Amazon's bizarre and troubled 2019: From HQ2 to Bezos blackmail
The e-commerce titan weathered many scandals, but its business kept charging to new heights.
Ben Fox RubinFormer senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
Signs this was going to be a difficult and strange year for Amazon surfaced just nine days into 2019.
CEO Jeff Bezos tweeted out news that he and MacKenzie, his wife of 25 years, planned to divorce. The initial message sounded heartfelt, but the story eventually morphed into a wild blackmail plot involving nudes of the world's second wealthiest person.
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This saga provided a suitable tone for the rest of the year, which became one of Amazon's most turbulent in its two-decade history, with the company buffeted by scandals involving Alexa human reviewers, continued criticism over its warehouse working conditions, its choice for HQ2 and its Ring video doorbell business. Now, both Bezos and Amazon reach the end of 2019 with their reputations irretrievably changed, left to navigate 2020 amid a much more hostile environment for tech leaders and their corporations.
Amazon wasn't left alone to wallow in infamy, as Facebook and Google were humbled by their own repeated stumbles and fresh antitrust investigations.
Watch this: What was 2019's biggest tech story this year? (The Daily Charge, 12/12/2019)
But, hey, the thing about Amazon is that it's huge and customers love it, which allows it to weather many storms. So despite a checkered year, the world's largest e-commerce company is still every bit as dominant as it was in January, and Bezos is still filthy rich. That will give both an opportunity to fix problems next year instead of being consumed by them.
There were so many big events, both good and (mostly) bad, for Amazon this year that it's worth taking a look back at all that happened.
The biggest divorce in modern history
Divorce is tough. Divorce when you're Bezos is tough, but also an international thriller filled with unexpected twists.
Hours after Bezos announced his divorce, the National Enquirer tabloid reported that he had been dating Lauren Sanchez, a former TV reporter who founded an aerial film production company. The paper said it contacted Bezos two days earlier about its plans to publish this story, which included a series of flirty texts from Bezos to Sanchez, likely forcing Bezos' hand in announcing the split.
The situation took a surprising turn when Bezos published a Medium post claiming the Enquirer had been trying to blackmail him. He said the publication was threatening to release nude photos of him unless he ended a private investigation into how the tabloid got a hold of his text messages to Sanchez. (They were leaked by her brother.) It also wanted him to publicly state he found no proof the tabloid's reporting was politically motivated, since the Enquirer has close ties to President Donald Trump, and Trump has publicly feuded with Bezos for years.
Bezos' decision to stand up against this alleged plot won him praise and allowed him to diffuse a potentially damaging situation. It also altered the public perception of Bezos from a press-shy nerdy tech mogul into a champion against blackmail and regular tabloid character.
The couple finalized the divorce in early July, with MacKenzie Bezos receiving 25% of Jeff Bezos' stake in Amazon. She's now the 26rd richest person in the world, worth $35.4 billion, according to Bloomberg. Jeff Bezos, worth $110 billion, has over the last two months traded the world's richest title back and forth with Bill Gates.
Watch this: Toronto makes its pitch for Amazon HQ2 and tech greatness
The HQ2 debacle
Yes, the divorce was a mess, but the scandal that most damaged Amazon's public reputation this year involved HQ2.
HQ2 was Amazon's nickname for its planned second major headquarters outside of Seattle. It would cost $5 billion and bring in 50,000 new employees. The project quickly became the thing city leaders across North America talked about, viewing it as a generational opportunity for whichever lucky city landed the prize.
To heighten the public fascination with the development, Amazon made parts of the selection process public, forcing hundreds of cities to battle each other for Bezos' attention. A municipality even voted to rename 345 acres of its land as the new city of Amazon, Georgia, if it won.
The backlash against HQ2 started even before the official announcement and grew as local activist organizations and unions banded with state and local politicians to block the project. Critics, who included New York Rep. Alexandria Ocasio-Cortez, focused on the development's $3 billion in subsidies, as well as complaints about Amazon's work with US Immigration and Customs Enforcement, reputation for fighting against worker unionization and mistreatment of warehouse employees.
Just three months after Amazon announced the HQ2 winners, the company on Valentine's Day abruptly canceled its plans to build in New York, despite a year of research and planning. Amazon nixed the deal just a week after Bezos revealed the Enquirer blackmail plot, adding to the appearance that things were unraveling at the company.
The cancellation tarnished what had been a year-long love affair for all things Amazon, with city leaders crowing about the online store's innovative technologies and high-paying jobs. Instead, HQ2 dredged up a litany of criticisms against the company. Protests in New York City against Amazon haven't stopped since. New York's reputation took a hit, too, with some viewing the city as unfriendly to new business.
Amazon had pointed to public polls that strongly supported the project but added it left because several state and local politicians wouldn't work with them.
While community members in Arlington have raised opposition to that project, they haven't enjoyed the backing of local politicians or a large swath of the public, which has helped that development move forward.
