Bezos will ‘break up his own company’ before regulators do

From CNBC:

Amazon CEO Jeff Bezos could break up his own company before regulators do so themselves, Atlantic writer Franklin Foer predicts.

Foer, who wrote the Atlantic’s November cover story entitled “Jeff Bezos’s Master Plan,” said in an interview Tuesday on CNBC’s “Squawk Box” that people close to the CEO believe spinning off Amazon Web Services from the e-commerce business “would be the obvious thing for [Bezos] to do in the face of this.”

“I think that eventually Bezos, who is seeing around corners, is going to break up his own company,” Foer said. “AWS exists as its own fantastically profitable business. There’s no reason that it needs to be connected to Amazon the e-retailer. And as he looks at what’s happening in politics, where there’s this increasing bipartisan consensus that Big Tech is a problem, I’m pretty sure he’s going to say, ‘OK fine.’”

. . . .

AWS accounted for 13% of Amazon’s total revenue in the second quarter of 2019, but a whopping 52% of its $3.1 billion in operating income for the quarter.

Link to the rest at CNBC

PG says antitrust investigations can and have hamstrung lots of large, successful companies, even if they don’t result in sanctions.

The antitrust investigations and suits against Microsoft in 1994 and 1998 arguably prevented MS from exploiting internet opportunities that were taken by others. Google Chrome displaced Internet Explorer as one example. Ironically, during its early years, Microsoft benefited from antitrust lawsuits against IBM in the 1980’s.

If Bezos can avoid serious antitrust actions by voluntarily breaking up the company, the minified-Amazons might continue the company’s success free of any throttling constraints.

44 thoughts on “Bezos will ‘break up his own company’ before regulators do”

  1. Amazon these days is a conglomerate instead of a unitary company and many of tbe units barely interact if at all. So splitting the company in two (remember the HQ2 conversations) would be a trivial exercise with no significant impact on day to day operations.

    It might actually be worse for competitors to have to deal with two or three Amazons, each hungry for growth, than just one.

    • Maybe.
      It’s been funding Amazon’s expansion into shipping and video and, soon, satellite internet. The only limit is Bezos’ ambition.

      The rest of Amazon is profitable but nowhere near the kind of rainmaking operation as AWS so if they do spin it off, the seed businesses (and poltical pressures) stay with AWS. There would be little gain on that end, except embolding the whiners to go after AWS in a couple of years.

      • I think that if they spin it off AND rename it without the Amazon name, it would fade into the background. Disassociating the business from the piles of cardboard boxes everyone sees everywhere is all it would take from a PR perspective.

        • Sorry, but I don’t think so.

          The masses are all about Amazon’s visibility but tbe agitators are about Bezos’ tactics and unending success. Spinoff and rename AWS and they’ll just have a seemingly different target. It’s not about perception but about the seed businesses. AWS and Lab126’s success in establishing new markets at the expense of entrenched players is tbe real sticking point. (Expect UPS to join tbe ADS crowd by next year.)

          Note that Apple is bigger and has zillions of unused cash and nobody goes after them because they stay in their little niche. (That may change in the unlikely even Apple+ actually succeeds but for now they’re not seen as predators. They know their place and stay there, as evidence by their non-compete salary antitrust case.)

          AWS on the other hand demonetized Linux support companies, marginalized Oracle, Salesforce, and IBM and left Google in the dust. AWS’s money isn’t new money: it comes from the old cows and they’re the ones running crying to the politicians.

          (The interesting players in that market are Microsoft and IBM. MICROSOFT is, as they typically do, competing with gusto instead of whining and IBM is looking to do an endrun by leapfrogging to a Quantum Computing cloud. Thumbs up to both.)

          Changing tbe name isn’t going to mollify the fat cats losing business and money to AWS. And if the satellite internet business actually (ahem) takes off you’ll see the telecoms going after AWS. Stuck fighting with streamers they can’t afford to fight Amazon over cheap global broadband so they’ll start whining too pretty soon.

