In February, billionaire activist investor Daniel Loeb, CEO of Third Point, shared with investors his belief that the market is failing to recognize the respective full value of Amazon
The industry experts on the RetailWire BrainTrust had a lively debate on whether Amazon should remain a single company, with some expressing the view that the online titan lifts all boats, just by being there.
“While retail rivals may fantasize about Amazon’s breakup, U.S. and global retail momentum would regress without a united Amazon,” wrote Lisa Goller, content marketing strategist. “That’s because, as a whole entity, Amazon uses its scale and influence to modernize the global retail infrastructure… A united Amazon can be a powerful force for good for diverse stakeholders — even rivals.”
AP Photo/Steven Senne
Others saw Amazon as a clear candidate for separation.
“Of course it should be broken up,” wrote Paula Rosenblum, co-founder of RSR Research. “Let its retail business stand on its own. I mean, PayPal and eBay were broken up. Why should Amazon continue this way?”
In June, a bipartisan group of House lawmakers proposed antitrust legislation against the major tech platforms (Apple
“Amazon creates its own house branded products, only after it has the data to determine if doing all of this is worthwhile, to successfully compete against major national brands. Walmart
In the antitrust camp, Joe Lonsdale, general partner at venture-capital firm 8VC, charged in a recent Wall Street Journal editorial, “AWS subsidizes Prime, harming consumers in the long run.”
“The fundamental question regarding anti-competitive legislation is whether one aspect of the business receives a subsidy that allows them to sell their services below their cost and which creates an unfair advantage to competitors,” wrote Dion Kenney, COO of Mondofora. “While there are many dimensions of Amazon’s behavior which demonstrate outsized negotiating leverage, with many documented instances of abuse, the only part of the Amazon empire that seems to fit the subsidy description is AWS, which is reputed to provide most of Amazon’s profits. Is there a reason why this couldn’t be spun-off as a separate business, eliminating the subsidy effect? I can’t think of one.”
As to the question of customer impact, however, some on the RetailWire BrainTrust were not convinced that consumers stood to be long-term losers of a united Amazon.
“Consumers would be impacted by any division within Amazon,” wrote Lucille DeHart of MKT Marketing Services. “Right now they benefit from bundled services — Prime Video with Prime membership. Yes, Amazon is getting so dominant that they present a threat to market fairness, but shame on other businesses that have not embraced innovation soon enough. The successful arms of Amazon allow for them to continue to invest in other developments.”
“Way back in the 20th century it might have made some sense to keep markets from monopolizing because of the long-term impact on competition and the consumer,” wrote Ryan Mathews, CEO of Black Monk Consulting. “But in the Digital Age, some problems — say last-mile delivery — require scale to address. Additionally, Amazon’s businesses are so intertwined, teasing out certain pieces may have profound unintended consequences. Who would benefit from an Amazon breakup? Large branders and the competition. Who would be negatively affected? My money is on the consumer.”
