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  • Health deal shows how Amazon keeps ahead of regulators and rivals

Health deal shows how Amazon keeps ahead of regulators and rivals

  • Categories Retail News, Top News
  • Date July 22, 2022
  • Comments 0 comment

For all its size and power, people continue to underestimate Amazon by focusing on what the company is already doing, instead of looking where it will go next.

Why it matters: Amazon is never content with just growing its share of markets it’s already in. It always has an eye toward what large market it can upend next.

Driving the news: Amazon announced Thursday it plans to buy health care provider One Medical for roughly $4 billion.

  • It’s hardly the company’s first move into health care: Amazon already owns an online pharmacy after buying PillPack, and it operates Amazon Care, a virtual primary care service.

How it works: Like an iceberg, Amazon is always a bigger threat than what’s visible from the surface.

  • In its earliest days in the ’90s, observers worried about Amazon’s impact on bookstores. But the company was already laying plans to take over other parts of online retail.
  • By the time rivals were worried about Amazon’s dominance of online retail as a whole, it was moving into related areas, including logistics, third-party marketplaces and web services.
  • As the world woke up to Amazon’s strength in those areas, the company was already expanding into physical retail. Whole Foods was its largest play, but it also entered the cashier-free market with Amazon Go, whose technology it is now licensing to others.

Between the lines: Amazon has seized all this turf with little challenge from regulators.

  • Antitrust law tends to focus on companies amassing too much power in one market — but Amazon keeps hopping into largely new markets.
  • Conventional antitrust doctrine does bar companies from abusing their power in one market to control another one. But such behavior can only be identified after the fact, leaving regulators struggling to catch up.

Critics say Amazon’s saga shows the urgent need for antitrust reform — something Congress has been weighing, but has yet to move forward with.

  • “Amazon is basically saying to Congress, ‘Catch me if you can,’ ” Sacha Haworth, executive director of the Tech Oversight Project, said in a statement. “Amazon having back door access to private health care data is frankly a terrifying thought.”
  • “Acquiring One Medical will entrench Amazon’s growing presence in the health care industry, undermining competition,” Krista Brown, a senior policy analyst at the American Economic Liberties Project, said in a statement. It will also pose serious risks to patients whose sensitive data will be captured by a firm whose own chief information security officer once described access to customer data as ‘a free for all.’ “

What’s next: Regulators are expected to review the acquisition carefully.

  • Federal Trade Commission chair Lina Khan made her reputation with research into Amazon’s practices and has been working to rewrite merger guidelines to address these kinds of deals.
  • Sen. Amy Klobuchar (D-Minn.) quickly called for an FTC review of the acquisition.

Whatever happens with One Medical, Amazon is likely to face heavier regulation down the road.

  • The company’s so big it’s starting to bump into itself, as evidenced by the charge that it uses sales data to compete with its third-party marketplace vendors. A recent report notes that Amazon has scaled back its white-label products business and could scrap it entirely.
  • If it does end up acquiring One Medical, Amazon will be plunging deeper into a medical business that’s much more tightly regulated than any other area Amazon has operated in.

The other side: Amazon, for its part, says it knows this, and that’s why the public should rest easy about its custody of their medical data.

  • The company notes in a statement that “nothing about this transaction changes One Medical’s obligations to comply with the Health Insurance Portability and Accountability Act (HIPAA) and all their applicable laws and regulations.”

My thought bubble: Amazon’s strategy of expanding into large new markets not only enables it to surprise competitors and avoid regulators but also helps it continue to show big growth despite how huge it has become.

Source: Axios

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