South Florida hedge-fund manager Douglas Kass believes government intervention in Amazon over antitrust issues could be imminent, and that lawmakers have begun a preliminary investigation
(VERO BEACH, FL) Mr. Kass, who previously advised investors in October 2014 to “avoid Amazon at all costs”, said the shipping giants recent purchase of Whole Foods has tipped the scale for many who now see Jeff Bezos’ growing company as a potential monopoly.
“My understanding is that certain Democrats in the Senate have instituted the very recent and preliminary investigation of Amazon’s possible adverse impact on competition,” Mr. Kass said on Wednesday in a column posted to The Street, an investment news website. “But, in the Trump administration we also have a foe against Jeff Bezos, who not only runs Amazon but happens to own an editorially unfriendly (to President Trump) newspaper, The Washington Post.”
Mr. Kass, who heads Palm Beach, Florida based Seabreeze Partners Management, said Thursday that he was betting Amazon’s stock will fall in price in the near future, noting specifically that he will be taking a short position on their company because “the stock could fall 10% overnight” once the market gets wind of the beltway talks.
“I am shorting Amazon today because I have learned that there are currently early discussions and due diligence being considered in the legislative chambers in Washington DC with regard to possible antitrust opposition to Amazon’s business practices, pricing strategy and expansion announcements already made (as well as being aimed at expansion strategies being considered in the future,” Mr. Kass wrote Wednesday.
Though he believes the government discussions to potentially constrict Amazon have just begun, Mr. Kass stated his belief that they “may never result in any serious effort to limit Amazon’s growth plans.”
Mr. Kass has however written a series of columns in the last year posing the question of whether we’ve reached “peak Amazon,” stating in a July 11th piece that the Whole Foods deal puts “Amazon’s vast power… under the microscope.”
“Is Amazon a productive change agent and force for the good of the consumer by virtue of a reduction in product prices? Mr. Kass asked. “Or is Amazon’s disruption of the general retail business a destroyer of jobs, moving previously productively employed workers into the unemployment line?”
In previous criticisms of Amazon, and before their stock more than tripled in value, Mr. Kass said in 2014 that the company “continues to fail to exhibit a cash flow return on any investment it makes.”
Questions surrounding Amazon’s compliance with antitrust laws stem from the companies expanded dominance from shipping, to books, cloud services, and electronics. The potential issue of monopoly creation is only further exemplified by their recent move into the fashion and grocery sector, with the purchase of Whole Foods and the Prime Wardrobe option, which allows customers to try on clothes before buying through their online market place.
In January 2017, regulators from the European Union applauded the end of Amazon’s exclusive audiobook deal with Apple, and in August 2016 Amazon’s Tokyo offices were raided by Japan’s Fair Trade Commission on the suspicion they were violating the nations antitrust laws.
On Wednesday Josh Sandbulte, co-president of Greenhaven Associates and a former Product Manager for Amazon, wrote an op-ed published in The Wall Street Journal detailing his alleged knowledge of a discrete relationship with the U.S. Postal Service and the delivery company turned tech industry heavyweight.
Mr. Sandbulte claimed that the U.S. Post Office and Amazon have a special delivery arrangement which involves the government actually subsidizing part of the cost associated with each delivery.
He cited a Citigroup analysis which found that each Amazon box gets a $1.46 subsidy from the U.S. Government, and compared the arrangement to getting “a gift card from Uncle Sam.”
TRUNEWS has previously reported on questionable favoritism Amazon has received from the U.S. Government, specifically, the $600 million ten year contract awarded to Jeff Bezos’ company in 2013 to build a secret interagency cloud network for the CIA.
Two other cloud enterprise services were in the running for the bid, one being IBM, whose contact was $54 million cheaper than Amazon, prompting a legal challenge in U.S. Federal Claims Court over favoritism versus merit being a driving factor in the choice.