          • Agree with Felix. AWS is successful for the services it provides. The name Amazon doesn’t matter to the techies who choose to use AWS services, but I am not so sure that AWS and the Amazon store can be separated without damaging the Amazon store.

            Bezos is astounding because he combines both the qualities of an astute entrepreneur and an innovative engineer. The Amazon store would not work if Bezos had not figured out how to provide the infrastructure to scale up and down without sinking an unrecoverable investment in unused compute capacity.

            Enterprise computing is a lot like solar electricity– it doesn’t work economically unless you have the means to supply power at midnight and store it at high noon. AWS provides the compute capacity the store needs to support the site during peak shopping periods while still getting a return on the infrastructure investment during the slow times, which occur in daily, weekly, monthly, seasonal cycles. A global enterprise smooths out some of the daily cycles, but compute demand is still bursty. AWS demand is undoubtedly bursty also, but I will bet that they tailor and throttle their services to support the store.

            This is one of the many secrets to Bezos’ success. His competitors like Walmart don’t have that flexibility. Could he preserve that edge if AWS is separated off? Is it a form of vertical monopoly? Probably not in the traditional sense, but it has some similarities.

            • Vertical integration isn’t illegal. (Yet.)

              The key things about Amazon is that it require all its established units to be profitable but it doesn’t force them to pursue maximum unit profits, just maximum share. And that it allows its seedling units to grow without pressure. They don’t stunt the long term for the short term.

              These policies are common in tbe tech world but not in the retail or publishing worlds. It’s actually standard startup management practice (What Bezos calls day one.), but open ended.

              That is what makes companies like Amazon (and SpaceX) so interesting to watch: figuring where they’re going next. They’re both in the disruption business.

              In this case they’re both going after satellite broadband: a class for the ages. After that I’d bet they both go after asteroid mining. That will be a joy to behold.

      • The only limit is Bezos’ ambition.

        His ambition has limited itself.

        Bezos ambition took a wrong turn when he decided to enter the political arena. That cost him very strong support from traditional free market capitalist types. Now, he has succeeded in lining the left up against him, and lining the right up against him. Nobody supports him.

        As Google and FB moved to the left, they attracted unwelcome attention from the right, and then they managed to alienate the left. Bezos took the opposite path. He attracted attention from the left, and then managed to alienate the right.

        Alienating the right was an unforced error. And the divorce and his fight back? All anyone remembers is how silly it all looked.

        Investors don’t give a hoot about him. They care about money, and AWS is money. As long as Bezos was money, they cared about him. Now he is becoming a liability.

        • Neither side is a trustworthy supporter.

          There is a very old saying the tech world, dating to at least the 80’s: “If you need government help to survive, you won’t.”

          (And its not about contracts.)

          As is, Amazon products and services aren’t leftist or rightist, which neither Google nor Facebook can claim. People can use them as they please without Amazon permission.

          • As is, Amazon products and services aren’t leftist or rightist,

            Nobody cares. Bezos is the target, and he has dragged Amazon into the mess with him. Nor are wages, working conditions, trade practices, and destruction of main street left or right. But they are fodder for both in a political fight.

            Watch the new phrases being used lately by the Trump folks. They speak of the “Amazon Washington Post” and “AT&T’s CNN.”

            This is matched by Bernie’s and Warren’s people telling us about the richest man in the world refusing to pay a living wage, offer health insurance, and forcing the taxpayers to support his employees. We can easily explain the difference between Bezos and the Amazon corporation, but nobody cares.

        • Bezos showed he’s a politician at heart when he tried to deflect from his infidelity (captured via leaked pics/emails) by drumming up a nonsense excuse – ‘the Saudis did it on Trumps orders because of the fake news WaPo treatment of POTUS’.

  2. Well, in the case of Microsoft, they *were* engaged in unlawful business practices, lied under oath in court, and the defendants’ team of lawyers and programmers made Microsoft’s “Dream Team” lawyers look like monkeys in the courtroom every time they did it. And it didn’t help that this was not long after Microsoft had been caught outright stealing software from Norton Utilities and Stac and settled out of court…

    Microsoft’s management chose to do those things, and they got caught. Blaming their problems on lawsuits is disengenuous.

