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Trump administration: no plans to take action against Amazon

The White House rebuffed a report that President Trump planned to “go after” Amazon, a perceived threat that had shaved billions of dollars off the retail giant’s market value.

Asked about the report, White House spokeswoman Sarah Sanders said there were no announcement or specific policies or actions the White House was currently pushing for or considering taking.

“The president has said many times before he is always looking to create a level playing field for all businesses, and this is no different. And he is going to always look at different ways, but there aren’t any specific policies on the table at this time,” she said.

Shares of Amazon slumped Wednesday after news website Axios, citing five unnamed sources, said Trump is considering whether to change Amazon’s tax treatment because of the impact the online giant has had on smaller retailers.

Shares of Amazon (AMZN) were down more than 5% in afternoon trading, little changed from earlier in the day.

According to the Axios story, Trump doesn’t believe Amazon pays its fair share of sales tax. This stance isn’t new. Last year, the president blasted the company for doing damage to “tax paying retailers.”

While that was once true, it’s not now. Amazon, and most other e-commerce companies didn’t pay state sales taxes when they launched in the 1990s, using laws dating back as long as 50 years ago made for catalog retailers that said they didn’t have to collect sales taxes in states where they did not have a physical presence.

That allowed them to keep prices low and gain market share as online sales were just beginning. However, Amazon and other big e-commerce companies now routinely collect state sales taxes.

The one area where Amazon and others might be vulnerable is on local sales taxes, which most e-commerce companies don’t collect and which stores have complained puts them at a disadvantage.

The federal government could decide to try help municipalities collect those taxes but thus far hasn’t pushed in that direction.

“The President can hate them all he wants, but he has limited power to do much about it,” said Michael Pachter, managing director of equity research for Wedbush Securities in Los Angeles.

Anti-trust off the table

Another beef Trump has long had with Amazon is over its size. Even during his campaign, he questioned Amazon’s treatment. During an interview May 2016 with Fox News host Sean Hannity, Trump claimed Bezos has a big antitrust issue related to Amazon.

However there’s not a lot of room for the government to maneuver on that issue.

First, Amazon’s $13.7 billion acquisition of Whole Foods Markets last year is a done deal and the company has no large public deals in the works at the moment.

Even if it did, it would be difficult to make an antitrust case against Amazon because that’s not what antitrust law is meant to do these days.

“U.S. law is that we don’t necessarily go after monopolies or concentrated industries and break them up. It’s more prospective, if there’s some merger that’s going to happen,” said Christopher Snyder, a professor of economics at Dartmouth College and expert on industry organization.

Even going back to 1982 and the government-mandated breakup of telecommunications giant AT&T, it only happened because AT&T was a regulated industry. “That’s not the case here,” said Snyder.

Probably the strongest antitrust case that could be made against Amazon is for price discrimination or predatory pricing against competitors, “but even those are thin,” said Sucharita Kodali, a senior retail analyst at consulting firm Forrester Research.

Thin because U.S. law around antirust has shifted dramatically from the 1890s, when it focused on breaking up big companies. Since the Reagan administration, the emphasis has been on consumer welfare. If bigger companies lowered prices or made things easier for consumers, antitrust was no longer an issue.

Given’s Amazon long-stated goal to “delight” customers, it’s difficult to make that case against the Seattle company.

Unspoken in all this is the concern that the president might harbor antipathy for Amazon because its CEO is Jeff Bezos. He is not only liberal but also owns the Washington Post newspaper, which has spent the last year covering the president in often unflattering investigations.

“The president doesn’t like The Washington Post, and Bezos’ ownership makes him associate Amazon with the Post,” Pachter said.

When Trump tweeted last year that Amazon was harming tax-paying retailers, the tweet came hours after an editorial was published by the Post with the headline “Mr. Trump gives comfort to racists.”

In July, Trump tweeted that many stories about him in the Post were “fake news.” In another tweet he said “Is Fake News Washington Post being used as a lobbyist weapon against Congress to keep Politicians from looking into Amazon no-tax monopoly?”

Bezos was critical of Trump during the campaign, even joking about sending the candidate to space.

Amazon is currently exploring cities in the U.S., as well as Toronto, as a potential home for the company’s coveted second headquarters. The location is expected to generate $5 billion investment and create 50,000 jobs.

Source: USA Today

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