Dec 5, 2018 - Technology

Postal report puts muscle behind Trump's Amazon grudge

Aerial view of Amazon fulfillment center

Packages are processed at an Amazon warehouse. Photo: Emanuele Cremaschi/Getty Images

A task force created by President Trump said Tuesday the U.S. Postal Service should consider increases to the cost of shipping some packages, a move that could hurt Amazon along with other e-commerce companies.

Why it matters: Amazon faces a politically perilous moment. At home, it has become a symbol of the outsized wealth the tech boom put in the hands of the few, and it fields regular attacks from Trump. Across the Atlantic, it is under antitrust investigation.

Details: The task force recommends that the Postal Service separate out commercial packages and mail from more essential deliveries, making them no longer subject to affordability guarantees that come with the service's status as a government-sanctioned monopoly for some offerings.

  • It suggests that the Postal Service determine when a "strong social or macroeconomic rationale exists for government protection in the form of price caps and mandated delivery standards" for packages and mail, as opposed to deliveries that are "commercial in nature" and aren't entitled to similar regulation.
  • It does not single out Amazon, despite the presidential attacks that led up to the creation of the task force.

The other side: "It’s very concerning, and if implemented it would be tremendously damaging to the Postal Service’s bottom line and more importantly to consumers and businesses large and small across America," said John McHugh, a former congressman who works at law firm K&L Gates and leads the Package Coalition, whose members include Amazon, Express Scripts and the National Retail Federation.

The big picture: The Postal Service report comes as Amazon's continued dominance ignites pushback on multiple fronts.

  • Amazon is in the middle of two antitrust investigations in Europe. One, led by the EU's top regulator, looks at the e-commerce giant's data-driven advantage over other sellers on its platform. Germany's Federal Cartel Office launched a separate probe into monopolistic practices last week.
  • Amazon's high-profile search for a second headquarters — which enticed up-and-coming cities all over the country only to settle on the D.C. area and New York, two of the richest places in the world — thrust Amazon into a sometimes critical spotlight.
  • On Black Friday and Cyber Monday, Amazon posted record-breaking sales, but the big shopping days were punctuated by worker-led protests against the behemoth's warehouse working conditions.

Yes, but: Consumers still, by and large, feel good about Amazon. A recent poll from the Baker Center at Georgetown University found that there's only one institution in which Americans have more confidence than Amazon: the military.

  • The report undercut Trump's claims that Amazon deliveries are a massive drain on the Postal Service, instead finding increased package volume hadn't made up for other shortfalls in revenue.

What's next? While the administration says that postal regulators can make many of its recommended changes, expect lawmakers to get involved.

  • "I appreciate Secretary Mnuchin and the Postal Task Force’s effort to accurately assess the Postal Service’s financial reality and propose viable solutions without relying on a taxpayer bailout," said Senate Homeland Security and Governmental Affairs Committee Chairman Ron Johnson.
  • "I look forward to working with the secretary and his department to put the Postal Service on a long-term, sustainable path," he said.

Go deeper: For Amazon, success breeds enemies

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