What Amazon’s Coming Fight Could Mean for Your Portfolio

What happens when big companies get too big? They get taken apart at the government scrapyard (otherwise known as the antitrust division of the Department of Justice).

And with the Trump administration’s new antitrust enforcer Makan Delrahim now confirmed by the Senate, it sure looks like he could swing an awfully big mallet at Big Tech all too soon. 

How Big Is Too Big?

Back in July, I warned that just such a trend was already in the works for Big Tech — Amazon, Google, Facebook & Co. — and that tech investors should beware.

“The stirring of antitrust activity,” I wrote, “goes hand in hand with overheated markets that only amplify the power of a few companies that become too big, too dominant … in a word, too powerful.”

That’s exactly the kind of language expressed by Delrahim’s agency four months later in opposing AT&T’s $85 billion proposed merger with Time Warner: “The combined company would use its control over Time Warner’s valuable and highly popular networks to hinder its rivals.”

AT&T, of course, is not exactly “Big Tech,” and the telecom has already said it will fight for merger approval in the courts. The company’s CEO says the DOJ’s opposition “defies logic.”

But the pursuit of antitrust cases has always rested as much on the public’s state of mind as it does on legal precedents.

Is an Amazon Antitrust Fight Next?

As an antitrust expert at the University of Pennsylvania Law School noted to Yahoo! Finance recently:

Attitudes toward mergers are changing, and they’re changing in the direction of more enforcement. There’s a view out there that mergers have been underenforced in the past decade or so, and that too many mergers have gone through that yielded higher prices [for consumers].

So think of the DOJ’s case as a testing of the antitrust waters to see if the tide of judicial and public opinion has turned against “bigness.”

In decades past, the rising of that same tide forced…

  • Standard Oil to break itself up into 34 independent oil companies in 1911.
  • Xerox to stop monopolizing its patents on “plain paper” copier technology in the 1970s.
  • Microsoft to give consumers a choice of internet browser software in 2000.

All of these cases threw shareholders for a loop for years, in the form of knocked-down stock prices.

If Delrahim’s lawyers win the DOJ’s case against AT&T, look for his agency to turn its crosshairs on the tech denizens of Silicon Valley and Seattle next.

Kind regards,

Jeff L. Yastine
Editor, Total Wealth Insider

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Comments 7

  1. Charles Beck December 8, 2017

    well if the gov’mint doesn’t like “big anything,” how come it is so big?!

    Reply

  2. Richard Stevens December 8, 2017

    What happened to the predicted October meltdown? Is that still coming and when?

    Reply

  3. Tom M December 8, 2017

    The government does like things big…especially deficits.

    Reply

  4. Bob December 9, 2017

    Question:
    What happens when the FAT corporate PIGS (CEO, CFO, Bd. of Dir.) buyout another company????
    Answer:
    They immediately layoff workers and stuff themselves with excess money (the hell with shareholders).
    Exception:
    Obama wasting trillions of tax-dollars gifted to “TO BIG TO FAIL BANKSTERS” wealthiest people in the county!!

    Reply

  5. Charles December 11, 2017

    Frankly, I believe that reining in these mergers and acquisitions is way overdue and far too little. At the rate they are occurring, soon there will be no competition left in any industry and the behemoth companies will do as they like, to the further detriment of consumers.

    Reply

  6. Will December 13, 2017

    Amazon is at long last getting caught up in anti trust activity you say! I had the impression that anti trust should be a preventive measure rather than closing the door after the fox was already in the hen house. So why is it that so many retailer feathers are already on the henhouse floor because no anti trust issues were raised in the past?
    Hmm, now tell me what kind of connection is there between Amazon and the owner of the Washington Post – and what connection does the Washington Post have in politics?And, why did the Obama Administration not apply anti trust to shut the door in time to prevent Amazon from consuming retailers before their feathers landed on the floor? Go and figure that out!

    Reply

  7. ROCKSON ANKOMAH December 13, 2017

    This Information is very vital

    Reply