FAANG stocks have had a rough go of it this week, but Amazon led the pack losing $53 billion in market value on Wednesday after Axios reported that President Donald Trump is “obsessed” with regulating the e-commerce behemoth.
Trump took to twitter Thursday to accuse the mega retailer of not paying its fair share of taxes, abusing the United States Postal Service, and driving traditional retailers out of business:
I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!
— Donald J. Trump (@realDonaldTrump) March 29, 2018
The president has also repeatedly attacked news coverage of his administration by the Washington Post, which is also owned by Amazon CEO Jeff Bezos, and has linked any unflattering reporting in the newspaper to Bezos and Amazon.
Axios also reported that Trump wants to impost further regulations on the company and quoted a source who has spoken with the president as saying “He’s wondered aloud if there may be any way to go after Amazon with antitrust or competition law.”
White House press secretary Sarah Huckabee Sanders addressed reports on Wednesday that Trump was about to take action against Amazon.
“We have no announcements and no specific policies or actions that we are currently pushing forward or considering taking,” Sanders said, adding that “the president has said many times before he’s always looking to create a level playing field for all businesses, and this is no different.”
But if Trump is gunning for a fight with Amazon, he may have an opportunity to strike a serious blow to the company soon.
The Defense Department will submit to Congress its request for proposals in the next few weeks on what could be a $10 billion, 10-year contract to provide the military with cloud services as the Pentagon moves to migrate its data onto a cloud. Many insiders believe Amazon, through its Amazon Web Services platform, has the inside track to winning the contract, here’s why.
The internet giant currently has the largest market share in the cloud infrastructure market, and its status as the perceived frontrunner for the new contract has largely been cemented by its $600 million deal with the CIA in 2013. That project showed the company has the capability to manage and secure sensitive information, and provides the company with an advantage on obtaining top-level security credentials.
In the draft requirements released by the Pentagon for the new project, bidders must be able to obtain those security credentials within 9 months of winning the contract, and Amazon Web Services is the only potential vendor as yet that meets that requirement.
But Trump has a history of trying to influence his administration to move against business entities he does not like, and it’s clear he is not a fan of Amazon.
“The issue to watch with Amazon in the short run is a movement against the company receiving the sole award for cloud computing contracts for the Department of Defense,” said Dan Clifton, an analyst at Strategas.
Regardless of whether or not Trump goes down this path to take a swing at Amazon, or focuses on antitrust enforcement or new legislation on tax collection – or all three, chances are good that there’s a fight on the horizon.