Page 27 - March 2018 Disruption Report

TECHLASH JAMNAURACRHY 22001188
...Why do I believe we should break them up? My belief is that we go in and we break these guys up because—full-stop—we’re capitalists. What does it mean to be a capitalist? I believe capitalism is the worst system of its kind—except for all the rest. And I’m stealing from Winston Churchill, who said the same thing about democracy. Effectively for capitalism, you need private property, wage, labor, voluntary exchange price system, and most importantly, you need competitive, full body contact marketplaces. What I’m here today to tell you is that I believe the markets have failed.
[Here are] some examples of how they failed.
Google can’t resist over time ...telling you that this isn’t us. “This is a paid ad” has slowly gone away [on search results]. Google used to say “we’ll take you to the best place on the home screen.” Now, slowly but surely because they have to increase their earnings every quarter, they’re no longer you taking you to the best place. They’re taking you to their place where they can monetize more of the screen... So they are effectively restraining competition by using their massive gateway to [direct] people into the things that they own.
The market is failing in the consumer world because consumer stocks now move for [two] reasons: (1) the underlying performance of the stock to the macro-environment and (2) what Amazon is or isn’t doing in that sector.
The key to robust markets is that no one-player or individual has too much in uence. Now I can tell you—as someone who attends somewhere between 40 and 50 consumer board meetings a year—all we’re doing is allocating capital around what we think Amazon is or isn’t going to do. The markets are failing.
...Amazon announces they’re acquiring Whole Foods. Their stock price [and] their market cap goes up by almost the acquisition price and the value of their competitors goes down by more than the acquisition price. Amazon can now acquire other companies on someone else’s credit card. The markets are failing.
...[B]etween the time they announced the purchase of Whole Foods and closed it, the price of the value of the largest pure-play grocer in America, Kroger, declined by 33%. And [Kroger] is a company that has 11 times the size of Whole Foods. Every company now seems to go down based on what Amazon does or doesn’t do, including manufacturers brands.
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