Trump’s obsession with Bezos is cutting the value of US tech stocks – and the source of his irritation is more than just ‘an uneven playing field’
One is the world’s richest man, the other is the world’s most powerful.
Together they are locked in a personal feud that is shaving billions off the value of US tech stocks. But is
Donald Trump’s onslaught against
Amazon chief
Jeff Bezos really about the president’s concern that the United States Postal Service (USPS) is getting a raw deal for delivering Amazon parcels?
Or is the source of his extreme irritation actually the Washington Post, the rejuvenated Bezos-owned title which has held the president and his administration to account under a portentous masthead line which reads “Democracy dies in darkness”?
For much of last week, Trump has been raging against his new favorite target, Amazon – accusing the company of putting “fully tax paying retailers” out of business, and using the USPS as its “Delivery Boy” at the expense of American taxpayers.
He has also chided “The Fake News Washington Post”, Amazon’s “chief lobbyist”, railing against what he sees as its many “phony headlines” and bad reporting.
His Twitter rants continued in person as he addressed reporters on Air Force One, telling them: “Amazon is just not on an even playing field. They have a tremendous lobbying effort, in addition to having the Washington Post … What they have is a very uneven playing field.”
Amazon stock has dropped from a $1,600 high on 12 March to $1,443 now. That is a $73bn drop in market capitalization over the past month. Based on estimates of Bezos’s stock holdings, the Amazon founder may have lost $16bn from his personal fortune, the world’s largest, over the same period.
For now, Bezos isn’t reacting. “I would not have bought the Washington Post if it had been a financially upside-down salty-snack-food company,” he told Fortune magazine in 2016.
Trump says the title is “used as a ‘lobbyist’ and should so REGISTER”. But the Washington Post has consistently rejected suggestions that Bezos has a hand in the paper’s editorial decision making.
Publisher Frederick Ryan Jr said in a Post analysis that its proprietor has “never proposed a story”.
“Jeff has never intervened in a story. He’s never critiqued a story. He’s not directed or proposed editorials or endorsements,” Ryan said.
Last week, Wells Fargo analyst Ken Sena estimated that for $250m the paper cost Bezos personally in 2013, the purchase could end up costing Amazon $75bn. But if Trump is hoping to pressure regulators to make a case against the company, it would ultimately fail.
“We don’t see how the current presidential rhetoric helps a US case against Amazon,” Sena wrote.
The online retailer has reportedly doubled its number of in-house lobbyists from 14 to 28 since Trump’s election, more than double that of Facebook or Apple. While Google spends more on lobbying ($18m in 2017 to Amazon’s $12m), Amazon’s lobbyists span its sprawling interests: drones, autonomous vehicles and air cargo, cybersecurity, data privacy and intellectual property and cloud computing.
Big tech’s Washington lobby presence parallels its growing vulnerability as, one by one, the tech giants are drawn into political disputes, with Facebook next in the spotlight: CEO Mark Zuckerberg is due to appear before Senate and House committees next week to answer questions on its failures to protect users’ data.
Dean Garfield, president and CEO of the Information Technology Industry Council, a global lobbying group for tech companies, said that big tech is preparing for battles ahead.
“The question is no longer whether this is an intellectual exercise,” he said. “There is the Washington bubble/elite conversation about techlash, and there is real consumer concern around a host of issues, including how the tech sector uses and enables control over data.”
How those two conversations now join together is dependent to some degree on the president and how his populist, anti-Amazon agenda plays with the political mainstream that is now looking at ways to limit the power of big tech companies.
Larry Kudlow, Trump’s new economic adviser, appears to back the president’s assault on Amazon. “I just think he wants a level playing field with respect to taxing,” Kudlow told Fox Business on Thursday. Kudlow’s remark seemed to ignore Trump’s own assertion during the presidential campaign that his own record of paying zero tax “makes me smart”.
Kudlow was referring to Amazon’s tax advantages. Since its beginnings as an online bookseller in 1994, Amazon has taken an independent approach to taxes, collecting no state sales tax for many purchases until recently, and still does not pay local tax in some cases.
Moreover, Amazon is not always obligated to raise sales tax on sales through third party vendors, giving both vendors and Amazon advantages over brick-and-mortar retailers already suffering from changes in consumer habits.
Then there is the issue of the post office. According to Trump last Sunday: “the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars.”
He continued into the week. “I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy,” Trump said on Twitter. “Amazon should pay these costs (plus) and not have them bourne [sic] by the American Taxpayer.”
The reality is more complex. Over the past decade, the USPS has lost around $60bn despite a 60% increase in shipping and package revenue. Amazon’s contract with USPS isn’t public, but its use of the postal service to deliver packages for “last mile” delivery has helped the service make up for a steep drop in the volume of letter mail it delivers. In other words, the USPS needs more Amazons, not fewer.
According to Vanity Fair, Trump is discussing new ways to escalate his attacks. “He’s off the hook on this. It’s war,” one source told the magazine. “He gets obsessed with something, and now he’s obsessed with Bezos,” said another.
But how far can he take the fight? Trump conjoined the Washington Post and Amazon into a single enemy with a tweet in December 2015, immediately after the paper reported his campaign call for a ban of Muslim immigrants, and has continued the attacks on and off since.
After the Post published a story critical of the attorney general, Jeff Sessions, in July last year Trump claimed the Post was a lobbying arm for Amazon and that Amazon costs the postal service to deliver its packages.
Trump was apparently gleaning that information from a Wall Street Journal article published days earlier titled Why the Post Office Gives Amazon Special Delivery that argued that Amazon was using its size to take advantage of the postal service.
According to Craig Holman, a government affairs lobbyist with Public Citizen, a consumer advocacy group, there’s no question Trump attacks Amazon as a surrogate for Bezos and the Washington Post.
“He’s hoping Bezos will apply some pressure on the Washington Post to back down on its criticisms,” said Holman. “I seriously doubt that’s going to happen. The Washington Post is a seriously independent newspaper, and Jeff Bezos is much wealthier as a result of Trump’s tax cuts. This won’t have much of an impact.”
Last week, Business Insider published a study comparing Trump voters (63 million) with Amazon Prime members (in the region of 60 million, according to some estimates). In a showdown that might threaten US consumers’ access to free shipping, the outcome is a no-brainer.
“If Trump were to take action that caused Amazon’s shipping costs to go up, the relevant stakeholders – including nearly 100 million American customers – would be broadly united on Amazon’s side of their business dispute with Trump,” predicted the publication.
Still, says Holman, there is concern that Trump’s continued attacks on Amazon and the Washington Post will feed into existing distrust of the media and, increasingly, of tech giants through which the news media is distributed and who are now gearing up for regulatory battles.
“He’s using every avenue he can think of to undermine the credibility of the independent press,” Holman says. “But I have the feeling Trump is out in the wilderness and he’s not going to succeed in his efforts to undercut the Washington Post or the mainstream media.” Americans, he says, “have become for good reason much more skeptical of his intentions”.