SAN FRANCISCO — The possibility that President Trump wanted to "go after" Amazon caused the retail giant to lose tens of millions of dollars in market value Wednesday, even after the White House downplayed any plans to take action.
But despite Amazon's seemingly inexorable growth — including its build-up in groceries, entertainment and health care — there's very little the president or the federal government could do under current antitrust practices. As for taxes: Amazon already collects state sales tax in all states that have them, though it could be vulnerable to any new tax efforts.
“The President can hate Amazon 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.
The furor arose after news website Axios published a story Wednesday, citing five unnamed sources who 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) fell 4.3% Wednesday.
While the White House downplayed the report, Trump himself tweeted Thursday that he has long had concerns about Amazon.
"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!" Trump tweeted.
But White House spokeswoman Sarah Sanders said no specific policies were on the table in regards to Amazon.
"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," she said.
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."
Treasury Secretary Steven Mnuchin has said that the White House favors an Internet sales tax. There have been efforts in Congress to force all e-commerce companies to collect state sales tax, but Amazon already does that. Those moves are more likely to hit smaller e-tailers.
Amazon, and most other e-commerce companies, didn’t collect state sales taxes when they launched in the 1990s, using laws dating back as long as 50 years made for catalog retailers.
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.
Antitrust 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 in May 2016 with Fox News host Sean Hannity, Trump claimed Bezos has a big antitrust issue related to Amazon.
There's not a lot of room for the government to maneuver on that issue, antitrust experts say.
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,” Snyder said.
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.
U.S. law around antirust has shifted dramatically from the 1890s, when it focused on breaking up big companies. The modern emphasis has been on consumer welfare. If bigger companies lowered prices or made things easier for consumers, antitrust was no longer an issue.
Given Amazon long-stated goal to "delight" customers with either lower prices or fast delivery, 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 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., including Washington, D.C., 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.
Contributing: Brett Molina in Tysons, Va.