    • And what did antitrust achieve?
      It cost MS a few weeks’ cash, enriched a bunch of lawyers and golden parachuted a few incompetent managers (especially at WordPerfect) and replaced Internet Explorer with Chrome.
      Oh, and Microsoft rolled merrily along, diversifying even more and quietly grew to where it is the most valuable along with Amazon and Apple.

      Very Shakespearean in the end: “A lot of sound and fury…”

      The judge didn’t even find them guilty and the rigged trial ended his career.

      Involving politicians solves nothing in today’s business world. Mostly because the big tech companies ride change, they don’t create it. They see it coming and exploit it.

      • MS wasn’t caught up in the political fight that Google, FB, and Amazon are in. We don’t know what direction it will take. Looks like the EU might lead the way, and they have some pretty nutty ideas.

        • They’re not in that fight because they don’t sell the data they collect and mostly the data they collect really is about performance of their software.

          The same applies to Apple and Amazon: the three collect data but it stays with them. A bit harder (though not impossible) to get in trouble.

          • The fight is about more than selling data. It has a strong anti-trust and unfair trade practices factor.

            Each of the three has some unique factors and some common factors.

            A political fight isn’t premised on logic. People will use what works once a target is selected. In that climate it’s easy to get in trouble. Bezos is in trouble because he decided to enter the political battles after enraging other factions with wages, working conditions, trade practices, and Chinese junk.

            It’s a bit amazing how Google and FB managed to lose support on the left, while Amazon managed to lose it on the right.

            • The Microsoft fight was purely political: MS was apolitical and didn’t contribute “as Microsoft” to either party. Instead, their execs contributed as individuals. Pretty big numbers. And their entire DC lobbying operation was one part time lawyer tracking tech bills going through Congress.

              The Netscape head honcho was the top fundraiser in California for Clinton and afterwards went whining to the Prez with his chit, who sent him to Reno.

              Reno siccced the DOJ and hanging judge on MS and the political drama was on.

              Nothing was achieved and the trust busters were unable to prove anything otherthanthe onbvious: MS had a big market share in one (carefully defined) segment of the broader OS and software markets. The Judge called it a monopoly in the findings of fact, handcuffing higher courts and allowing the roadkill to sue for money that came from price raises.

              It was all political drama and the only measurable result is MShas one of the biggest DC lobbying operations, Congress run on free Wintel hardware and software paid for MS and MS makes big political contributions to both parties.

              Folks whine about Citizens United but forget that when corporations don’t pay off politicians they get drama.

              It wasn’t antitrust, just an old fashioned shakedown.

              And the whiners begging the government to protect them from evil Microsoft? All gone. Companies were roadkill to start with from self-inflicted wounds.

              Amazon’s “troubles”?
              All media-hyped union inspired.
              Ignore the media and the astroturfers and look instead to their sales numbers.
              They’re not hurting one bit.

              The masses vote approval and disapproval with tbeir credit cards and the cards are with Amazon, not the astroturfers.

              And unlike Microsoft, Amazon and today’s other big companies have tbeir own ma$$ive lobbying organizations. Sit back and watch as…nothing happens. (Have you seen Facebook’s financials?)

              Again, it’s all sound and fury signifying nothing.

              • Ignore the media and the astroturfers and look instead to their sales numbers.
                They’re not hurting one bit.

                Agree. But hurting has little to do with being in the political cross hairs. Amazon could split up and none of the parts would be hurting.

                And I agree the MS effort was political, but the political climate then is far different than what we see now.

                • A difference that makes no difference is no difference.
                  People have been whining about Amazon, to no effect, for twenty years. Changing the ADS cast over the years has had and continues to have no effect.
                  If politicians were to “do something” about Amazon they would’ve done it before they became the biggest employer in entire stretches of the country.
                  They didn’t.
                  They won’t know.

