Former Walmart CEO: Amazon 'Anti-Competitive' For Using AWS, Ad Profits To Sustain Retail Business
Walmart's former CEO accused Amazon of using its cloud and ad revenues to cushion its so-called "meager" retail profits, the retail giant's former chief said in an interview on Wednesday.
The former CEO, Bill Simon, accused Amazon of taking money away from retail rivals by "gaining traction and profitability by other business activities that have nothing to do with retail," including its highly profitable Amazon Web Services business unit, as well as its advertising segment.
"The way [Amazon] are operating, where they use the profitability of completed unrelated segments of businesses to drive out competitors and build market share is akin to Exxon Mobile getting into the restaurant business and using profits from oil to sell below cost in the restaurants to build market share, and that's anti-competitive," Simon said i nthe interview, which aired on CNBC on Wednesday.
Amazon did not return CRN's request for comment on the interview before press time.
During its first quarter this year, Amazon generated $51.04 billion in revenue. The company reported $4.26 billion in sales through its physical stores, including its recently-acquired grocery chain Whole Foods.
Amazon in the same financial quarter fetched $5.44 billion in AWS sales and $2.03 billion in ad sales.
During Simon's interview, the former Walmart executive acknowledged that Walmart was also once viewed as a retail "bad guy." The difference, however, was that Walmart was able to drive down costs within the same line of business and without taking profits from another business segment, he said.
This isn't the first time Simon has voiced his concern over Amazon's sales strategies. The former Walmart CEO in March said that Congress should consider splitting up Amazon. Simon at the time told CNBC the e-commerce giant has operated its retail segment at a loss for decades, but has gotten by from subsidizing the retail portion of its business with profits from other areas, such as web services.
"It's anti-competitive, it's predatory, and it's not right," said Simon, who said that Amazon was "destroying jobs and value" in the retail sector.