(Part 1)
The Paradox of Jeff Bezos and his Amazon.
Why the Street Trader Became an Extraction Landlord?
Jeff Bezos began his commercial empire Amazon in 1994 by packing books on his hands and knees in a garage in Bellevue, Washington. He is said to have missed buying packing tables as the idea did not strike to him. This was a man who understood the street trader’s wisdom that efficiency creates sustainable advantage, and serving customers honestly generates loyalty that no amount of advertising can purchase. Today his net worth is 250 billion and Amazon is “the everything store.”
Yet three decades later, the company he built has become the antithesis of that founding philosophy. Amazon in 2026 represents not the culmination of the efficiency principle but its abandonment. The transformation of Amazon from an efficient marketplace to a rent seeking extraction center is a story of corrupting influence of scale and the tension between founder vision and corporate machinery.
Amazon Prime
The journey can be traced through specific strategic decisions that prioritized extraction over efficiency. When Amazon launched Prime in 2005, it appeared to be a customer-first innovation. Pay a flat annual fee and receive unlimited free shipping, video and music.
The underlying logic was to remove friction from purchasing decisions, and customers will buy more frequently. But Prime created something more insidious than customer loyalty. It created a walled garden. Once tens of millions of people paid their annual subscription fee, they developed what behavioral economists call sunk cost commitment. Having paid for the service, they felt compelled to use it even when prices were no longer competitive. Amazon recognized this psychological lock-in and began optimizing for subscription retention rather than honest value.
Customers who pay annual subscription fees now discover that premium content requires additional rental fees. Hollywood blockbusters cost an extra 99 to 499 rupees. The free tier consists largely of low-quality content. This is classic extraction logic. First, lure the customers into a subscription, then charge them again for anything they actually want. Amazon’s model has become fundamentally inefficient which appears dishonest.
Amazon Fresh operates in India to offer groceries but its prices are not competitive. While Flipkart sells Delish cornflakes for 127 rupees, Amazon sells Kellogg’s for 313 rupees. Flipkart could do it by eliminating brand premiums and using efficient private supply chains. It innovated to be more efficient.
Amazon Fresh prices own brand Vedaka’s products much closer to branded alternatives. They cannot compete on price because their business model has accumulated too much overhead. They maintain expensive Fresh warehouses designed for rapid delivery rather than low cost. They fund Prime Video content production. They employ layers of corporate management whose primary function is identifying new revenue streams rather than reducing customer costs.
The pickpocket technology represents Amazon’s most revealing departure from founder principles. The company has spent billions developing algorithms that optimize not for customer satisfaction but for revenue extraction. Their search function has degraded from a discovery tool to an advertising platform. When a customer searches for cornflakes, the first three results are paid placements from sellers who paid the highest advertising fees. Amazon now brings customers to a curated selection designed to maximize platform profit.
The Kindle ecosystem provides another illuminating case study. Amazon removed the ability to purchase books directly within the Android Kindle app to avoid paying Google a commission. This forces customers to exit the app, open a web browser, complete their purchase, and return to sync their library. The experience is deliberately degraded in service of a corporate turf war. Neither of the companies considered accepting a slightly lower margin to preserve user experience.
Missing Founder
So why did Bezos, who built his initial success on customer obsession, allow this corruption of founding principles?
The answer lies in the scale trap. When Amazon was small, Bezos could personally ensure that every decision aligned with customer value. He packed boxes himself. He answered customer service emails. But as the company grew, Bezos became distant from operations. He appointed professional managers who were selected and promoted based on their ability to increase shareholder value, not their commitment to customer obsession.
For a middle manager the objective is to identify revenue opportunities that improve quarterly metrics. He has to propose advertising products that monetize search traffic. Develop subscription models that increase customer lifetime value. None of these activities require asking whether they serve customers better. Over time, thousands of such decisions transform a customer-obsessed startup into an extraction machine.
Bezos himself appears to have recognized this corruption. In late 2024 and throughout 2025, he stepped back from Amazon retail operations to focus on Project Prometheus, a new venture developing artificial intelligence for engineering and manufacturing. This is not the move of a leader fighting to preserve his company’s founding mission. This is a calculated retreat. Thus, Bezos has tacitly accepted that Amazon retail has become unreformable. The extraction model is too deeply embedded. Rather than fighting internal resistance, he has chosen to start a new AI project
The timing of this pivot is significant. Bezos recently stated publicly that artificial intelligence is in an industrial bubble, but characterized it as a good bubble. He has concluded that the digital platform era is reaching maturity. The next frontier lies in applying intelligence to physical manufacturing. He wants to own the factories, not the marketplace. This represents a return to first principles. Manufacturing efficiency is closer to the efficiency model than marketplace extraction. But it again represents an admission that he cannot save Amazon from the extractive path it has chosen.
