Amazon shares fall after report Trump wants to curb its power

A monitor displays Amazon.com signage in New York, on March 28, 2018.
A monitor displays Amazon.com signage in New York, on March 28, 2018.PHOTO: BLOOMBERG

WASHINGTON (REUTERS) - Amazon.com shares fell as much as 7.4 per cent on Wednesday (March 28), briefly wiping about US$53.6 billion (S$70.1 billion) from its market value, after news website Axios reported that US President Donald Trump is obsessed with the world's largest online retailer and wants to rein in its growing power.

Trump has talked about using antitrust law to "go after" the company because he is worried about mom-and-pop retailers being put out of business by Amazon, Axios reported, citing five sources it said had discussed the issue with him.

Trump also wants to change Amazon's tax treatment, the report said, an issue the president raised publicly last year when he called for an internet tax for online retailers, even though Amazon already collects sales tax on items it sells direct to customers.

In response to questions about the Axios report, a White House official said no specific policy changes related to Amazon were known, but it was always looking at different options on a range of policy issues.

Another administration official confirmed to Reuters that Trump has been complaining about Amazon in private, believing the company has become too powerful.

The official said Trump links this to Amazon chief executive Jeff Bezos' private ownership of the Washington Post, which he has called "fake news" and effectively a mouthpiece for Bezos'business interests.

Amazon could not be reached immediately for comment.

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Trump has criticised the big e-commerce company over taxes and jobs in the past, without offering evidence.

Tech stocks are already under pressure after Facebook Inc acknowledged this month that user data had been improperly harvested by a consultancy.

"Capitol Hill wants Facebook's blood, but President Trump isn't interested. Instead, the tech behemoth Trump wants to go after is Amazon," Axios reported.

Changing Amazon's tax treatment or using antitrust law to thwart Amazon would be difficult.

"In my many years of being an antitrust lawyer, I'm not aware of a scenario where an individual company was singled out by the president of the United States with a strong encouragement to the Department of Justice to file an antitrust case," said Jeffrey Jacobovitz of the law firm Arnall Golden Gregory.

Michael Pachter, a former tax attorney who is now a financial analyst with Wedbush Securities, said Trump's information about Amazon's tax status is likely outdated.

"I think somehow he's convinced himself that they don't collect sales tax," Pachter said, adding that "when Trump came into office, they were already collecting sales tax" in every state that has one.

The stock, which fell as low as US$1,386.17, was last down 4.2 per cent at US$1,434.54.

"With Facebook and regulatory worries, the last thing nervous tech investors wanted to see was news that Trump is targeting Bezos and Amazon over the coming months as this remains a lingering cloud over the stock and heightens the risk profile in the eyes of the Street," GBH Insights analyst Daniel Ives said.