Let's talk about the 2019 shareholder letter from Jeff Bezos that Amazon released yesterday--and especially how I think it reveals one of the biggest threats to Amazon itself.

First, the context. Every time I write about Amazon these days, it seems like I hear from somebody who wants to, shall we say, "help fill the gaps in my education."

For example, last month I cited a report that showed, by the numbers, just how big Amazon had become--stuff like the fact that Amazon controls 45 percent of all e-commerce.

Yes (as an Amazon spokesperson helpfully and quickly pointed out), Amazon might control 45 percent of e-commerce--but that adds up to just 4 percent of U.S. retail overall (including brick and mortar). Compare that with Walmart's 12 percent.

Fair point. Consider my educational gaps filled. But, it's a funny situation to be in: a company trying to convince you that it's not as successful as you think.

Trust me, this does not often happen in media.

But then, you step back. There must be an obvious reason why Amazon would want to emphasize metrics that suggest it's not really the all-knowing, all-seeing, all-controlling behemoth so many of us think it is--just as Bezos does in the new shareholder letter.

In fact, I suspect there are two reasons.

  1. The first is simply that companies want investors to see that there's always room to grow.
  2. But the other has to do with the backlash Amazon has seen lately -- from its heavy-handed negotiations on HQ2, to the voices calling for the company to be broken up on antitrust grounds.

I wrote yesterday that I found parts of it inspiring, like where he reminds the world of how Amazon was once a scrappy upstart, and how many of the things we take for granted today (Prime, AWS, and the like) were controversial and risky bets at first.

But, Bezos is not known as a sentimental man, to put it lightly. He does things for a reason.

So, there has to be a reason why he starts his letter with two long columns of numbers showing the increasing percentage of products sold on Amazon that are sold by third-party sellers (growing from 3 percent in 2000 to 58 percent last year)--emphasizing the number of small and medium businesses that use the platform.

There has to be a reason why he is eager to concede that "third-party sellers are kicking our first-party butt. Badly."

There has to be a reason why he describes Amazon as "a small player in global retail," making the same point that the Amazon spokesperson did to me last month: that Amazon dominates e-commerce, but it's comparatively small in brick and mortar.

There has to be a reason why he talks so much in the letter about failure, and "the power of wandering," and "imagining the impossible" -- arguing that to invent things like, say, Echo and Alexa, you need a company with the resources to be able to try and fail at big things.

And there's has to be a reason why in a fairly short letter -- 2,500 words -- he spends a good amount of time talking about promoting from within, paying for employees' education, and Amazon's $15 an hour minimum wage, plus a challenge to other companies to match or exceed it.

Bezos doesn't exactly reply when I email him at jeff@amazoncom, so I can't tell for sure.

But add all this up, and I see a CEO and a company starting its public relations strategy now to start fending off an antitrust problem not too far down the road. I see a company that looks like at this as a real threat.

You don't have to believe the government would actually try to break Amazon up to constitute a grave threat. Microsoft endured a five-year antitrust battle in the 1990s and early 2000s; it's still Microsoft, but the fight took a huge toll. I think this is the undercurrent.

Is it going to happen tomorrow? Probably not, although it seems Amazon is quickly running out of friends among Washington politicians.

But to paraphrase something Bezos often likes to say, in the world of antitrust and Amazon -- this could very well be "Day 1."

Published on: Apr 12, 2019
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