Building a trillion dollar company isn't easy.
It took a lot of hard work, a lot of luck, and some help from the government for Amazon (AMZN) to become the technological marvel it has morphed into over the past two and a half decades.
Help from the government is probably the least discussed aspect of Silicone Valley's ascension since the start of the new millennium.
But Tesla (TSLA), Amazon and other success stories from the Bay Area owe a lot of their gains to the boosterism of state governments as well as the federal government.
While Tesla CEO Elon Musk has publicly claimed that he is against government subsidies, stating last year that "I'm literally saying to get rid of all subsidies."
But between Tesla and SpaceX, Musk has received more than $7 billion in government aid, according to research from Grid.
The state of Texas shelled out $60 million in benefits to entice Musk to build his shiny new Gigafactory in Austin.
Meanwhile since 2000, Amazon has received at least $4.28 billion in direct subsidies from state governments where it operates, according to Good Jobs First's Subsidy Tracker.
That number pales in comparison to the money the company saves in tax payments.
Amazon Gets Billions from U.S.
In the three years between 2018 and 2020, Amazon reported $44.7 billion in U.S. pre-tax profits.
Over that period the company paid $1.9 billion in U.S. corporate income taxes, according to a 2021 analysis by the Institute on Taxation and Economic Policy.
Those payments gave Amazon an effective tax rate of just 4.3%, about a fifth of the 21% statutory U.S. corporate income tax rate.
Amazon isn't the only company benefitting from low taxes. In 1961, corporate income taxes made up 22.1% of the federal government's revenue.
In 2020, that number was down to 6.6% despite record corporate profits.
But even as Amazon enjoys the tax benefits of being founded in the U.S., the U.S. government is becoming increasingly adversarial to the company.
On June 2, members of the House Oversight Committee sent a letter addressed to Amazon CEO Andy Jassy accusing the company of "obstructing" its investigation into a deadly warehouse collapse at the company's warehouse in Edwardsville, Illinois.
Six workers died when a tornado ripped through the warehouse, causing the roof of the 1.1 million-square-foot facility to collapse in December 2021.
The Oversight Committee opened a probe into the company's labor practices in April and gave Amazon until April 14 to respond to its inquiry and produce requested documents.
“Nearly seven weeks have passed since the April 2022 deadline, yet Amazon still has not produced any of the key categories of documents identified by Committee staff, let alone the full set of materials the Committee requested in March,” the letter said, according to CNBC.
Lawmakers Overtake Walmart as Amazon's Biggest Rival
In recent years, Walmart (WMT) has begun fighting back against Amazon's dominance of e-commerce by expanding its own online offerings and investing in a last-mile delivery apparatus that can rival Amazon's industry-leading delivery service.
While Walmart presents a challenge to Amazon, its threat is nothing compared to what the U.S. government could do to Amazon.
On June 1, Amazon VP of Public Policy Brian Huseman published a blog criticizing legislation led by Sen. Amy Klobuchar (D-MN) and Rep David Cicilline (D-RI).
Amazon is against the American Innovation and Choice Online Act, a law which intends to limit conflict of interests that may be created when tech companies own more than one type of business.
"Congress is considering legislation that jeopardizes two of the things American consumers love most about Amazon: the vast selection and low prices made possible by opening our store to third-party selling partners, and the promise of fast, free shipping through Amazon Prime," Huseman wrote.
Amazon says that its business has "much more in common with thousands of retailers like Walmart, Target (TGT) and Costco COST, all of which would be mysteriously excluded from the bill's proposed regulations."
A spokesperson for Klobuchar told CNN that Amazon was misrepresenting the bill and that it would help the small businesses that Amazon claims it represents.
"Who do you trust? The largest online retailer in America with a demonstrated record of stiffing small businesses and lying about this bill's impact, or small businesses themselves?" the spokesperson said, according to CNN.
"We'll take the side of small business and consumers, not the side of big tech monopolists."
The proposed legislation would cover companies like Apple, Meta Platforms (FB), Microsoft (MSFT), and Alphabet (GOOGL), but would cap its regulation at a $550-billion market cap.
Amazon is worth more than double that amount currently and could soon be worth significantly more than that.
