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- According to a new research note, Amazon bulls could ignore a critical threat to society.
- Antitrust actions against the company can take place at the state level despite the fact that the company is not afraid to violate the federal antitrust law.
- Watch the Amazon Live Trade.
Amazon bulls may be facing a rude awakening after state-level antitrust actions against the e-commerce giant.
A report by DA Tom Forte, Senior Research Analyst at Davidson & Co., notes that the company has taken steps to avoid antitrust violations by the federal government, although state-level concerns may be the most important great threat. Although Forte did not elaborate on the details of a state-level regulatory attack, he cited Sucharita Mulpuru, e-commerce and retail sales manager at Forrester Research, in this regard.
"According to Forrester, the federal government, more than likely, will do nothing to slow down / stop Amazon," wrote Forte. "More likely, the regulatory changes will occur at the state level and ultimately lead to the Supreme Court, similar to the legislation on online sales tax."
The decision, which requires online retailers to collect taxes at the state level, regardless of where they live, originates from a complaint filed by South Dakota at the state level. A Supreme Court decision then applied it at the federal level.
At the time of the Supreme Court ruling, Amazon was already paying the tax in the 45 states where it operated. However, its initial growth was, for many years, stimulated by the ability of consumers to avoid the sales tax by buying online.
One of the measures taken to avoid federal antitrust measures was the removal of a "most favored nation" clause in Amazon's agreements with third-party sellers. The clause required sellers to agree not to sell their products at prices lower than those listed on Amazon. The retailer removed the clause in silence after a letter from Senator Richard Blumenthal called the practice anti-competitive.
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Amazon is clearly aware of the regulatory risks it faces, pointing out that the evolution of government regulation is one of the main risks of its 10K annual filing. Although the company does not highlight state-level actors, such as regulators and attorneys general, it notes the risks of future actions in its ranking.
"Unfavorable regulations, laws and rulings interpreting or enforcing these laws and regulations could diminish the demand for or availability of our products and services and increase our cost of doing business," the document says.
Given the large number of state-level politicians struggling to attract media attention, anti-trust action against the company would certainly gain the attention and support of many circles. The presidential candidate, Elizabeth Warren, was particularly virulent on the subject by publishing an open letter entitled "Here's how we can break Big Tech."
"Here is what will change: small businesses would be better off selling their products on Amazon without fear that Amazon will drive them out of business, "said Warren.
Amazon is up 21% this year.
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