Not making enough money from hosting the CIA’s spy operations, Amazon goes all-in on government hand-outs
Amazon Leans on Government in Its Quest to Be a Delivery Powerhouse
WASHINGTON — Ever since Jeff Bezos started the website Amazon to sell books, he has wrestled with how to deliver its products as quickly and cheaply as possible. Today, Amazon, now a retail giant, remains obsessed with this issue, building its own fleet of drones, buying trailers for trucks and signing up drivers for on-demand deliveries.
And nowhere is the company’s push to become a logistics and delivery powerhouse more evident than here in the nation’s capital. Amazon has emerged as one of the tech industry’s most outspoken players in Washington, spending millions on this effort and meeting regularly with lawmakers and regulators.
Amazon has pushed officials to allow new uses for commercial drones, to extend the maximum length of trucks, to improve roads and bridges and to prop up a delivery partner, the United States Postal Service.
The efforts are mostly in the early stages, but Amazon already has detractors, particularly for its drone efforts. Some drone makers argue that Amazon is pushing too hard, too fast. And airline and pilots groups have said opening the skies to more commercial drones, which are remote-controlled flying machines, could create safety risks.
“Amazon is disrupting huge industries; retail was a start, then the enterprise market with its cloud platform and now transportation logistics,” said Colin Sebastian, a senior analyst at Robert W. Baird. “This is Jeff Bezos’s playbook, and achieving it by influencing legislation would be consistent with that plan.”
The money Amazon spent on lobbying in 2015 nearly doubled, to $9.4 million, compared with the year before, which helped to pay a bigger lobbying staff and pay for a new office to house them. The tally, compiled from public records by the Center for Responsive Politics, includes only the spending that Amazon must legally disclose.
Amazon’s figure still lags those of some companies that made camp in Washington long ago, like Boeing, which spent about $21 million in 2015. And it trails the leading tech lobbyist, Alphabet, Google’s parent, by several million. But Amazon’s spending grew at a faster pace than any other big tech company’s.
When Paul Misener, Amazon’s global head of policy, took over the company’s Washington office 15 years ago, he had a staff of two focused on retail tax laws and other technology-related issues. Amazon now has more than 60 people listed as its lobbyists — both employees and contractors — double what it had just two years ago, according to the data from the Center for Responsive Politics.
The lineup includes people as prominent as Trent Lott, the former Senate majority leader, who helps persuade members of Congress. Representatives for Amazon have met with lawmakers dozens of times in the last year. The efforts also reached NASA, the postal commission and the Department of Transportation, among others.
Amazon and Mr. Bezos, its chief executive, have other interests in Washington, too. Amazon is now a major government contractor with a $600 million cloud computing partnership with the C.I.A. And Mr. Bezos’s ownership of The Washington Post, which he bought in 2013, gives him a foothold in the political and media circles of Washington.
Amazon declined requests to comment for this article. But on a recent earnings call, Amazon’s chief financial officer, Brian Olsavsky, explained why Amazon wanted to move more aggressively into delivery.
“To properly serve our customers at peak, we’ve needed to add more of our own logistics to supplement our existing partners,” Mr. Olsavsky said. “That’s not meant to replace them.”
In addition, the company’s shipping costs rose 19 percent, to $5 billion, in 2015. The millions of members of its Prime annual subscription service, Amazon’s most frequent customers, have helped feed the surge. Those customers receive free shipping for many products.
Some analysts expect Amazon eventually to take over its entire logistics chain — in some cases, from factory to doorstep. Just this month, Amazon signed a deal to lease 20 Boeing cargo planes.
A few analysts got excited when Amazon referred to itself as a “transportation service provider” in a recent regulatory filing. The company, they suggested, could even become a competitor to UPS and FedEx.
Mr. Olsavsky insisted on the call that UPS and FedEx would continue to be important partners. FedEx’s chief executive, Fred Smith, also played down the possibility of Amazon becoming a rival. In a call with analysts and investors last week, he criticized “fantastical” reports about Amazon’s challenge to logistics companies.
Satish Jindel, founder of the SJ Consulting Group, which advises transportation and logistics firms, said, “If my package doesn’t get delivered to my expectations, most people don’t think of FedEx or UPS.” He added, “They think of the retailer, so Amazon is getting into drones and delivery to enhance the customer experience and have a bigger influence over the customer.”
Already, the company’s drone push in Washington has had some success. Amazon has worked with NASA, for example, to create an air traffic system that would establish lanes in the sky for drones.
Amazon has also urged Congress to adopt rules that would allow the retailer to fly drones beyond a pilot’s line of sight, a crucial hurdle to Amazon’s goal of operating drones from its warehouses. This effort is expected to face an important test soon. This month, the Senate Transportation Committee drafted a bill that would ensure rules for delivery drones within two years.
Airline and pilot groups have resisted many of Amazon’s proposed changes.
“The chances of a collision will go way up when you have more unmanned aircraft up,” said Chris Dancy, a spokesman for the Helicopter Association International, a trade group.
Some drone makers said in interviews that Amazon’s bold statements may be generating too much public angst, helping the safety advocates.
Amazon is arguing for changes in many other areas, too. Already, Mr. Misener, the lead lobbyist, has called for an overhaul of an arcane system of international delivery rates that he says give foreign e-commerce rivals an unfair advantage to deliver to American homes.
He also urged the approval of legislation that aims to improve roads, bridges and railways. The bill was passed by Congress and signed into law in December.
“The private sector cannot make all the necessary improvements” in transportation, Mr. Misener said in July during a Senate hearing, a message that he has repeated to members of Congress. “Government needs to keep up.”
Amazon has backed a proposal for 33-foot twin-trailer trucks, vehicles that would extend the current legal length of trucks by several feet; opponents say longer trucks could make roads more dangerous for other drivers.
“The 33-foot trucks are going to be safer,” Mr. Misener said last July, “because there will be fewer of them on the road, driving fewer miles.”
The proposal has been met with resistance from Ralph Nader, a longtime consumer advocate. He said he wrote Mr. Bezos, asking Amazon to stop its support of these trucks for safety reasons. He said Mr. Bezos never responded. The proposal was rejected last year as part of a broader transportation bill.
“Drones and longer trucks, what are all these efforts for?” Mr. Nader said in an interview. “To get you your toothpaste faster?”
Doris Burke contributed research.