By James V. Grimaldi
About 18 months ago a new nonprofit group called Free and Fair
Markets Initiative launched a national campaign criticizing the
business practices of one powerful company: Amazon.com Inc.
Free and Fair Markets accused Amazon of stifling competition and
innovation, inhibiting consumer choice, gorging on government
subsidies, endangering its warehouse workers and exposing consumer
data to privacy breaches. It claimed to have grassroots support
from average citizens across the U.S, citing a labor union, a
Boston management professor and a California businessman.
What the group did not say is that it received backing from some
of Amazon's chief corporate rivals. They include shopping mall
owner Simon Property Group Inc., retailer Walmart Inc. and software
giant Oracle Corp., according to people involved with and briefed
on the project. Simon Property is fighting to keep shoppers who now
prefer to buy what they need on Amazon; Walmart is competing with
Amazon over retail sales; and Oracle is battling Amazon over a $10
billion Pentagon cloud-computing contract.
The grassroots support cited by the group was also not what it
appeared to be. The labor union says it was listed as a member of
the group without permission and says a document purporting to show
that it gave permission has a forged signature. The Boston
professor says the group, with his permission, ghost-wrote an op-ed
for him about Amazon but that he didn't know he would be named as a
member. The California businessman was dead for months before his
name was removed from the group's website this year.
Free and Fair Markets, or FFMI, declined to reveal its funders
or disclose if it has directors or a chief executive.
"The bottom line is that FFMI is focusing on the substantive
issues and putting a spotlight on the way companies like Amazon
undermine the public good -- something that media outlets,
activists, and politicians in both parties are also doing with
increasing frequency," it said in a statement in response to
questions from The Wall Street Journal. "If Amazon can not take the
heat then it should stay out of the kitchen."
The creation of a group aimed solely at Amazon is an indication
of the degree to which competing companies have coalesced to
counter the growing and accumulated power of Amazon and how far
competitors are increasingly willing to go to counter-strike.
Lobbyists that exaggerate the extent of their grassroots support --
a practice known as "AstroTurf lobbying" -- are common in
Washington, but it is rare for a nonprofit group to be created for
the sole purpose of going after a single firm.
Amazon is facing additional opaque opposition as well, with
websites and articles popping up portraying the software giant as
the Evil Empire. The website Monopolyamazon.com, which does not
disclose who is behind it and registered its web address
anonymously, includes a handful of articles calling on the Defense
Department to reject Amazon's bid for a $10 billion cloud-computing
contract. For months last year, an anti-Amazon dossier circulated
in Washington alleging conflicts of interest in the Pentagon
procurement process and a chart from the document later reached
President Trump before he asked for a review of the Amazon bid.
Free and Fair Markets is run by a strategic communications firm,
Marathon Strategies, that works for large corporations, including
Amazon rivals. Marathon founder Phil Singer is a veteran political
operative who has worked as a top aide to Democrats Sen. Chuck
Schumer of New York and President Bill Clinton.
In a statement, Mr. Singer defended the group. "FFMI is not
obligated to disclose its donors and it does not," Mr. Singer
said.
Marathon initially asked for a fee of $250,000 per company to
fund the anti-Amazon group, according to a person at one of the
companies approached. Among those invited to fund the group but
declined were a trade association that includes members who compete
with Amazon, and International Business Machines Corp., according
to people familiar with the contacts. IBM, which declined to
comment, previously was a client of Marathon.
In a statement, Amazon said, "The Free & Fair Markets
Initiative appears to be little more than a well-oiled front group
run by a high-priced public affairs firm and funded by
self-interested parties with the sole objective of spreading
misinformation about Amazon."
Simon Property, the world's largest mall landlord, declined to
comment. Simon does not have any brick-and-mortar Amazon stores in
its roughly 200 malls, outlets and open-air centers in the U.S.,
whereas its peers with smaller portfolios count multiple Amazon
stores in theirs. The Indianapolis-based landlord recently launched
its own online shopping platform, Premiumoutlets.com.
Walmart funds the organization indirectly by paying an
intermediary that pays for Free and Fair Markets, according to
sources familiar with the arrangement. Walmart is a client of
Marathon.
Walmart spokesman Randy Hargrove said, "We are not financial
supporters of the FFMI but we share concerns about issues they have
raised." Mr. Hargrove declined to comment further.
The group's aim is to sully Amazon's image on competition,
data-security and workplace issues, while creating a sense of
grassroots support for increased government regulatory and
antitrust enforcement, according to people familiar with the
campaign.
Free and Fair Markets has lobbied the government for legislation
and investigations of Amazon, sent dozens of letters and reports to
Congress and staff, according to congressional staffers, published
scores of op-eds in local and online media and tweeted hundreds of
social media posts blasting Amazon.
