Amazon Not Going to be Broken Up, Despite New Reports
Amazon Not Going to be Broken Up, Despite New Reports
Latest "Amazon's Toll Road" Released by Institute for Self Reliance / Stacy Mitchell. There is a lot to unpack here but here are the major points:
1 - Seller fees, not AWS are the major profitability source.
2 - You would know that if Amazon hadn't been hiding it from you.
3 - It's being hidden to obscure the monopoly forces at work.
4 - So Amazon needs to be split into smaller companies. RN.
In my opinion, Amazon really has 2 businesses. One dependent on Prime. This includes 1P (#retail), 3P (#marketplace), Advertising, Video, Devices (Alexa, Ring, etc), and Logistics (AMZL in all its forms). Prime stirs the drink. And yes it's a flywheel with a phenomenal moat.
The other is AWS. Not really Prime-dependent which is why it is vulnerable to Microsoft and Google. Microsoft has the long-term advantage here as Microsoft Office is essentially their "Prime".
My take: 1 - Amazon doesn't really hide its fees. They are well known to all sellers. And yes, they have been increasing over the last 15 years steadily.
2 - Amazon doesn't really hide its seller business. When your CEO writes in reports that "third parties are kicking our first party butt" and units are greater than first party, how's that hidden again?
3 - Amazon does obscure its 3P GMV, and many analysts confuse 3P revenue (which Amazon books) with 3P GMV (which they do not really disclose). 🐧 Scot Wingo (with one t) has been talking about this for 13 years I feel like.
4 - Government NGMI (not gonna make it) on any breakup. It takes month of "negotiations" to simply fund commitments everyone agreed on 10 years ago and prevent the entire government from shutting down. This same body is going to pull off something like this? Ah, no.
5 - #Amazon PR train is well-tuned. Years ago Amazon selected a Virginia HQ site for two reasons -- 1 it's where AWS is heaviest, and 2, lobbying. The 2 million SMB narrative continues to be driven into the ground.
