Amazon - The scary 'Monster' is slowly 'swallowing up' America
Last weekend, Amazon announced it would buy Whole Foods Market in a deal worth more than $ 13 billion. About an hour later, Amazon's stock rose about 3%, resulting in an additional $ 14 billion in market value.
So basically, Amazon has just purchased the 6th largest retail store chain in the US "completely free"!
According to veteran financial correspondent Ben Walsh this is an exception. Normally, the stock price the company acquires will decrease after the big deals but Amazon is the opposite. Can this only be explained that investors seem to be confident that something will happen to Amazon? So what could it be?
From the simplest point of view, the Whole Foods acquisition means that Amazon will enter the $ 700 billion grocery store business. Jeff Bezos himself - the president and CEO of the company, has been calculating this market for years - from the launch of Amazon Fresh - a home-delivery food service to the opening of a wide range of wine shops. Amazon brand in Seattle. And now, Bezos also owns one of the most famous brands in this industry.
However, putting aside all that, the rise in stock prices after a major acquisition shows an even more troubling problem: An incredible amount of economic power is concentrated on Amazon and professionals. He said that makes it difficult for other companies in the retail sector to compete, but more broadly, the US economy.
Is Amazon a monopoly?
Considering an online retailer that provides home appliances, Amazon currently competes with Walmart, Target, Bed, Bath & Beyond. As a clothing and footwear retailer, Amazon competes with DSW, Foot Locker and Gap. As a distributor of music, books, and television, Amazon competes with Apple, Netflix and HBO. For the past decade, Amazon has also acquired the largest online shoe store, the largest online children's clothing store, diaper store and the largest online cosmetics store.
And in every area of Amazon is successful. Last year, Amazon sold 6 times more merchandise online than Walmart, Targer, Best Buy, Nordstrom, Home Depot, Macy’s, Kohl's and Costco combined. Amazon also generates 30% of the total retail sales growth rate in the US, including online and offline.
Not only that, Amazon's dominance goes beyond retail. They have also expanded into credit, book publishing, clothing design, and hardware equipment manufacturing. 3 years ago, the company acquired Twitch.com - a website specializing in providing online games for $ 1 billion. And above all, Amazon owns Amazon Web Services - $ 12 billion cloud business. Slack, Netfix, Droboz, Tumblr, Pinterest and a number of US government agencies are using AWS.
To sum up the current state of Amazon is: EVERYTHING STORE - That is, a store that sells everything. More than just selling goods, Amazon even produces them; Not only distributing content through existing server systems, Amazon also leased it to others.
All of which makes many experts and analysts wonder: Is Amazon a monopoly?
“Commercially, I think Amazon is providing all the infrastructure needed for the US economy. And that gives Amazon a lot of power and control, ”said Lina Khan, an Open Market member.
In January, Khan himself called for the need to tighten antitrust controls on Amazon through an article in The Yale Law Journal.
Historically, Amazon has been criticized for Marketplace - a feature that allows small businesses to sell goods through their website. Some merchants have accused Amazon of secretly using the Marketplace as a "laboratory": After collecting data on which products sell best, they will launch a similar product to compete with. Cheaper prices through the company's available services.
Institute for Local Self-Reliance - a non-profit organization also criticized Amazon for monopolistic behavior. “By controlling critical infrastructure, Amazon is now competing with other companies and has established provisions to prevent competitors from accessing the market. Local retailers and independent manufacturers will suffer the most in this situation. ”
As Amazon has grown throughout the economy, concerns over its strength have widened.
“Amazon initially launched consumers as a book seller but later expanded and became a middleman selling everything. Until now, Amazon has gone even further, no longer a middleman because they distribute more content and produce more goods. Because of that, more conflicts of interest began to emerge. ”
In general, people are starting to wonder if Amazon is too big: A company that is controlling so much in the online retail industry and now they are gradually expanding to dominate the rest of supply chain.
So far, Amazon has not acknowledged them as monopolies. Recently, the company began looking to business professionals to consult on concerns surrounding competition law. Before November, one of the loudest criticisms of Amazon's monopoly concerns came from President Donald Trump when he announced that Jeff Bezos would face monopoly sanctions. But so far, Mr. Trump has not yet appointed a chairman of the Federal Trade Commission, which is charged with inspecting acquisitions before they are completed.
Concerns about monopoly have started emerging about a decade ago partly because of companies like Amazon. During the first 10 years of operation, Amazon was hardly profitable, but investors continued to trust Bezos, constantly pouring money for the company to invest in infrastructure and expand market share. As a result, Amazon is now a "monster company," despite "tiny" profits, but the stock price is nearly 200 times higher than when it was first listed.
Khan and others have urged people to be less concerned about Amazon's share price, but should pay attention to their dominance in so many areas of the economy. “No one can deny that Amazon in its current state is great for consumers. The question is what awaits?
The scene inside an enormous Amazon warehouse:
“Americans always want the economy to be open and competitive. However, when an ever-growing part of the economy was occupied by Amazon, the problem became centralized. From past to present, self-business is the way Americans use to build wealth and transfer wealth through generations. But for now, just look at any area that Amazon dominates - I bet everyone gets frustrated trying to get into that. ”
This fact is happening for the big startups. Last year, Jet.com was born as a competitor to Amazon in the field of e-commerce, attracting millions of dollars in investment and a lot of media and ink. But, despite its fairly rapid development, this startup could not survive long as an independent company. Finally, Walmart acquired Jet.com for $ 3 billion in August.
Or more recently, the case of Whole Foods was bought by Amazon for $ 13.7 billion, making experts extremely worried. It is easy to see that the deal immediately gave Amazon another advantage in infrastructure: More than 400 warehouses, spread over the busiest areas in the United States. Overall, with logistic advantages including a warehouse network, transportation itineraries, and cargo planes across North America, Amazon has weapons that no other company can beat. More worrisome, many analysts believe that these advantages are not due to innovation and technological innovation but because of the constant money flowing from Wall Street.
It seems that Amazon is getting far-fetched privileges. First, the Stock Exchange should consider more carefully about the Whole Foods deal. Second, the authorities should also reconsider the structure of this corporation.
Khan said: "Amazon is pervading all corners of the US economy in an unprecedented way. Investors know Amazon is monopoly. That's why stock prices continue to rise despite the "The market can portray a reality that the law cannot."