Amazon HQ2 thread

[the urban politician]

Originally Posted by chris08876

Which is a quick flight away from NY or Philly...

You don't need to be close to DC to have political and legislative change or influence ability. If this was 1812, where it would take days to get there, and people would die on the way there potentially, I could understand being close to the capital, but in this day and age, airplanes exist. And technology might I add. Things like email or video conference and so on.

I totally agree. I think my initial point is that being successful in the business of medicine is something different from achievement in the sciences, which is important but something of a different nature.

And if you guys say NY-Boston-Philly again I will puke. There are a TON of healthcare executive and even pharma experts in other regions in the country.

[ScreamShatter]

Originally Posted by chris08876

The potential market share war could result in lower prices. I was kinda wondering about the monopoly aspect of the idea. The consumers may benefit from it, but that also holds us at the mercy of Amazon if they become too large.

Rapid growth is always a good thing when it comes to the shareholders, but it comes with its risks. And like you said, this will not be a smooth process. There will be a fight.

Competition can be a good thing, but there is always the greed aspect of it. The convenience of what Amazon offers is great, but the risk is there of them abusing it, and again, the consumer is at their mercy.

I suspect with Buffet and Diamond involved with Bezos that it means HQ2 could be a completely separate and new Amazon company. It could be a large startup project like how many tech companies are spinning off their special project divisions to isolate their main stock prices from initial investment risks and whatnot. I would expect something like that for this project with an investment banking leader involved.

[the urban politician]

Originally Posted by ScreamShatter

I get your point. However, you also made my point for me, Hopkins is literally 1.5 hours from philly by car and 30ish minutes on train. Philly sits in the middle of all the top research and medical facilities. There’s nowhere in this country closer to the most medical, research, education, and big pharma talent as philly, nyc, and Boston. And if we mapped out all the companies within a couple hour drive from a location or connected via trains and transit, I’m willing to bet that philly might have an edge in that area bc of location between dc and Nyc. Combined that with quality of life and affordability and Philly has more of an edge than many give it credit.

As others have said, can some of you cut out the "lobbying for why my city should be chosen" stuff as if every one of your posts on this thread is a personal pitch to Bezos? We get it. You live in Philly. You really want Philly to get it. You're a hometown booster. You're finding all the reasons in the world why Philly should get it.

But you really need to lay off a bit..

[Pedestrian]

Originally Posted by bnk

Amazon will be split up or spun off if they get into pharma

That’s too big of a pie for any one company

The feds won’t allow one company to be spread so wide

See the baby bells as an example

Even if they push hard on this they are still years away to getting approval for drones to send your meds to your doorstep

Drugs are not like general consumer items

They are highly regulated especially controlled drugs.

I can’t see one company doing everything they want at one go

They can spend billions of dollars in lobbying but the other side will not step aside quietly, they have their own lobbyists that are likely stronger than what amazon can muster at this point

If they do get into rx’s It’s going to take more than a few years even if they can break into that massive market

All arguments for why they should TRY to buy Rite Aid but also why they would probably have a tough time getting FTC/Justice Dept approval. Rite Aid's market cap is just over $2 billion, an easy swallow for Amazon, and it has all the experience and technical expertise in drug retailing they would need.

[ocman]

Being that it’s a joint venture between 3 companies, I don’t think this announcement relates to their second headquarters search. With that said, the clearest and most obvious way to reduce healthcare costs is to get rid of the middle-man, insurance companies.

Pharma will always be expensive. There’s nothing Amazon can do about that. Pharmaceutical/Surgical instruments will always be expensive too. Both are pretty much patented intellectual property so Amazon can’t just make a cheaper version. Diagnostics, on the other hand is something they can do directly, as well as paying their own doctors. My guess is that they want to build something similar to the Kaiser Permanente mold: one stop shop for all your needs. The fact that it’s a non-profit is already one step of cost-cutting. It’ll also be their defense if the Feds try to break them up for being too big. But then that begs the question of why Berkshire and JP Morgan want in on this, if it is in fact, non-profit.

[jtown,man]

Originally Posted by chris08876

The potential market share war could result in lower prices. I was kinda wondering about the monopoly aspect of the idea. The consumers may benefit from it, but that also holds us at the mercy of Amazon if they become too large.

Rapid growth is always a good thing when it comes to the shareholders, but it comes with its risks. And like you said, this will not be a smooth process. There will be a fight.

