Mergers these days are not easy things to accomplish. Regulators seem terrified by the notion that, somehow, somewhere, competition might be slightly tougher to come by in a sector. And now, Amazon (AMZN), already a competition-buster in many fields, is facing regulatory scrutiny over a deal of its own with Anthropic. Investors were not unhappy, though, as shares rose modestly in Thursday afternoon’s trading.
The Competition and Markets Authority (CMA) in the UK is taking aim at Amazon, launching a Phase 1 investigation following Amazon’s hefty investment of $4 billion into Anthropic. Amazon doled out the cash to help Anthropic bring its various AI models to the AWS Bedrock platform, which is used for building generative AI applications. The UK, meanwhile, is concerned that might impact competition in the region, and is investigating accordingly.
Now, the CMA will spend as long as 40 days considering the transaction and its impact on the market and—if a negative impact is believed to be found—will proceed to the more formal and exhaustive Phase 2 study. Amazon, for its part, is “disappointed” that the UK is even bothering with a Phase 1 investigation to begin with.
Victim of Its Own Success
Meanwhile, elsewhere, Amazon continues to deliver huge quantities of merchandise worldwide. And this is proving to prompt difficulties of its own. Over in Orland, California, two out of the three private delivery companies in the town—which are based at an Amazon facility—are shutting down after operating at a loss for months.
This happened because Amazon’s algorithm changes left the delivery drivers badly overloaded with stops to make. Orland drivers were effectively required to skip legally required breaks or even do their jobs at a dead run (driving without carrying any freight or goods) just to meet quotas. Amazon reportedly acknowledged problems but did nothing to actually fix them, according to one of the firms that shut down.
Is Amazon a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 41 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 19.59% rally in its share price over the past year, the average AMZN price target of $223.58 per share implies 35.79% upside potential.
