By Tonya Garcia, MarketWatch
Amazon.com Inc.’s longstanding antitrust issues could take center stage ahead of the presidential election, say Monness Crespi Hardt analysts.
Tech companies are increasingly the focus of Trump administration investigations, with the Justice Department and the Federal Trade Commission looking closely at antitrust issues.
Perhaps sensing a bigger fight brewing, Amazon /zigman2/quotes/210331248/composite AMZN -2.65% , along with Facebook Inc. /zigman2/quotes/205064656/composite FB -2.05% and Apple Inc. /zigman2/quotes/202934861/composite AAPL -2.26% , ramped up their lobbying to record levels in 2019, with Amazon spending $16.1 million.
The issue has been a persistent one for Amazon, with GlobalData Retail saying that a 2018 revenue slowdown at the e-commerce giant could poke holes in the talk of a monopoly. Other onlookers as far back as 2017 suspected that government intervention could be imminent.
But in an election year, the sour relationship between Amazon, Jeff Bezos and President Trump could heighten.
“We expect the antitrust rhetoric to reach deafening levels during this presidential election year, while Amazon’s relationship with the White House remains the most precarious within Big Tech,” analyst Brian White wrote in a note.
Monness Crespi Hardt rates Amazon stock buy with a $2,250 price target.
President Trump has singled out Amazon Chief Executive Jeff Bezos on Twitter because of Bezos’ ownership of The Washington Post and with claims that the U.S. Postal Service was losing money on Amazon e-commerce package deliveries. Trump ordered a review of the USPS’s finances, but not much has been said on the topic for some time.
The Post Office had blamed the U.S. government, and not Amazon, for its losses.
More recently, Amazon blames Trump for losing the $10 billion Joint Enterprise Defense Infrastructure plan, or JEDI, contract with the Pentagon. JEDI instead went to Microsoft Corp. /zigman2/quotes/207732364/composite MSFT -3.16% in October.
Amazon has filed a lawsuit over the contract.
Amazon is scheduled to announced fourth-quarter earnings on Thursday after the closing bell. D.A. Davidson analysts led by Tom Forte say they’ll be listening on the call for comments about this appeal. The JEDI contract is “what we consider to be the company’s biggest loss since its inability to secure government support of its New York City HQ2,” analysts said.
D.A. Davidson thinks there are two factors that will help Amazon in the antitrust fight: the company’s investments in shipping, which would position it to “break the duopoly” between FedEx Corp. /zigman2/quotes/203047719/composite FDX -1.01% and United Parcel Service Inc. /zigman2/quotes/201245396/composite UPS -3.32% in the U.S.; and its growing advertising business, which will snap the stranglehold that Google and Facebook have on that category.
“[These are] excellent arguments for Amazon on its efforts to promote more competition, which should provide protection against an increasingly hostile global regulatory environment for big technology, including Amazon,” analysts wrote.