President Trump is gunning for Amazon’s Jeff Bezos with the same sort of intensity he usually reserves for foreign dictators such as North Korea’s Kim Jong-un or trade wars with China.
In the most extraordinary outburst of tweets, Trump has stepped up his fight with Amazon, accusing Bezos of using the US Post Office as its ‘delivery boy,’ depriving it of billions of dollars a year, of paying little or no taxes to state governments and putting thousands of retailers out of business.
Trump’s vendetta against the world’s richest man is not new. He has been criticising the retailer since before he was elected.
But according to a Vanity Fair article, the President is now so obsessed by Amazon’s power that he is determined to smash its monopoly on retailing.
President Trump is gunning for Amazon’s Jeff Bezos with the same sort of intensity he usually reserves for foreign dictators such as North Korea’s Kim Jong-un or trade wars with China
Trump is also furious with Bezos because of his ownership of the Washington Post, a paper whose aggressive criticism of his reign has infuriated the President.
He is said to be so angry that his advisers are looking at how the Post Office can push up postal prices to hurt Amazon, to investigate its business practices and, most damaging of all, to cancel Amazon’s pending multi-billion contract with the Pentagon to provide cloud computing services.
Cloud computing is one of Amazon’s lesser known business divisions but one of its biggest, and arguably most influential in the long term.
That’s why Trump’s threats are being taken so seriously by investors, and why Amazon’s value has collapsed by £43billion since his obsession has come to light.
Wall Street is rightly unnerved on three counts. It’s impossible to know what regulations Trump might be considering, so analysts don’t know how to assess any potential impact.
Its shares are held widely by popular funds so any threats are unsettling the already jittery markets.
Investors also fear that once the President starts interfering in corporate behaviour for what seems like an ad hominem grudge, you must worry about the rule of law.
Trump’s instinct for unfair business practices is often right but for the wrong reasons. While Amazon does benefit from cheap postal delivery services, you can’t blame the retailer. Indeed, the root of the problem lies with the US government.
The Post Office has its rates, which are capped at the rate of inflation, approved by a board appointed by none other than the President – and is governed by Congress.
So if Trump wants to jack up prices to deter online retailers, he needs to appoint the rest of the board. And he needs to move fast as Amazon is typically one step ahead of the game.
Even with price rises, Amazon would continue to get discounts because of its huge volume. More pertinently, Amazon is already building its own distribution network. As they say, Bezos plays chess while the rest of the world plays draughts.
Tables turn quickly. Until now, Trump has played the starring role in last year’s stock market boom. Now he’s being blamed for putting Wall Street on the skids because of his attacks on Amazon, and fears that his trade war with China might escalate.
It’s impossible to judge whether Trump is playing a brilliant Machiavellian game against Bezos, as he did with Kim, or whether his attacks are another example of his boorish bluster. Either way, this week’s sell off was Wall Street’s worst start to an April since 1929.
Spot on at Spotify
There’s an old saying in the North: what Sweden does today, the world does tomorrow. Think Volvo, Abba and Ikea.
And now we have Spotify, the Swedish music streaming service, which yesterday broke world records to become the biggest company ever to go public, listing its shares direct to investors without fees going to bankers or brokers.
Its debut on the New York Stock Exchange was also Wall Street’s first ever direct-floor listing.
Spotify took a gamble going public without any underwriters, but so far the risk has paid off: shares started trading at $165.90 – way above the reference price of $132 – valuing the group at £21billion.
Other highly-valued tech companies like Uber and rival Lyft, which do not need to raise capital, will be watching like hawks to see how it pans out.
So too will the bankers who have missed out on what would have been fat fees usually spent on underwriting and roadshows.
They will be terrified that Spotify has started a trend. Not only has it saved the music industry but may be cutting out the bankers. Pity.