                  Don’t buy everything politicians say, of nothing else because as forty year old hot button issues have proven, they prefer to have an open problem to campaign ontban a solved “problem”.

                  Campaigning on “doing something” about the big (tech) companies goes back a hundred years with the result that there are more and more powerful big companies after each “fix”.

                  In over a century there is but one true win and it came right at the beginning. Going after IBM did nothing for the seven dwarfs; they all gone and it took fifty years to marginalize (for now) IBM. They may yet end upback on topby next decade. Going after At&T made a big mess and after twenty years we ended up exactly where we were, with two and a half telecom giants. Going after MS achieved even less: they weren’t broken up, their IP wasn’t nationalized, they didn’t even have to pay consumers like Apple, or even found to have violated any actual laws. Just tried and failed. Maybe.

                  Their biggest exposure is tying KU to KDP SELECT. And that is no slam dunk.
                  The marketplace? Outlaw tbat and you outlaw eBay, Rakuten, and AliBaba.

                  Amazon’s only crime is being a better competitor than the astroturfers. And that is no crime.

                  Don’t buy into the media hype. It’s all talk, no meat.

                • A difference that makes no difference is no difference.

                  Agree. But the difference in the political climate from 25 years ago is profound.

  3. Antitrust (whether consumer-focus like the US or competitor focused like tbe EU) can’t deal with Amazon, Microsoft, or ALPHABET because they aren’t anti-competitive but rather hyper-competitive.

    They are ready, wil!ing, and able to go up against anybody, including each other, and relish the opportunity to crush the less competent. They’re throroughly Darwinian and have no time for the lazy or incompetent.

    And they’re all focused on the “next thing”, not the past.
    They’re not afraid of failure or of taking on an entrenched player.

    None of which is particularly bad by itself.
    But like any organized entity they will strike back when attacked. Few enemies survive, even when they “lose”.

    • Antitrust (whether consumer-focus like the US or competitor focused like tbe EU) can’t deal with Amazon, Microsoft, or ALPHABET because they aren’t anti-competitive but rather hyper-competitive.

      Anti-trust can deal with anything in a political fight. And so can brand new legislation.

      • Is antitrustgoing to fix Wal-Mart’s website?

        It antitrust going to make AWS customers move to Oracle’s overpried and underfeatured, also-ran cloud operation?

        Is antitrust going to take away Amazon’s electric delivery vans? Aircraft? Distribution centers? data centers? R&D staff?

        Is antitrust going to stop KDP users from pressing “upload” or consumers clicking “buy now”?

        Or, has any Amazon warebouse voted to unionize?

        Hype, hype, and political drama.

        Deeds, not words.

        Again: “If your business needs the government to survive, it won’t.”

        Lotus is gone; Word Perfect, dead and buried. Netscape? History. And on and on.

        The best revenge is surviving.

        • Oh, and if you want a real measure of Amazon power, try the numbers:

          – 250,000+ jobs spread over 45 states. In many counties they’re the biggest employer.

          – 80 million Prime members over all 50 states.

          – Capitalization of $900M+.

          Remember the movement to draft Gates for president?
          Look to Amazon’s recent statement of Beliefs?
          How would a draft Bezos movement fare?

          Amazon will live long and prosper, like it or not.

          • This quote echoes my comment somewhere up above. ADS is primarily driven by the visibility of Amazon boxes. AWS is an also-ran in that respect. Nobody cares, and nobody cares about what the people who do care object to.

            Part of Amazon’s defensiveness stems from executives’ conviction that regulators’ concerns are based not on logic but on a misguided understanding of retail. One executive told me that the real problem is that Amazon is disproportionately popular among lawmakers. Congressional aides, high-profile journalists, and other élites often use Amazon to buy kitchen supplies and Christmas gifts. They watch “The Marvelous Mrs. Maisel” and shop at Whole Foods. They don’t even know the location of the nearest Walmart, the executive said, and therefore think that Amazon is much more powerful than it really is.

            • Regulators misguided understanding can do incredible harm. Amazon execs are right to be concerned about it.

