Is Amazon ‘too big to fail’? And if not, how long before they are? I’m thinking of a scenario where Amazon continues to grow, and eventually puts so much of the competition out of business that if Amazon were to go under there wouldn’t be enough retailers left to fill those orders, which could lead to a major hit on the US economy.
So should we start thinking about this? And if it is plausible, is it necessarily a bad thing if Amazon is/becomes too big to fail?
No, amazon is not too big to fail. Other online retailers exist and some of them can match or come close to matching Amazon’s prices, like walmart. The worst case scenario is that Americans spend slightly more on consumer goods for a short period of time.
Amazon has a revenue of 95.8 billion, some of it surely coming from markets other than consumer goods, and some of which comes from outside the US. The total market for consumer goods is 419 billion. So Amazon is less than 22% of the consumer goods market, which itself is less than 2.5% of US GDP.
Does Amazon actually make a profit these days?
If Amazon “goes under”, or in other words goes bankrupt, there’s nothing to worry about. Most companies that go bankrupt end up restructuring and remaining in business.
In the worst case scenario, where Amazon goes bankrupt and actually ceases to exist, there’s still nothing to worry about. New retailers would arise to take its market share. Amazon’s assets would be broken up and sold off by the courts, and the proceeds given to creditors. Other retailers would buy those assets, and for most of us, life would continue as before.
The only really bad scenario is if our politicians become convinced that Amazon is “too big to fail” and thus bail out the company with a ton of taxpayer money.
It can’t fail - how would we get our sex toys?
Alibaba. They’re made in China anyway.
Most of the things Amazon sells you can get online from other retail outlets or the directly from the companies. The main thing that Amazon does is consolidate the purchasing for all items into one site. If Amazon disappeared tomorrow people would just have to google the items they wanted individually.
Amazon can fail only if something else comes along that does what Amazon does better, in the same way that Amazon is replacing a lot of traditional retailers.
TBTF only comes about because companies do weird things with debt, such as take on pensions they can’t afford, or do funny business with novel investments. Amazon has neither problem. As long as there is demand, they will be in business. Until another business meets that demand better.
Would owners of DRM-limited Kindle content be screwed immediately, or only later when their readers failed and they couldn’t get new ones?
I think this is the most realistic answer. Jeff Bezos and the Amazon administration have chosen to run the company on the edge - they feed the money Amazon makes back into the company to push for continued growth. If Amazon went bankrupt then some other investors would step in and take it over. They’d restructure the company and run it in a more conservative way to focus on producing profits rather increasing in size.
No organization is too big to fail, although several that probably should have were propped up by government intervention.
“Too big to fail” really means “too important to fail”.
I.e.-- you are so important that your failure causes serious damage to the rest of society.
Banks are important–because that’s where the money is.The rest of society needs money.
Car companies are (were?) important–because they had a million or so employees, and tens of thousands of other companies dependent on them.Society doesn’t like to lose 2 million jobs.
But why is Amazon important? Because it’s convenient for you?
The rest of society can get by without Amazon.
Amazon has about 150,000 employees–which is no small company, but not big enough that their layoffs would affect the rest of society.
There’s a lot more to Amazon than its retail web operation. It’s the biggest provider of cloud operations to all sorts of businesses.
Regardless, its assets have significant value (unlike a failed financial institution) and these would be scooped up.
The real problem with failures of large financial institutions is the cascades of collateral damage as creditors lose their assets. When a service provider fails, it increases costs temporarily for its customers and people lose jobs, but the cascade isn’t so damaging.
It also doesn’t have as big an effect on the money supply. A lot less debt would be erased, so a lot less deflation.
I came in to mention this. Rather than their retail, which would hurt, but I expect other companies are poised to fill. That is, there’s tons of online retailers, so all the remaining ones could expand just a little and we’d wouldn’t be hurt that bad. I think their web services would cause much greater problems because their market share is much bigger. It’s literally 3 times larger than the next closest competitor, it’s market share is 28% compared to Microsoft Azure’s 10%.
The bigger problem is, AWS is getting a lot of major clients, particularly the Federal government, and because there just aren’t that many companies in the business, if they suddenly went under, there’d be massive implications across the entire internet and for a huge number of businesses. Worse, unlike with retailing, because they’re so much bigger than all their competitors, we couldn’t just see any of them expand and fill the gaps. Presumably, if they were to go bankrupt, a company like Microsoft, IBM, or Google would need to come in and scoop up part or all of their infrastructure, but I’m not sure how financially viable that would be. And even if that were to happen, we’d probably still see some major disruptions.
That said, I still don’t think they’re too big to fail. I personally don’t think any company is; at least not one with significant investments in product and infrastructure. Now, if they were to go under, particularly because of the work they do with the government, I wouldn’t be shocked if they got a bail out or they did some other kind of deal to make sure that there wouldn’t be too much disruption in their services as they sold off their assets.
Knock off sex toys made in China using Chinese materials and regulation?? :eek: Holy shit, Amazon CAN’T BE ALLOWED TO FAIL!!!
ETA: Though [Alibaba](1500 Idalia Road, Building D, Bernalillo) might not be too big to fail either.
Legally, they may be screwed or the question is at least complicated based on the DMCA and its exemptions. I’m not really sure.
From a technical sense, it’s trivial to remove the DRM, convert between formats if needed (mobi to epub, for example), and copy the ebooks anywhere you want them. The Calibre ebook management software plus a DRM removal plugin that is freely available online is all it takes.
Wal-Mart sells five times as much as Amazon. If there was ever an American retailer that is too big to fail, it is Wal-Mart.
Walmart has driven so many other retailers out of business in so many places that there is no one available to pick up the slack (I am not anti-Wal-Mart by the way). The scale of Wal-Mart’s logistics of nation-wide distribution of goods could not be reproduced by other stores if they were given months of time.
If it were suddenly close its doors, there would be an enormous lack of the ability of the American consumer to buy things.
This is particularly applicable to smaller towns. I grew up in a small town (20,000 people) that was surrounded by many other small towns. Wal-Mart was where people bought things to live their daily lives (food and non-food). If Walmart were to suddenly close (permanently), there would be a panic. People would drive to larger cities an hour away to Targets and Costcos to only find the lines out the door and the shelves empty.