The chances of Amazon (AMZN) being forced to break up amid Big Tech’s antitrust reckoning are slim to none, according to a bestselling author who wrote two books about the e-commerce giant. Brad Stone, author of “Amazon Unbound: Jeff Bezos and the Invention of Global Empire,” told Yahoo Finance Live that it’s unlikely the e-commerce giant would face such extreme measures if and when regulators make a move against the company.
Stone, who previously wrote “The Everything Store: Jeff Bezos and the Age of Amazon,” says that Microsoft’s (MSFT) successful appeal in its own antitrust case back in 2001 lays out a blueprint for what will likely happen if Amazon is accused of operating an illegal monopoly.
“I think an enforced breakup by the federal government faces some very long odds,” said Stone, an executive editor at Bloomberg.
The Department of Justice sued Microsoft in 1998, accusing it of maintaining an illegal monopoly by preventing third-party browsers from being installed on Windows-powered machines. The company was initially ordered to break up in 2000, but an appeals court sided with Microsoft. Ultimately, Microsoft entered into a settlement agreement requiring it to share its application programming interfaces with third-party developers so they could run their software on Windows.
Despite the protracted antitrust battle, Microsoft is now one of the most valuable in the world, with a market cap of nearly $2 trillion.
“You look back at Microsoft in the 1990s when it had dominant market share of the operating system market and had clearly engaged in illegal behavior to extend its dominance in the web browsers. That case dragged on forever, and Microsoft won an appeal,” Stone said.
Amazon is the target of antitrust investigations at both the federal level and by state attorneys general. And in May, DC Attorney General Karl Racine filed a lawsuit accusing Amazon of violating the District of Columbia Antitrust Act by forbidding third-party sellers from offering cheaper rates for their products on competing websites.
It’s not the only company facing such scrutiny, though. The DOJ has already filed suit accusing Google (GOOG, GOOGL) of operating as an illegal monopoly, while the Federal Trade Commission filed its own suit against Facebook (FB) seeking to break up the social media giant. Apple (AAPL) has also faced its own antitrust issues via a bench trial brought about by Epic Games’ suit against the iPhone maker that alleges it operates as an illegal monopoly via its App Store.
But Stone says it’s difficult to call Amazon a monopoly in the traditional sense.
“It’s competing in very large markets of retail and cloud computing and doesn’t have the same market dominance that Microsoft once did,” he said. “So I think the argument for breakup, even though some Amazon opponents are suggesting it, is difficult.”
Still, Stone said the company could be forced to change its business practices related to prioritizing its own products over third-party sellers in its marketplace. A full-on breakup, however, would only happen if Amazon decided to separate its Amazon Web Services (AWS) as a means to enhance shareholder value, he added.
Beyond the D.C. lawsuit and investigations, Amazon is also staring down a series of five proposed antitrust bills that could have serious implications for its business if they pass. Those bills seek to address some of the biggest issues raised by antitrust watchers and would prohibit Amazon from requiring third-party sellers to use its logistics platform.
It’s not just the U.S. that’s going after Amazon. In November, the European Union’s European Commission has also filed suit accusing the e-commerce titan of violating antitrust law by using data from third-party sellers to benefit their own Amazon-branded products.
All of this comes as Amazon founder Jeff Bezos is set to step down as CEO on July 5. And while he’ll stay on as chairman of the board, AWS CEO Andy Jassy will take the company’s top spot. And without the added baggage Bezos brings thanks to his massive wealth, Amazon could stand to benefit from a less wealthy CEO.
“Jeff Bezos is the wealthiest person in the world,” Stone said. “This person represents income inequality...but you have Andy Jassy who, I think, will be a humbler target as [Amazon] attempts to navigate this new era of heightened scrutiny.”
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