              The EU seems to be the gold standard in misguided understanding, but the US regulators are up to the challenge.

              • Well, of course the EU doesn’t like Amazon.
                But the US isn’t France where they can pass an anti-Amazon law. And when that failed they passed another. And when tbat fails…
                The same with Google.
                Don’t overestimate government power, much less their intelligence.

                But in the US, for each politician the ADSers buy, Amazpn can buy three. It won’t even cost much since they’re cheap.
                Last I heard, congressmen have been convicted for $30,000 and Senator for less than a million.

          • I doubt a draft Bezos movement would do very well. And I agree Amazon is doing very well. So what? What does that have to do with political fights?

            • About as mich as politics have to do with big business.
              Politicians can mess with Bob the plumber but once a business grows national, to say nothing of multinational, they can flick off IdiotPoliticians™ like flecks of dust on their shoulders.

              Most are just smart enough to do it off-camera.

                • About as well as most things political.
                  (Hint: not very.)

                  Like I said, it’s easy to overestimate/misunderstand politicians.
                  Especially since tbeir stock in trade is saying one tbing and doing the exact opposite.

                  “An honest politician is an oxymoron.”
                  “An honest politician is one that stays bought.”
                  “Q: How do you know a politician is lying? A: Their mouth is moving.”

                  Those aren’t jokes; they’re folk wisdom.

                • Those are indeed good jokes about politicians. But, the awful stuff they manage to inflict on millions isn’t a joke. They are very effective at screwing things up.

                  We may sit around and tell each other how misguided the EU is and how they lack an understanding of the digital world. They aren’t listening.

        • Agree deeds mean more then words, and anti-trust isn’t going to affect anything you mention. That is not the object.

          I also agree with, “If your business needs the government to survive, it won’t.” But what do they say about government being your enemy?

          • The same as being one of the Government’s biggest suppliers. Who are by law required to go with low cost bidders.

            Are you aware of how much business ground level government units do with Amazon? Or the big boys, like the DOD $10B JEDI contract that Oracle keeps protesting and keeps getting busted on.

            It isn’t just consumers who stretch their budgets by doing business with Amazon. GAO and low level government purchase card holders are Amazon regulars.

            Try this:


            While politicians talk, that is how they walk.
            Amazon and WalMart opponents tried to kill the amendment but it passed, with a built-in two year delay. That ends this year. By next year, Amazon might be adding $5B a year in small purchases and $10B in AWS business.

            Yeah, deeds, not words.

            • Btw, this is where JEDI stood in April:


              As of late september, Oracle planned to appeal the rejection of their appeal to rejection to their sept 1918 loss of the contract. Three times and they keep whining and keep losing, blindly ignoring they aren’t even close to tbe winner’s circle. If AWS doesn’t win on cost, Azure wins on the greater functionality of tbeir software stack.

              But Oracle is desperate. Enterprise computing is moving to both public and private clouds; AWS leads the former, Azure tbe latter, and both lap Google, IBM, and Oracle.

              Revenue-wise, Azure barely edges out AWS $21.2B to $20B and Oracle beats Google $6B to $4B.

              Customer-wise, AWS has the lead, 68% to 58% over Azure and Oracle trails Google’s 19%, IBM’s 15%, and VMWARE’s 12% with 10%. They do beat Alibaba’s 2%, though.

              Combine both and its easy to see why ORACLE appeals keep getting bounced. Too expensive for the low-cost bidder government market. When Microsoft beats you on cost you’re toast. (6x the customers, only 3x the cost.)

              Easy to see why Oracle is spearheading the ADS astroturf campaign and why Microsoft isn’t in it.

            • Well, they have a clever saying, ““If your business needs the government to survive, it won’t.”

              What do they say about the government being the enemy?

              Doesn’t really matter if Oracle lives or does. bezos has still dragged Amazon into the political cross hairs.

              • Only if you ignore ADSers, in and out of government, who have been openly talking antitrust, FTC, and all sorts of government action against Amazon all century long.

                Long before Bezos bought the WP.

