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Jul 16, 2021

Amazon Is In For a Rough Ride

Did you know that Amazon has a new CEO? I remember back in the nineties; I pledge that I would never use Amazon again because they filed and were awarded a patent on technology everybody was using.  Jeff Bezos is out of a job.

[00:00:19] This is a guy that grew a company that all they did initially really was book sales, and they had a warehouse the size of the Amazon, right? Because they wanted to represent everybody. They had every book ever published, and to a large degree. They did. They had a whole lot of bucks, and then I've expanded, of course, beyond that.

[00:00:47]And beyond that, to the point today where they are doing some well, again, shady things I mentioned in the intro that I was concerned about what Amazon was doing with pat. They got a patent on this one-click purchase. Now I have been a fan of patents for a long time. I do not like the patent law as it exists today.

[00:01:14] And in fact, I haven't liked it for quite some time, but this patent law where you don't have to show that there was no prior art and frankly, the prior art does not matter at all. I think that's huge. And I've had a number of patent attorneys on my show, talking about it and talking about what we may want to change.

[00:01:37]Jeff Bezos grew it to today, where it really is the number one provider of online services is. You might, in fact, almost certainly are using Amazon's services, whether you realize it or not to go to most, any website, any of the big ones they're probably using Amazon's web services. They're probably using Amazon storage, and Amazon has dozens and dozens of different services.

[00:02:09] So it's a very big deal. And Jeff Bezos, who's the guy that started all of that, sat down stepped on. I should say. Now it's rare that the founder of a company ends up taking the company public. Public, basically, that just doesn't really happen because all of a sudden, when you're public, your whole job changes, and no longer can you make a decision, a snap decision about something, and then go ahead and do it.

[00:02:37] You've got to be very careful about what you do when you do it, how you do it, you have to announce it and everything, but just an amazing man being able to take it—all of that. And by the way, he have the largest settlement, a divorce settlement in history with his ex-wife. It's amazing, but he is still the world's richest human.

[00:02:59] Now he has this company called blue origin, which is his rocket company. He's got the Bezos earth fund, and he's still chairman of Amazon's board. So he's not going anywhere. However, we've got this new guy, Andy Jassy, who has stepped in as the CEO of Amazon. He was the head of Amazon's online services, which is absolutely huge. It's their most profitable arm by far. So he's taking this whole thing over when Amazon, frankly, is in a lot of trouble. Now they're basics of, Hey, there, the money that they're making, their profits and everything, that's all well and good, but there are ongoing antitrust investigations.

[00:03:52] There's a battle with labor. And we're talking about, of course, big labor here—the unions. There's increased competition in the cloud space. Just look at what happened with the US military in there. I think it was at least a billion dollar. I can't remember the exact number, a cloud contract because Amazon was battling Microsoft Azure and it was awarded.

[00:04:20] And then just a couple of weeks ago it was pulled back again. They're also seeing increased competition in their online services from Google. And I use some of those Google services. In fact, if you go to Craig, it's actually right now using some of those Google services. So they are really getting nailed from a whole bunch of different directions.

[00:04:45] And this guy Jassy has worked there since 97. But he may be the perfect person to guide Amazon through. W really now we're talking about the middle-aged, that's the time when you're supposed to buy your convertible, buy your motorcycle, et cetera. The middle aged years. And in this case, there's some problems.

[00:05:10] Here's a quote I want to read from this Yahoo article is actually I think AP yeah. Yahoo finance. This Yahoo article and it's from Harvard business school, because we've got regulators who are circling, and this may be the main reason Jeff stepped down. I don't know, but quote, you may want somebody who has the confidence of the chair.

[00:05:35] And the board you want somebody who understands the strategy and was part of it and knows where the bodies are buried and the mistakes that have been made and how to move forward. This is from Harvard business school, professor of business administration. Rosabeth Moss Kanter, and I think she's right.

[00:05:58] Absolutely because this road ahead for him is going to be tough. But the fact that he ran their most profitable division tells you something, it tells you a lot and he might be the exact right guy to be able to do that. Amazon's now got a market capitalization of about $2 trillion, which is huge.