Competition can be a good thing, but there is always the greed aspect of it. The convenience of what Amazon offers is great, but the risk is there of them abusing it, and again, the consumer is at their mercy.

But why would people buy meds for example from Amazon if they up the price really high? They will just go to other alternatives. This is actually really exciting, Amazon has the massive clout, along with the other two brands to make a huge mark on the market.

Why would JP Morgan, for instance, do this with no profit in mind? One guess is the fact we are talking about them right now, this is really good PR for the face of Big Finance, an industry that hasnt looked so good in a few decades.

[Khantilever]

Originally Posted by bnk

Amazon will be split up or spun off if they get into pharma

That’s too big of a pie for any one company

The feds won’t allow one company to be spread so wide

See the baby bells as an example

Idk, the FTC/DOJ are far more interested in traditional vertical/horizontal mergers that consolidate power within a particular market. There isn’t really an obvious antitrust case against Amazon expanding its business into new areas.

[IluvATX]

We're all aware it's going to Austin right?

[Pedestrian]

Originally Posted by jtown,man

Why would JP Morgan, for instance, do this with no profit in mind? One guess is the fact we are talking about them right now, this is really good PR for the face of Big Finance, an industry that hasnt looked so good in a few decades.

I think it's simpler than that: Just like in WW II when work-related health insurance got started, it's a valuable benefit that workers like and being able to offer really good coverage to employees at a reasonable cost would be great for work force retention and even allow them to minimize wage increases (better health insurance vs higher wages).

[Pedestrian]

Originally Posted by Khantilever

There isn’t really an obvious antitrust case against Amazon expanding its business into new areas.

But I bet there's a room full of people at the FTC and/or Justice Dept. looking for a good case and even a case for breaking Amazon up. Recall that Bezos is probably not a favorite of this Administration.

[chris08876]

Originally Posted by jtown,man

But why would people buy meds for example from Amazon if they up the price really high? They will just go to other alternatives. This is actually really exciting, Amazon has the massive clout, along with the other two brands to make a huge mark on the market.

Why would JP Morgan, for instance, do this with no profit in mind? One guess is the fact we are talking about them right now, this is really good PR for the face of Big Finance, an industry that hasnt looked so good in a few decades.

The benifits of a monopoly are having a large majority within the market sphere and huge advantage over similar industries. It doesn't necessarily have to be 100:1 with regards to a product.

Think of it this way. Lets say we take three companies: Verizon, AT&T and T-mobile. If the control of the market when it comes to cellphones % is [30, 45, 25], the idea of competition is there, and there is no single carrier stranglehold. These figures btw are made up, as an example. If that same % was [60,20,20], in favor of Verizon, they have the potential to raise prices and people will just have to go with it.

My fear would be that Amazon starts to become a monopoly is that regards. Now, its a far cry from being one, but the potential exists. Greed can be a terrible thing is abused.

I think with Amazon venturing into the market, the potential for "generics" and non-scheduled meds can be lowered via competition, but if they become to big, its a problem. A competitive advantage over their competition gives them a buffer to do as they please.

One benefit though is the supply-chain. Like Wal Mart, they are logistical savants. Distributing products, and having a tidy system in place. Logistics are just one element that is factored into the price of "X" item.

[ScreamShatter]

Originally Posted by the urban politician

As others have said, can some of you cut out the "lobbying for why my city should be chosen" stuff as if every one of your posts on this thread is a personal pitch to Bezos? We get it. You live in Philly. You really want Philly to get it. You're a hometown booster. You're finding all the reasons in the world why Philly should get it.

But you really need to lay off a bit..

Cut it with the attitude. I’ve responded in this thread very few times, and I’ve spoken very logically about other cities that I thought had an advantage over philly for months, unless there was truth to the rumor of amazon going into pharma which would put philly near the top of the list.

My point remains consistent that if amazon plans to go into pharma, they will need people with direct industry experience and that includes more than just academics. Amazon already has compentency in technology, scale, and distribution. What it lacks is going into a new industry is a staff of industry experts to handle the complexities of healthcare and pharma distribution. Assume Amazon wanted 20% or it’s staff to come from pharma industry, there are very few regions where it could pull 10k to 15k staff to support that goal. Boston, NYC/Philly, and Raleigh are probably the only regions on their list that could accommodate that specific healthcare staff plus technical staff in the immediate future. That’s not a put down to other regions. Just looking at the data and knowing what discussions I had with my company when we were opening up our new office.

