Question

CASE STUDY 8.1 - AMAZON'S SILENT RISE TO THE TOP

Amazon, the Seattle-based Internet retailer, was started in 1994 as the 'Earth's biggest bookstore'. Besides selling books, the company has diversified into selling music and entertainment, as well as apparel, furniture, food, toys and jewellery. In recent years, the company has also added cloud infrastructure services to its remit and has become a producer of digital content, including Amazon Kindle, e-book readers, Fire tablets and Fire TV. Over the years, Amazon has slowly but steadily built its brand and reputation. Far from being just an online retailer, Amazon has become a true digital innovator, rivalling the likes of Google and Apple in its innovative prowess. The company is constantly innovating new digital products and offers a breadth of digi­tal services, ranging from marketplaces bringing buyers and sellers of local services together to e-book lending services. This constant innovation of products that are, upon launch, almost immediately in high demand stems from founder Bezos' vision for creating what he calls the 'world's most consumer-centric company'.

Corporate Silence

When he started Amazon in 1994, Jeff Bezos' personal traits - a competitive spirit, a loathing of taxes and government intrusion, a lack of sentimentality and a mistrust of the media - proved to be the perfect foundation for a young start-up that quickly gained ground. Those values appear to be, however, still very much alive in the company today. despite the fact that the company has become far bigger in size. In fact, Amazon is these days somewhat notorious for its lack of communication with the media. Some say that most of its communication efforts are not out in the open, but take place behind closed doors in the form of its communication staff lobbying legislators to pass, for example, favourable legislation on transporting Amazon pack­ages through drones in the air and through longer delivery trucks on the ground. This may well be the case, as its media relations demonstrate a largely stony, silent effort. The company does not appear to be pushing its stories into the media, nor does it often seem compelled, even in the face of ongoing media criticism, to respond. This way of handling the press is perhaps not unique to Amazon; Apple, Google and other high-tech giants often say very little in the press. This may work when trying to keep new products under wraps, but it is perhaps less effective when the company is being criticized or attacked in the media, with its reputation hanging in the balance.

An Ongoing Dispute in Book Publishing

A recent issue that flared in the media was the struggle between Amazon and the Hachette book group. Hachette was very vocal on the negotiation and its fight, with Amazon saying very little. The issue involved the difference of opinion on the royalty payment for Amazon and the pricing of e-books, which were no longer set but open for discussion. Amazon did not want to abide by the price that was set by Hachette, so that it, in effect, can decide itself on the appropriate pricing of books. This, however, would affect authors who would see their profits dwindle, and could in some cases not even make a profit at all. When the dispute continued, Amazon eliminated discounts and delayed the delivery time for books provided by Hachette, badly affecting the sales of Hachette books and pushing customers away for those titles. Throughout the dispute, Amazon remained largely silent, even when many well-known authors, readers and loyal customers waded in. In a post on its website, the company did, however, release a brief formal statement in which it declared that 'we are not optimistic that this will be resolved soon', seeing the issue as at the heart of its business model and the future of the publishing industry. In the same post, Amazon also oddly enough criticized the media for its `narrow' coverage of the dispute with Hachette, but had undertaken no media efforts of its own to balance out such coverage.

A Great Place to Work?

A second issue that emerged in the media in 2015 was a critique of the company's corporate culture. The New York Times published a scathing critique of a competitive and intense workplace environment faced by Amazon's white-collar employees. Whilst earlier coverage had detailed the conditions for workers in its warehouses. the New York Times feature documented what it saw as cruelty towards employees in the company's corporate headquarters, including gruelling working conditions and the rather harsh, even bullying, treatment of staff suffering personal crises, such as cancer and miscar­riage. Confronted by the article, communication staff did not immediately respond to The New York Times or to the general media who, following the feature, had also started to write about the work conditions at Amazon. Jeff Bezos did, however, issue an internal e-mail to employees, saying that the article 'claims that our intentional approach is to create a soulless, dystopian workplace where no fun is had and no laughter heard'. Bezos writes: 'I don't recognize this Amazon and I very much hope you don't, either ... I strongly believe that anyone working in a company that really is like the one described in the NYT would be crazy to stay. I know I would leave such a company'. In the e-mail, he also encourages staff to report the kind of negative experiences and management practices reported in the New York Times feature: 'Even if it's rare or isolated, our toler­ance for any such lack of empathy needs to be zero.' Whilst the company has remained largely silent on the external front, the vice president of corporate affairs for Amazon, Jay Carney, interestingly did post a message on Medium a few months after the New York Times piece was first published. In it, he criticizes the lead journalist for not checking her sources and for offering a rather one-sided account of Amazon's corporate culture. Carney also writes that through all their conversations with the lead journalist on the arti­cle, they 'were repeatedly assured that this would be a nuanced story that dove into what makes Amazon an exciting and fun place to be, not just a demandingplace to work'.

Apart from the question of what conditions at its headquarters may really be like, these two recent cases do reveal an interesting fact about Amazon. In contrast to what its steady rise in terms of the value of its brand and reputation would suggest, the company has been operating a very minimal approach to its media relations. Its record in terms of pushing stories in the press shows that Amazon has done very little of the kind, and equally when issues emerge in the media - such as the two issues described in this case - the company often remains silent, and for a prolonged period of time. It seems that communication practitioners in the company believe - and they may, at times, be right - that too strong a response to such issues may escalate them even further, turning them into real talking points in the public domain and affecting the company's reputation in turn. At the same time, with such a tacit response there is a real risk of such issues lingering and turning into a real crisis for the company, which may be one reason why, after a few months of silence, the company's vice-present of corporate affairs tried to set the record straight on the New York Times article.

QUESTION

1. In your point of view, what are the potential risks and rewards for Amazon in staying out of the limelight, in response to media coverage on its business conduct? (10m)

Answer 1

According to my point of view staying being less vocal and staying out of limelight can have a negative impact on reputation when a company is being criticized and attacked in media or in crisis time. Media coverage can also have an influence on the company’s reputation through increasingly determined opinions about the organization or through emphasizing issues. Remaining silent in case of the media coverage can be proved dangerous because if the company is having issues that have already emerged in media such as the critique of the corporate culture at Amazon and it can be a struggle between the Hachette Group and Amazon.

Amazon could be acting in such a way of avoiding the escalation of issues – by giving a strong response or could be turning to public discussion groups. This might have a negative effect on the reputation of the company. If we talk about the other side there is more risk that this tactic can turn to crises for the company. Communicating directly with the media, Amazon has the possibility to respond to the coverage containing rumors or might withhold information which is important. By doing this the company could have set the thing in the right way. It is really important for the PR professionals to maintain good relations with the journalists because they both have mutual trust and it will pay off in times of any scandal or crisis. Both parties need to interact and adapt. We can say that it is really important for the PR people to provide information to the journalists or by press releases or by calling a press conference etc.