Human reviewers scandal
In April, Bloomberg reported that human reviewers were listening to people's Alexa recordings.
This practice is common in voice computing and a critical piece for ensuring the technology works, as human help machines decipher garbled language, double meanings and accents. Still, many were surprised by the story, especially because it revealed that sometimes private conversations were being reviewed.
Reports followed that people were reviewing audio from Apple's Siri, Google Assistant, Microsoft's Cortana and even Facebook Messenger, with the stories often mentioning that the audio would sometimes include medical records, drug deals and people having sex.
The companies responded by tightening up their policies around human reviewers, with Apple and Google taking the strongest approach by only listening to recordings from people who opted into its review process. Amazon said it only ever listened to a fraction of 1% of user recordings and says it now lets folks opt out of the practice.
Amazon has also had to deal with heavy criticism of Ring, its video doorbell company. Many news reports have discussed Ring's partnerships with hundreds of local police departments and their potential for expanding surveillance of the public.
Despite the controversies, sales for Ring device and voice-controlled smart speakers have increased from the year before.
The change has already had significant impacts, with Amazon splurging billions of dollars to power the speedier service, depressing its profits in the process. Walmart in May responded with its own one-day shipping program. Plenty of other retailers were left to plan their strategies for a new world of next-day deliveries.
So far, Amazon is seeing this big bet bear fruit, with its third-quarter revenue jumping 24% -- it's best showing in a year. Amazon now ships over 10 million products next day coast to coast for Prime customers, and that number should keep rising. Additionally, Amazon has said it's brought in more Prime members worldwide this year than any past year.
"We are energized by the overwhelmingly positive response to One-Day Delivery," Maria Renz, Amazon's vice president of Global Delivery Experience, said in a statement. "Prime members have already ordered billions of items with Free One-Day Delivery in 2019, and we expect this year to be our fastest and biggest holiday yet."
Amazon's next steps to move even faster are already in process, with the company offering same-day and Prime Now two-hour deliveries in some cities. Longer term, it's working on delivery drones to fly items to people in 30 minutes.
Alexa on the go
Amid privacy concerns about voice assistants, Amazon kicked off its annual device launch event in September by discussing all the ways it's working to improve privacy features for its Echo devices and put more control in your hands.
Amazon hardware chief David Limp also used the event to reveal the next phase for Alexa. He showed off a new set of mobile devices that allow people to bring the voice assistant with them on the go. Those gadgets include the Echo Buds earbuds, Echo Frames smart glasses and Echo Loop ring.
These devices could turn Alexa from a smart-home operator to an all-day companion, making Alexa an even more useful assistant for users and helping Amazon tie those customers even closer to its ecosystem.
Troubles in DC
Amazon is among the four big tech companies who are facing heavy scrutiny from state and federal officials over their potential monopolistic practices. The others -- Facebook, Google and Apple -- have also faced a tumultuous 2019, with Facebook sustaining the worst backlash.
The outcome of these congressional, regulatory and states attorneys generals' investigations could be new laws to restrain these massive companies to help foster competition. Amazon, for example, controls 37.6% of US e-commerce, according to eMarketer. No. 2 is eBay, at 5.7%.
An even more extreme change could be the breakup of these tech giants, an idea floated by Democratic presidential candidate Sen. Elizabeth Warren.
The long-simmering feud between Bezos and Trump continues to come up too. Trump spent last year criticizing Amazon on a number of fronts. This year, questions arose whether Trump pushed a lucrative Defense Department contract, nicknamed JEDI, to Microsoft and away from Amazon to get at Bezos. Amazon is now suing the Pentagon over the decision.
Activism, both inside and outside, hits Amazon
The battle over HQ2 uncorked a torrent of negativity against Amazon that's been going on all year.
Internally, pockets of warehouse workers around the country have banded together to demand better working conditions. Those issues were highlighted by many investigative stories this year about fulfillment center workers facing injuries and being overworked. Amazon disputes many of these accounts, saying it has several layers of safety protocols at its warehouses.
Plus, corporate employees started the Amazon Employees for Climate Justice, pushing the company to make environmental changes, and Whole Worker is trying to get Whole Foods employees to unionize. Amazon said it already offers the kinds of benefits unions have been calling for, including a $15 minimum wage and career-growth opportunities. It also claims direct communication without a union go-between is more beneficial for employees.
"With more than 650,000 employees at Amazon, we have people with a wide range of opinions. This diversity of opinion makes us a better company," an Amazon spokesperson said about employees speaking out about various issues.
These groups have found support from a variety of immigrant and worker activist organization who helped organize HQ2 and Prime Day protests this year. More than 40 of these outside groups came together in November under one umbrella organization called Athena, creating a potentially more potent force against the e-commerce giant.
The good news for Amazon going into next year is that some of its biggest uproars, like the Bezos divorce and HQ2, didn't last. But other situations, like all these anti-Amazon protests and the antitrust investigations, have been rolling on for months.