. In Oxford, if you don’t want to go to Starbucks, there are three Costas all within a couple of minutes walk. As a result of the furore over tax payments, Starbucks brand image has definitely  been adversely affected. According to Market research, Starbucks is now less trusted than Parliament (link) and only slightly  more than News International.

respect-starbucks

However, interestingly, Amazon has been much less affected by the fallout than Starbucks. It’s much harder to organise a boycott of online companies. It’s more fulfilling to go on the high street and offer a physical protest. As a customer, there is a strong incentive to join in the boycott.

But, while we are happy to walk a few extra metres to buy a different coffee,  when it comes to the new monopoly Goliath’s of the modern age – Amazon and Google, would people feel strong enough about tax avoidance to look for alternatives?

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Impact of tax avoidance by Amazon

Directors of big multinationals such as Amazon, Google and Starbucks received a challenging investigation by MPs annoyed that big multinationals are avoiding paying corporation tax. An Amazon director was described as being ‘deliberately evasive’ and being unacceptably ignorant of who owned the Luxembourg based Amazon company – used to avoid UK tax. According to Conservative …

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