Its giant Amazon.com He’s used to having everything at once. However, this is no longer the case. Since the beginning of the week, a total of 1.3 trillion. Dollars under the management of the CEO Anti-Gacy A lawsuit has been filed against Fair Trade Commission to United State Because of practices that harm healthy competition in the local market.
However, the company’s share price suggests that any stranglehold on this market is beginning to ease. Unfortunately for the company, investors and regulators may be right at the same time.
The lawsuit accuses Amazon.com of monopolistic practices, including forcing merchants participating in its main warehouse service to prioritize its own products or charging them unfair commissions.
For its part, Amazon.com claims that the Fair Trade Commission’s complacency shows that it has “moved radically away from its mission to protect consumers and competition.”
However, the Chairman of the Committee, Dr. Lina Khan, has had its sights set on Amazon.com for some time. He rose to prominence when he published a study in the Yale Law Journal in 2017 titled “The Amazon Antitrust Paradox,” in which he described the e-commerce conglomerate as a thriving monopoly, growing relentlessly without traditional regulatory oversight. On the part of investors, they have a different opinion.
Over the past 10 years, the group’s valuation based on a multiple of expected gross earnings before tax, depreciation and amortization has fallen sharply, while at the same time rival Walmart has been going along undisturbed. In 2013, Amazon’s multiple was nearly 7 times Walmart’s, but now the two are converging.
Part of the problem is that Amazon’s dynamic presence and power in the retail industry still doesn’t translate into consistent profitability after all these years. Ms. Han points out that it doesn’t matter in the end.
Some companies can behave like monopolies, using their deep pockets to operate at a loss and ultimately cornering off the rest of the market. However, Chinese competitors Shein and Temu, which maintain a different cost structure, are beginning to erode Amazon.com’s market.
Meanwhile, business deals aimed at bolstering Amazon.com’s brick-and-mortar position against Walmart — one of which was its 2017 acquisition of Whole Foods — have failed.
Laina Khan and the Fair Trade Commission are likely to criticize the group at the hearing for behavior that has in the past given it an exclusivity advantage.
Also, no matter how hard Amazon fights, the prospect of maintaining a dominant position in retail may not be sustainable. However, the digital commerce giant has not been able to convince the investing public that it is sufficiently proving its dominance. Perhaps the investing public noticed something Ms. Khan missed.
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