[00:06:20] And it's certainly enough to get some of these regulators. Paint a lot of attention to what's going on. We've got the Washington DC attorney general, who has accused them of violating the district of Columbia's antitrust act. And that has to do with, for bidding third-party resellers, from offering cheaper rates for their products on competing sites.

[00:06:43] Cause remember what Amazon does. About half or more. In fact, I think now of their products are not actually sold by Amazon. They're certainly not Amazon products. They are products from resellers who are just selling on Amazon. They're using Amazon is their platform. And that way Amazon will manage the inventory.

[00:07:06] It'll warehouse a little ship it out. It'll handle the returns. Yeah. What Amazon is doing is charging these sellers for the space in the warehouses, which is perfectly legitimate and taking a percentage of the deals. Are there other websites that might give these sellers or resellers or stuff they're importing from China or wherever.

[00:07:31] Might there be other sites that give them better deals? Will you bet there are sites out there. So that's why she's suing them. Federal regulators look like they might be coming in as well. The federal trade commission's newly appointed chairman. She's a fierce critic of the. Amazon way of doing business and she made herself a name by publishing an article for Yale's law journal titled Amazon's antitrust paradox.

[00:08:01] So before she was even appointed to the federal trade commission, she was already calling for changes in the current antitrust regulatory framework. And that might be widely invited administration has appointed her, but there's six antitrust bills. Targeting big tech right now that are working their way through the house of representatives.

[00:08:24] And we've talked about some of those already, and, I do not like these huge tech companies that are making crazy profits and using those profits to keep other people out. And Amazon's one of the largest employers in the country. And after years of complaints from somewhere house workers, we've got the labor unions now in the mix trying to take action.

[00:08:49] Now, I don't have a single problem with labor unions while at some of their tactics, I have problems with, I don't have a problem with the labor union. In the private space. I have a huge problem with I'm in government space. And we could talk about that at some point, but I don't have a problem with them trying to organize inside Amazon.

[00:09:12] So the international brotherhood of Teamsters. Yeah. I remember the guys that drive the horses. They announced that they're going to begin working to organize Amazon workers. So that might succeed. There was another one in Alabama that had failed. So are you getting the hint here? This is huge. It's huge.

[00:09:32]By the way, Amazon's offering warehouse workers starting pay at $15 per hour plus benefits. So that doesn't seem too bad. If you ask them. But again, with the pandemic, all of the stuff going on there been a lot of calls for Amazon to quote, treat its workers better. So we'll see. We'll see what happens.

[00:09:53] Other problems with Amazon that we've talked about before are things like fake reviews. You and I, we look at the reviews, it's critical in us buying things. Isn't it. We look at the reviews and say, oh, wow. Jeepers. There's 500 reviews here and it's four and a half stars. Okay. So I can have confidence that this product is good.

[00:10:17] It's going to work. And yet some of these sellers, what they're doing is bribing people to give a good review. So they'll say, Hey, you buy my product. And then they send the product in with, along with the product is a little note saying, Hey, if you give me a review and send me a link, I'll send you an extra battery or whatever it might be.

[00:10:39] That has been a real problem for Amazon, even worse than that, because at least those people might give an honest review, right? Worse than that is that some of these reviews are paid for. So some of the sellers it's alleged are going out there. They are hiring. People and paying them to give reviews. Now, those ones are very obvious.

[00:11:04] If you look at the reviews, so don't just look at there's 500 and the average is 4.5. Look at some of the reviews in the wording. So I've seen reviews where it was for a massager, and there was talking about what a great. A set of wheels that has on it. And they work really well. And it's very smooth when you're out, riding it on the trails.

[00:11:27] Wait a minute wait, we're talking about a massager here. We're not talking about a bicycle, so that's one of the ways to tell if the reviews are fake, they're don't even talk about the product at all, or any of its real features. The other one is look at the wording because most of these fake reviews.

[00:11:45] Don't use English, so good. All right. Okay. Thanks for being with me. I want to make sure you stick around and visit me online. In the meantime, go to Craig If you sign up for my free newsletter, you'll be getting that every week with all of the details. I'll try and catch you up and you can listen to my podcast, right from there.

[00:12:09] That's Peterson with an O.