ONDC
The rise of platforms like ONDC expose the fundamental weakness of Amazon’s model. When tariff barriers fall and logistics costs decline, the extraction premium becomes visible. A customer in Delhi will now access European products through specialized platforms that charge minimal commissions rather than Amazon’s 15 to 30 percent fees. The 0% fee charged by amazon on grocery and herbs is not applicable on International trade of goods.
The India-EU Free Trade Agreement will create a new intercontinental market without currency exchange constraints. Now entrepreneurs can build private platforms and sell for less. WooCommerce has made creation of a marketplace on internet economical and quick. The Open Network for Digital Commerce threatens to do to Amazon what Linux did to Microsoft’s server business.
Amazon’s Response
Amazon’s response to these competitive threats has been predictable and futile. They have cut costs by eliminating 16,000 jobs in early 2026. They are closing their physical Amazon Fresh stores globally. These are the actions of a company in managed decline. Cost-cutting addresses symptoms rather than causes. The fundamental problem is not excess employees but a business model predicated on extraction rather than innovation and value creation.
The customers of India can smell money like carnivore can smell blood thanks to India’s 5,000 years of trading DNA. They smell the extraction and reject it. They use browser extensions to compare prices across platforms. They search specifically for private label alternatives to avoid brand taxes. They migrate to ONDC-enabled platforms that offer transparent pricing. Amazon’s attempt to counter this through AI-powered personalization misses the point entirely. They fail in common sense and commitment to service.
The tragedy of Amazon is not that it failed technically or strategically. The company remains highly profitable and dominant in cloud computing through AWS. The tragedy is that it abandoned the philosophy that made it great. Bezos proved in the 1990s that obsessive customer focus and operational efficiency could defeat entrenched retail incumbents. He demonstrated that a startup in a garage could outcompete billion-dollar corporations by simply offering better value. But success bred complacency, scale bred bureaucracy, and public ownership bred pressure for quarterly earnings growth.
Whiteboard with the Red Question Mark
Amazon now employs thousands of strategic planners trying to chart the company’s future. But all their sophistication cannot answer the simple question that every successful trader knows instinctively: are we giving customers honest value, or are we extracting rent through artificial advantages?
Bezos may claim to devote his time and attention to retail business but it shows no such sign. He appears to be devoting himself to Project Prometheus. Thus rather than reforming Amazon retail, he has signaled that he believes the extraction model is too entrenched to fix. He has left the whiteboard with its unanswered question to professional managers who never understood the basic principles in the first place. Good luck to current CEO Andy Jassy.
The argument that most of fee structure, which is called an extraction model is a common practice. Two wrongs do not make one right. Ten will certainly not make right. They are all waiting to be removed from top position by a better model which is more conventional.
Whether his new venture will remain true to efficiency principles or eventually succumb to the same extractive pressures remains to be seen. But his departure from Amazon retail operations represents an acknowledgment that the company has strayed too far from its founding vision to be saved by its founder.
The lesson for entrepreneurs is sobering. It is not enough to start with the right principles. Those principles must be embedded so deeply in organizational culture that they survive the founder’s departure from daily operations.
Amazon grew beyond the possibility of personal oversight, and no one successfully institutionalized the founder’s customer obsession. Bezos built an empire and then watched it become exactly the kind of extractive incumbent he once disrupted.
That is his paradox and his failure.
Unfortunately for Bezos, his flaws are more clearly revealed in his management of Washington Post. That will be discussed in Part 2 of this article.
References:
- Amazon Prime Launch on 2nd Feb 2005: https://scaleinsights.com/learn/when-did-amazon-prime-start
- Startup from a rented garage: https://fortune.com/2025/07/16/jeff-bezos-amazon-history-rented-garage-barnes-noble-team-meetings/
- Packing table: https://www.entrepreneur.com/leadership/that-time-jeff-bezos-was-the-stupidest-person-in-the-room/325536
- AI business: https://timesofindia.indiatimes.com/technology/tech-news/jeff-bezos-is-back-at-amazon-just-3-years-after-his-retirement-my-fears-are-there-and-/articleshow/116026924.cms
- Project Prometheus: https://www.nytimes.com/2025/11/17/technology/bezos-project-prometheus.html
- Job cuts at Amazon: https://www.nytimes.com/2026/01/28/technology/amazon-corporate-layoffs.html
- Grocery Fee: https://sell.amazon.in/fees-and-pricing
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