Former Walmart U.S. CEO raises prospect of breaking up Amazon
Bill Simon, the former CEO of Walmart U.S., thinks it may be time for Congress to take action and split Amazon.com up.
In an interview with CNBC, Mr. Simon made similar arguments to others who have taken issue with Amazon’s business practices. In short, Amazon makes money on non-retail businesses, particularly Amazon Web Services (AWS), and uses the profits to subsidize its e-tail efforts. Amazon has used those subsidies to undercut a wide variety of retail rivals and gain share in one category after another that it targets.
“It’s anti-competitive, it’s predatory, and it’s not right,” said Mr. Simon.
Those who know something of the retailing industry’s history may find some irony in Mr. Simon’s remarks.
For years, Walmart’s smaller rivals have complained that the Bentonville behemoth sells products at prices at or below what it costs them to purchase the very same items. To gain share, Walmart systematically targeted key categories and sold products at prices its competitors couldn’t match.
Buyers at smaller retailers have (sarcastically) wondered how Walmart could have shelves filled with products when the vendors of those very same items had notified them of short supplies due to one manufacturing issue or another. For years, stories have been written about the power of Walmart and how it has put rivals, particularly independents, out of business.
Mr. Simon’s comments follow reporting earlier in the week by Axios that President Donald Trump is “obsessed with Amazon” and has expressed interest in targeting the company for violations of “antitrust or competition law.”
I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!
— Donald J. Trump (@realDonaldTrump) March 29, 2018
Mr. Trump tweeted on Twitter, “Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!”
The Axios report points out that Mr. Trump’s views on Amazon are not always grounded in fact. One of five sources who spoke to the news organization said, “The whole post office thing, that’s very much a perception he has. It’s been explained to him in multiple meetings that his perception is inaccurate and that the post office actually makes a ton of money from Amazon.”
Another motivating factor for Mr. Trump’s recent public criticism of Amazon may be that its CEO and founder, Jeff Bezos, owns The Washington Post. The paper, which is separate from Amazon, has broken news reports and published opinion pieces largely critical of the president’s behavior, his policies and the performance of his administration.
- Former Walmart US CEO says Congress should consider splitting up Amazon – CNBC
- Trump hates Amazon, not Facebook – Axios
DISCUSSION QUESTIONS: Do you agree that Amazon is an anti-competitive force in the retail marketplace? Has its position risen to the point where it needs to be broken up?