In this file:
· Column: Jeff Bezos becomes the first CEO to break his pledge to dump the ‘shareholder value’ model
· Is Amazon's Search Algorithm Boosting its Own Products?
Column: Jeff Bezos becomes the first CEO to break his pledge to dump the ‘shareholder value’ model
By Michael Hiltzik, Los Angeles Times
Sep. 16, 2019
The most important question left by the recent pledge by nearly 200 major corporations to place their workers, customers, suppliers and communities ahead of their shareholders was: How will we know that the companies are adhering to the pledge?
Jeff Bezos, a signatory to the statement issued Aug. 19 by the Business Roundtable, and chief executive of Amazon and its subsidiary Whole Foods, has shown how we’ll know when companies are reneging. One signal would be cutting benefits for part-time employees. That’s exactly what Whole Foods just did.
As Business Insider first reported, Whole Foods has told employees working between 20 and 30 hours per week that they’ll lose access to the company health plan as of Jan. 1. Some will still be eligible for coverage via the Affordable Care Act marketplaces, but, of course, Whole Foods doesn’t pay any part of that.
The company told Business Insider, however, that it was taking the step “to better meet the needs of our business and create a more equitable and efficient scheduling model.”
It said that it is “providing team members with resources to find alternative healthcare coverage options, or to explore full-time, healthcare-eligible positions starting at 30 hours per week.” Business Insider calculated that the change will affect 2% of the workforce, or about 1,900 workers, based on the company payroll of 95,000 employees.
In an email, a company spokeswoman emphasized that “no jobs are being eliminated as a result of this change” and that all part-timers remain eligible for benefits that include company discounts and a 401(k) retirement plan, but didn’t comment on the estimate of affected workers.
The Whole Foods policy sheds some light on the Business Roundtable pledge. As we reported at the time, the statement issued by the big corporate lobbying organization represented a new approach to the issue of the “purpose of the corporation.” It effectively scrapped the prevailing model, which took the maximization of shareholder value as the paramount — sometimes the only —purpose of a corporation.
That model dated from 1970, when it was codified by the conservative economist Milton Friedman. It had been endorsed by the Business Roundtable as recently as 1997, when the group stated that “the paramount duty of management and of boards of directors is to the corporation’s stockholders.”
The new statement placed stockholders last among a corporation’s stakeholders. Its signatories explicitly committed themselves to “investing in our employees,” explaining: “This starts with compensating them fairly and providing important benefits.”
As one of the most recognizable names among the signatories and the richest in the world, Bezos helped immeasurably to give the statement credibility...
more, including links
Is Amazon's Search Algorithm Boosting its Own Products?
By Victoria Campisi, The Food Institute
Sep 17, 2019
Amazon reportedly adjusted its product-search algorithm to more prominently feature listings that are more profitable for the company, according to people familiar with the matter.
Sources claim private label executives argued Amazon should promote its own items in search results, much like grocery chains showcase their products alongside national brands, reported The Wall Street Journal (Sept. 16).
Amazon's rankings can make or break a product as the site's search bar is the most common way for U.S. shoppers to find items online. Nearly two-thirds of purchases come from the first page of search results, according to marketing analytics from Jumpshot.
The U.S. and the EU are examining Amazon's dual role as a marketplace operator, as well as a seller of its own branded products. A skewed algorithm could drive customers toward thousands of Amazon's own products that deliver higher profit margins than competing listings.
However, Amazon's lawyers rejected an internal proposal for how to add profit directly into the algorithm, saying it represented a change that could create trouble with antitrust regulators, according to one of the people familiar with the matter. The Amazon search team, dubbed A9, viewed the profitability push as violating the company's principle of doing what is best for the customer.
"This was definitely not a popular project," said one of the people familiar with the matter. "The search engine should look for relevant items, not for more profitable items."
Amazon considered long-term profitability for many years and does look at the impact of it when deploying an algorithm, according to the company. "We have not changed the criteria we use to rank search results to include profitability," said Amazon spokeswoman Angie Newman.
The company declined to say why A9 engineers considered the profitability emphasis to be a significant change in the algorithm. The people who worked on the project said they didn't know how much the change has helped Amazon's own brands, as the algorithm still stresses metrics such as unit sales.
Amazon's private label business, about 1% of retail sales, would represent less than $2 billion in 2018. The business is expected to post $31 billion in sales by 2022, according to SunTrust Robinson Humphrey.
Although Amazon does not publicly share a list of its private brands, it's known that the company owns at least 70, reported Fortune (Sept. 16). In addition to owning Whole Foods, Amazon sells snacks under the brand name Happy Belly.
Private label market share has reached nearly 25% of unit sales in the U.S. and is expanding faster than national brands, according to Private Label Trade Show. In 2018, private label grew by 4.4%, four times as much as national brands, representing a gain of $5.5 billion.
Amazon's private-label products are designed to...
more, including links