Amazon’s $1T status is the attention it may not want
SAN FRANCISCO – Amazon’s $1 trillion market value is great for shareholders and a testament to how much consumers love the e-retailer’s two-day shipping. But a rash of attention on its gilded status may not come at the best time.
Amazon on Tuesday became the second company to reach a $1 trillion market capitalization, following Apple’s surge last month.
While the actual dollar amount Amazon is worth doesn’t matter that much, what it reflects – $178 billion in annual revenue, more than half a million workers, and an expanding reach into health care, advertising, artificial intelligence, facial recognition and transportation – could bring it greater scrutiny from politicians who have already warned it’s exerting too much control over our lives.
To a degree, Amazon is like an enormous bird of prey that’s been able to fly slightly below the radar in the increasingly politicized world of tech. Facebook, Google and Twitter were faulted for allowing foreign manipulation schemes to game their platforms during the 2016 presidential election.
But Amazon’s brand perception has stayed steady, as Americans prioritize convenience of package delivery and streaming video over concerns it’s becoming too intrusive.
But politicians have made pointed attacks on its practices, including President Donald Trump’s accusations it didn’t pay taxes and underpays the U.S. Postal Service for delivering its packages.
Then last week, Sen. Bernie Sanders, I-Vt., dinged Amazon for a different set of alleged faults. The former presiden- tial candidate claimed its lower-level employees did not make a fair wage. In a rare response, Amazon in a blog post called statements about worker conditions in its fulfillment centers “inaccurate and misleading.”
The $1 trillion valuation of a company run by CEO Jeff Bezos, the world’s richest person, may not make it more of a target of concerns about size and equity than it was a week ago. But it doesn’t help.
Just a year ago, some Democrats were floating anti-trust concerns from Amazon’s acquisition of grocery store chain Whole Foods.
On Amazon’s side, there’s no legal precedent in the United States for breaking up a company simply because of its size. The metric is whether it dominates and therefore controls a specific market. That’s simply not the case for Amazon. Michael Pachter, managing director for equity research at Wedbush Securities in Los Angeles, estimates the company has 1.5% market share of retail, which is too small to give it pricing power.
“The antitrust laws are designed to remedy anticompetitive behavior, and there is no evidence that Amazon’s market share allows them the market power to behave in an anticompetitive manner,” he said.