TRUMP IS RIGHT ABOUT AMAZON
Once again, despite the flurry of so-called experts who were quoted in the financial media saying President Trump has no idea what he’s talking about when he tweeted that Amazon “are putting many thousands of retailers out of business”, somebody with experience running one of the world’s largest retailers shocked a handful of financial journalists on CNBC when he said Friday afternoon on “the Closing Bell” that, actually, Trump has a point.
As Bill Simon, former CEO of Walmart US, said Congress should look into splitting up Amazon.
“They’re not making money in retail, and they’re putting retailers out of business,” Simon told CNBC.
Simon said Amazon has operated its retail segment at a loss while relying on more profitable business segments – like Amazon Web Services – to offset these losses. The company’s explicit goal is to drive its competitors out of business before seizing their market share. It’s because of this type of behavior that the government should intercede.
“It’s anti-competitive, it’s predatory, and it’s not right,” said Simon. “It’s not going to hurt the big ones. Walmart can adjusted. It’ll be there. Costco will continue to thrive.
“It’ll hurt small retailers, and it’ll hurt specialty chains,” he said. “You see what’s happened to Toys R Us and department stores. JC Penney is in trouble. And it’s because Amazon sells below cost and continues to do that,” Simon said.
“It’s destroying jobs and it’s destroying value in the sector.”
Trump published his controversial tweet early Friday, reigniting the selling pressure on Amazon’s share price.
The battle over whether Amazon should pay more taxes centers on a 1992 Supreme Court decision which ruled that states couldn’t collect sales taxes gathered by mail-order catalog unless the business is physically located in that state.
As one might imagine, this ruling – issued a year before the consumer-Web revolution began in earnest – is at the center over the battle over whether e-commerce businesses should pay more in local and state taxes. And as Gerald Storch told CNBC the ruling is “an antiquated decision.”
But its existence means that the Supreme Court, not the president, must be the driving force in upending the status quo.