Is Amazon “steel dumping”? Scott Galloway suggests that Amazon is using profits from its AWS hosting service to lose money on its retail operations. I think this analogy may be accurate.
Excerpt from Scott's newsletter email:
Amazon. The Seattle firm is actively engaged in information age steel dumping, using the profits from AWS to subsidize losses on the retail platform, neutering other retailers’ ability to compete. The result is that good firms are being euthanized prematurely, and startups can't get out of the cradle. I’m contemplating acquiring more stock (I've owned Amazon for a decade) and advocating for a spin of AWS. Note: I doubt Mr. Bezos is losing any sleep over this. AWS has little to no synergy with the core platform, and a spin would slow the napalming of traditional retailers and retail workforce. It would also be accretive to shareholders, as AWS would trade at a crazy, Amazon-like valuation as an independent firm.