It’s been clear for several years now that Amazon has been making a systematic effort to seize ownership of its supply chain. Success for them means that every step of their shopping and distribution process will be run by the same company. This vertical integration strategy has demanded some aggressive maneuvering by Amazon, with the most conspicuous move recently being the acquisition of Whole Foods.
The rationale behind the vertical integration strategy is the ability to create a unified route from manufacturers to customers that will hedge out other competitors. This is clearly a monopolistic strategy at work here.
The question is whether political or business constraints will stymie Amazon’s efforts. There has already been some increased enforcement of antitrust regulations in Europe, especially against technology companies like Amazon.
What’s significant is that there’s also been signs of a similar trust-busting initiative brewing in the United States as well. The House antitrust subcommittee has asked the Judiciary Committee for a hearing on the Whole Foods deal and its effects on customers. The other question is whether any significant government action can be expected on this issue, from America or Europe, and what effects penalties might have on Amazon’s stab at vertical integration. There are several ways that this confrontation could play out, and each warrants some examination, so that investors can know what to expect in the future for the tech giant.