[ScreamShatter]

Originally Posted by Pedestrian

But I bet there's a room full of people at the FTC and/or Justice Dept. looking for a good case and even a case for breaking Amazon up. Recall that Bezos is probably not a favorite of this Administration.

This Admin def doesn’t like Amazon. But they do like jobs and growth so I don’t see them doing something to prevent that, especially in a state like PA that Trump would need to win a second term.

But political conspiracies aside, this is a horizontal expansion of a company. Usually, antitrust only comes up during vertical expansion that reduces competition. It’ll def we interesting to see what happens!

[skyscraper]

Originally Posted by Pedestrian

But I bet there's a room full of people at the FTC and/or Justice Dept. looking for a good case and even a case for breaking Amazon up. Recall that Bezos is probably not a favorite of this Administration.

Just because he isn’t a fan of this administration doesn’t mean that the administration will try to interfere with amazons prosperity.
You’re thinking of the previous administration.

[ScreamShatter]

Originally Posted by jtown,man

But why would people buy meds for example from Amazon if they up the price really high? They will just go to other alternatives. This is actually really exciting, Amazon has the massive clout, along with the other two brands to make a huge mark on the market.

Why would JP Morgan, for instance, do this with no profit in mind? One guess is the fact we are talking about them right now, this is really good PR for the face of Big Finance, an industry that hasnt looked so good in a few decades.

The articles didn’t reveal the specifics of how Buffet, Diamond, and Bezos were going to work together. My inkling is that JP Morgan could be doing the IPO work on a new company that Amazon creates and that Buffet would be including this new firm in his BH fund for distribution of stocks.

[LouisVanDerWright]

Guys it's a really tough case to argue that Amazon is a monopoly when their entire business model is heavily associated with plunging prices for consumers. Monopolies typically price gouge because they aggressively eliminate competition. Amazon aggressively eliminates competition the Wal Mart way: by having a business model that drops prices by so much that people go out of business in droves. It's actually the opposite of a monopoly when you consider they are essentially competing with Wal Mart, Target, and every other retailer in the country.

[UPChicago]

Originally Posted by LouisVanDerWright

Guys it's a really tough case to argue that Amazon is a monopoly when their entire business model is heavily associated with plunging prices for consumers. Monopolies typically price gouge because they aggressively eliminate competition. Amazon aggressively eliminates competition the Wal Mart way: by having a business model that drops prices by so much that people go out of business in droves. It's actually the opposite of a monopoly when you consider they are essentially competing with Wal Mart, Target, and every other retailer in the country.

You do understand monopolies aren’t about prices right?

[blorkishdork]

And not to mention. Monopolies are more likely to lower prices so low that it kills all competition. These companies rely on economies of scale to lower their prices as opposed to innovation. Which is one real bad issue with monopolies.

[Khantilever]

Originally Posted by Pedestrian

But I bet there's a room full of people at the FTC and/or Justice Dept. looking for a good case and even a case for breaking Amazon up. Recall that Bezos is probably not a favorite of this Administration.

I've done some antitrust work (on the private side though). It does seem to be getting increasingly political, unfortunately, but I think the majority of those guys are reasonable and are genuinely looking out for the best interests of the public.

But as others just noted, they can be somewhat myopic and think only about the price effects. Amazon is great at lowering prices and so they're getting a huge pass. There's generally an attitude of "we'll deal with it when we get there" when it comes to the issue of Amazon eliminating its competition by pricing below cost.

These companies rely on economies of scale to lower their prices as opposed to innovation. Which is one real bad issue with monopolies.

If Amazon is actually reducing prices due to economies of scale, that'll generally be seen as a positive for consumers. We don't want monopolies but we don't want inefficiently small firms either.

[AbortedWalrus]

The problem with the monopoly argument regarding Amazon is they have very real competitors in e-commerce. They have competitors that offer competing products and that are profitable. People don't use Amazon because it's the only option, they use it because it's the best option. Proving otherwise is going to be a huge uphill battle.

Anyway, I will say I agree with the sentiments of some others. If this new healthcare initiative from Amazon is going to be located in their HQ2 campus (which is unknown) it would certainly give an advantage to cities like Boston, Raleigh, and Philadelphia.