Over the past year, many of the actions advocated by the group
have gained traction. Amazon has come under increasing antitrust
scrutiny from the Department of Justice, Federal Trade Commission,
states attorneys general and the European Union. In New York,
Amazon backed out of plans to open a second headquarters in Long
Island City after facing political opposition. Free and Fair
Markets campaigned against government subsidies to support the site
and tweeted more than 300 times on the topic.
Oracle provided financial support as part of an all-out strategy
to stop Amazon from getting a $10 billion mega-contract to handle
cloud computing for the Defense Department. The Pentagon eliminated
Oracle as a bidder in the first round. Kenneth Glueck, who runs
Oracle's office in Washington, confirmed that the computer
technology firm has contributed to the effort.
A goal of the organization was achieved in July when President
Trump said he wanted to conduct a review of the contract. In
August, the secretary of defense said he was investigating
conflict-of-interest allegations surrounding the $10 billion
contract known as Joint Enterprise Defense Infrastructure, or JEDI.
At the urging of President Trump, the bid award has been put on
hold during the review.
Mr. Trump, a frequent critic of Amazon, cited complaints about
the project from several of Amazon's competitors, which in addition
to Oracle included IBM and Microsoft Corp., saying he had heard the
contract "wasn't competitively bid." The contract has not been
awarded and Microsoft remains one of the two remaining bidders.
Though Free and Fair Markets has contacted members of Congress
and the administration, it has not registered as a lobbying
organization. Such groups are required to file with Congress if
more than 20% of their work involves lobbying. Marathon said it
complies with lobby disclosure rules.
The group's chief spokesman is Robert Engel, the retired chief
executive of CoBank, an agriculture bank in Denver. Mr. Engel has
published more than 20 op-eds blasting Amazon in print and online
news publications across the country including in The Philadelphia
Inquirer, Pittsburgh Post-Gazette, Houston Chronicle, The Hill and
RealClearPolicy.com.
None of the articles notes that Mr. Engel's group is funded by
rivals of Amazon.
A spokeswoman for The Hill said the publication was unaware of
the funding sources and failure to disclose such payments violates
a standard written agreement all op-ed writers are required to
sign.
Sandy Shea, managing editor of opinion for the Inquirer's parent
company, the Philadelphia Media Network, said, "We aren't equipped
to investigate the makeup or structure of a nonprofit that submits
a piece."
Bill Zeiser, RealClearPolicy editor, said RealClearMedia
publishes "commentary on politics and public policy from a wide
array of sources. These submissions are assessed on their editorial
merits."
Representatives of the Post-Gazette and Chronicle did not
respond to emails.
In an interview earlier this year, Mr. Engel said the motive of
the group was not to promote the views of Amazon's rivals. He said
Amazon has been the only target because its business tactics run
counter to the group's goal of free and fair markets. "The one
organization that feels it stands above that is Amazon," Mr. Engel
said.
Marathon did not make Mr. Engel available for comment a second
time after the Journal determined that rivals were funding the
group.
Mr. Engel and his group have been quoted in publications,
including once each in The Wall Street Journal and The New York
Times. None said who funded the group.
One article about Free and Fair Markets was commissioned by
Marathon.
Last October, an Iowa writer and consultant, Jeff Patch,
published an article on RealClearPolicy.com, a news website known
for political coverage, about a report by Free and Fair Markets
critical of Amazon's record of hiring and firing women. "Many
[women] were fired after Amazon concocted pretexts for their
terminations," Mr. Patch wrote.
Mr. Patch, who has worked as a journalist and a staffer for a
Republican congressman and conservative think tanks, did not
disclose in his article at the time that he was a paid contractor
for Marathon.
Bank statements and invoices reviewed by the Journal show that
Mr. Patch billed Marathon, and was paid thousands of dollars for
promoting a variety of Marathon projects. One line item on Mr.
Patch's spreadsheet of outstanding invoices noted $1,175 for
placing an article, subject: "Amazon piece."
Mr. Patch said the documents referred to by the Journal were
"unrecognizable" and said "I have been the target of an ongoing
misinformation campaign." He did not address directly the question
of whether he was paid by Marathon.
Marathon said it has "engaged Mr. Patch for editorial and
research services in the past."
RealClearMedia Group executive editor Carl Cannon said the
article was an unpaid guest op-ed. The editors who published the
piece are no longer with RealClearPolicy and Mr. Zeiser, the
current editor, said his predecessors "were unaware that the author
was being paid by Amazon's business competitors."
Free and Fair Markets has tweeted more than 1,060 times and
produced glossy videos, some of which it has circulated through
thousands of dollars in paid advertising, according to Pathmatics,
an independent company that tracks social-media ads. A review of
the tweets shows that aside from four tweets about FoxConn
Technology Group, which assembles Amazon's smart speakers, all of
the tweets are about Amazon or an Amazon-related issue. The tweets
have attacked Amazon on several fronts, including antitrust, worker
rights, data privacy, soliciting subsidies from local governments
for its second headquarters and its bid for the Pentagon cloud
contract.