                You don’t even need long memories to recall the BPHs’ calling for “government action” in 2014, or congressional representatives and senators talking of a need for online sales tax to “stop amazon” earlier this decade.

                Look, after the Microsoft case, the few tech companies that weren’t politically active went political. Amazon included.



                Note the spike after 2014 after the BPHs openly talked of resorting to “government action” agaibst Amazon. They went from Microsoft levels of lobbying to Google levels. Will probably go higher.

                They’ve been lobbying all century long and are currently spending almost twice as much as Microsoft ($15M vs $8M), more than double Apple ($6.6M) and almost as much as Alphabet/Google’s $16M.

                (Remember what I said about politicians being cheap to buy.)

                Even when Amazon was reporting losses over tbeir big investments, they were “investing” significant sums in DC. To keep ADSers at bay, to “make friends”, to grease the skids for any contracts they could grab.

                Amazon’s survival doesn’t depend on Government contracts or laws, but only a fool ignores a potential market that can be tapped cheaply.

                The $60B at play in the JEDI contract and Amazon Amendment won’t make or break Amazon tbe way LOTUS suing BORLAND over QUATRO broke Lotus and “saved” Borland (for a while) but it won’t hurt Amazon’s bottom line; the lobbying involved is cheap.

                It’s all part of the game, the price of doing business, as much a regular cost of operation as PR.

                They were political before Bezos bought the WP, before the orange guy, before AOC and the socialists targetted them, and they will be political long before they’re all gone.

                You might want to look into Philip Bobbitt’s SHIELD OF ACHILLES.

                It’s old and tradpubbed but very on point to the limits of state powers and ability to deal with competitors to them, especially in the final sections where he postulates the emergence of “Market states”, transnational organizations, both commercial (Apple, Amazon, Samsung, Hyundai, Hyundai, etc) and political (Soros, ISIS, etc) or both (the Dart family of the Cayman islands–recently profiled by tbe NYT).

                In his model, the biggest multinationals are becoming transnationals and transcending the power of indivual nation states to regulate and control and possibly supercede them.

                Some of it is already happening, in small countries like the Caymans (where one family uses business to control the country), in the EU (where government support of “national champions” has flipped and the entrenched companies control the government), Russia (where Putin and tbe Oligarchs have an ever tighter symbiosis), and in the US, where politicians struggle to “tame” the likes of Google, Facebook, and Amazon while serving the interests of Boeing, the Military Industrial complex, and transnational politicians like Soros and the Orange guy. And in each case, these organizations power comes from the masses, not the traditional politicians.

                In many ways, the future he posited is nearly upon us. One thing to expect is a result of the current trade wars, the coming time when tbe Chinese Communist party finds out that tbere is a fine line between telling the likes of Huawei what to do and doing what Huawei tells them to.

                It’s just one model, but it is far more nuanced and realistic than assuming nation state politicians being almighty. And it is based on the idea that power flows to whomever best serves the interests of tbe aggregate masses, not necessarily to parties, tribes, or individuals.

                All the talk about about changing antitrust law is dated thinking that fails to recognize that the transnationals have too many options to neuter by last century thinking, progressive, socialist, or whatever.

                • Why ignore ADSers in a political fight?

                  And the WP? The point there is that the left had been agitating against Amazon before Bezos bought the WP. When Bezos bought the WP, and chose to bring Amazon into the political fight on the side of the left, he alienated the right, while getting no relief from the left.

                  And the talk of updating anti-trust isn’t to use last century thinking. It’s a recognition that last century thinking isn’t useful. We can call the new legislation George if the anti-trust label doesn’t apply.

  4. BTW, try spending some time looking up individual companies and industries at OpenSecrets. Lots of interesting facts emerge.

    For example, Amazon lobbying is bigger than half of the major retail lobbying and five times Walmart’s. In fact, half of that is from medical retailers.

    Amazon spends about as much as Boeing, which has the government wrapped around its little finger, and 25% of tbe (open) military ibdustrial complex.

    But Amazon is peanuts compared to the half billion spent annually by the health care industry:

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