Amazon ‘botched government relations’

At the end of 2023, the Federal Trade Commission (FTC) and 17 state attorneys general sued Amazon for alleged illegal monopolies and antitrust violations. Author and WSJ journalist Dana Mattioli joined Opening Bid with Yahoo Finance Executive Editor Brian Sozzi to breakdown what this means considering Amazon's influence on both the worlds of retail and tech. She and Sozzi speculated on how Amazon's (AMZN) practices are even contributing to inflation: 'We’re all paying more because of Amazon’s power in e-commerce.' In her new book "The Everything War: Amazon’s Ruthless Quest to Own the World and Remake Corporate Power" she covers rank and yank practices, culture shifts under Jeff Bezos, and combative relationships with regulatory bodies.

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Has Amazon learned, have they learned from the observations in your book?

Are they still ranking and yanking human beings outside of the company?

They are still doing yanking rank.

Um They've also had this really combative way about them as it relates to press, but also government relations.

You know, this is a company that's firmly in the regulatory spotlight.

You know, jurisdictions around the world have said that they might be a monopoly, including the FTC and instead of, you know, doing what typical company would do, which is, you know, make friends of regulators or at least lobby them in a way that's constructive.

They've really botched government relations and been, have been combative, which doesn't make any sense.

It doesn't because, you know, they could be broken up as a result of this lawsuit and, and in the midst of the, you know, the FTC calling them a monopoly, they've deleted all their signal messages for two years related to M and A and antitrust, right?

So these are not the sorts of things that build bridges and sort of help you make your case when you're in the regulatory spotlight for those not familiar why is the FCFTC contending that Amazon is monopoly.

Yeah, it's really fascinating to Dan's point.

The seller base is really important to Amazon.

This is, you know, where 60% of all of their retail sales come from is third party sellers.

And you know, Amazon for years has been where 40% of all online shopping in the US happen.

So sellers need to be there.

And for the last decade, they've, they've known that and they've been able to extract more rent from these sellers.

So for instance, a decade ago, on average, Amazon took 90% of every dollar a seller made in revenue on Amazon today.

That's 45%.

And that means those sellers in order to have any sort of margin, a lot of them have had to raise their prices.

So basically whoever I ordered my toothbrush from is probably losing money.

But I mean, I need the toothbrush, maybe he's charging me more, charging me more.

And the FTC is saying that Amazon has this undue power over sellers on amazon.com.

And because if you're a seller on amazon.com, you have to charge your lowest price on amazon.com, your toothpaste, your toothbrush seller.

If he's charging $5 on Amazon has to cover all those fees.

He's also charging $5 for that toothpaste on walmart.com and target.com.

Even if he could make more money on those websites, Amazon responsible for inflation.

That's sort of what the FTC laws is saying.

Not inflation large but in e commerce, they're saying that we're all paying more because of Amazon's power in e commerce.

Daniel, how closely are you watching this FTC case?

Which is what starts in 2026 it will go to trial in 2026.

How big issue is this?

I'm watching it very closely.

Not with the FTC.

If you think about the regulatory bodies in Europe is another example, Amazon needs to and really all of these platforms, they need to be more transparent in terms of how their platforms operate, how they use data, how privacy security, how all of these critical issues are being handled.

And it's not that Amazon I think will ever have all of the answers.

It's a case of, are they, are they iterating?

Are they working, are they engaging with the, the regulators in France and the US and all of the different countries that they operate in Germany, Japan, the United Kingdom?

And so are they able to basically take what they're doing, work with the bodies to help shape the issues and, and clearly if regulators and governments make it too onerous for some of these corporations, some of these platforms to operate, they may choose not to operate there or they may choose to have a smaller presence?