Marathon officials said the group will expand to address other
companies' abuses. "The organization has started looking at FoxConn
and is preparing to scrutinize other tech giants," Marathon's
statement read. Taiwan-based FoxConn, a major supplier also to
Apple Inc., got $4 billion in public support to locate some of its
operations in Wisconsin.
More than two dozen tweets are particularly critical of Amazon's
bid for the cloud-computing JEDI contract.
One tweet said, "As if $1.5 billion in state and local corporate
welfare wasn't enough, @amazon wants $10 billion more from American
taxpayers to host the @DeptofDefense most sensitive data," and then
linked to a list of stories that recounted the complaints of a
primary opponent for the contract, Oracle -- mainly that the
technical specifications in the JEDI request for bids had been
"rigged in favor of a single provider: Amazon." Oracle sued in an
attempt to block the Pentagon from awarding the contract, but a
federal judge ruled in July that the bid could proceed.
Amazon has previously said that Oracle's claims are "meritless
and a desperate attempt to distort the facts"
None of the members listed by Free and Fair Markets on its
website seemed to have an obvious issue with the cloud-computing
contract or several other of the group's issues. When the Journal
began inquiring with the members about their reasons for being
listed -- some did not know their names were posted on the website
-- the group took them down.
Marathon said, "The names of the groups listed on the site were
removed at their request after we heard complaints about some
receiving harassing phone calls" from journalists.
One listed member, Aubrey Stone, was founder and head of the
California Black Chamber of Commerce. He died in September 2018.
His name remained listed as member until at least June and wasn't
removed until the Journal contacted the group.
Maria Gillette, a member of the largely inactive Carbondale Tea
Party outside of Scranton, Pa., is listed as an advisory member of
Free and Fair Markets. Ms. Gillette, known in her small community
for appearing in national media in 1974 after seeing an
unidentified flying object, said she thought the group was about
free trade -- not Amazon.
The New England Convenience Store & Energy Marketers
Association is listed as a member, and Jonathan Shaer, executive
director, said the group is aligned with its stated principles but
does not share the anti-Amazon animus. Mr. Shaer said his
association "hasn't had any active involvement in any of the
Initiative's activities."
Benyamin Lichtenstein, a business professor at the University of
Massachusetts Boston, said he was contacted out of the blue by a
Boston corporate public relations firm last year about signing his
name to an op-ed opposed to Boston's bid for Amazon's second
headquarters. The firm sent a draft of the op-ed that called on
Boston politicians to "reject an Amazon headquarters for the sake
of small businesses." The PR official wrote in an email to Mr.
Lichtenstein, "If you are happy with the draft we can submit it as
is," according to a copy of the email reviewed by the Journal. The
article was pitched to Boston newspapers and was eventually
published in DigBoston.com.
Chris Faraone, editor-in-chief of DigBoston, said Mr.
Lichtenstein first submitted the article, but that DigBoston didn't
publish it until receiving an email from the same public-relations
representative who had initially contacted the professor.
"As for whether Lichtenstein wrote the piece himself, we assumed
that was the case, but if it wasn't, we assure you that we're no
more surprised to hear that than we are when politicians or
celebrities use ghostwriters," Mr. Faraone said.
Mr. Lichtenstein said he agreed to sign his name to the article,
to which he made some changes and checked citations, because he
believes in advocating for small businesses.
Told he was listed as a member of the group, Mr. Lichtenstein
said, "Wow. I had no idea." He said the group had inflated his
role.
In a statement, Marathon said, "All of the individuals and
groups that we work with have full editorial control and input on
any materials they put their names on. In fact, those who play a
more formal role with the group sign agreements that clearly spell
out the mission and vision of the group."
Service Employees International Union Local 721, which
represents more than 95,000 workers in Southern California, was
named as a member without permission, said Coral Itzcalli,
communications director. "We have zero involvement with that
organization," she said. After being contacted by the Journal, the
union's attorney sent a cease-and-desist letter demanding the
removal of the union from the list of members. A few days later, it
was.
Asked for comment, Marathon emailed to the Journal a membership
agreement that the agency said had been signed by Gilda Valdez, the
chief of staff for the union local, dated July 23, 2018. The firm
also provided a statement from Juan Carlos Mendez, president of
Churches In Action, a Christian community group in South Gate,
Calif., stating that he had asked Ms. Valdez to join the group and
had "secured her signature of FFMI's consent form."
But Ms. Valdez said that the signature on the documents provided
by Marathon was not hers.
"I did not sign on with this group," she said. "Their real
motive for listing us as supporters remains unknown to us."
-- Sarah Nassauer, Esther Fung and Jay Greene contributed to
this article.
(END) Dow Jones Newswires
September 20, 2019 10:45 ET (14:45 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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