A recent report from the Wall Street Journal claims that the e-commerce giant Amazon is telling suppliers that want to win Amazon as a client that they must give the e-commerce Masters of the Universe the right to buy large stakes in their firms at steep discounts.
A recent report from the Wall Street Journal states that Amazon has been telling suppliers that want to land the e-commerce giant as a client for their goods and services that they must give Amazon the right to buy large stakes in their companies at steep discounts to market value.
Amazon has reportedly struck at least a dozen deals with publicly traded companies in which it gets rights — called warrants — to purchase the vendors’ stock in the future at what could be well below-market prices.
The Wall Street Journal reports:
Amazon over the past decade also has done more than 75 such deals with privately held companies, according to a person familiar with the matter. In all, the tech titan’s stakes and potential stakes amount to billions of dollars across companies that provide everything from call-center services to natural gas, and in some cases position Amazon among the top shareholders in those businesses.
The unusual arrangements offer another window into how Amazon uses its market heft to increase its wealth and clout. The company has been under growing scrutiny from regulators and lawmakers over its competitive practices, including with companies it partners with.
While the deals can benefit the suppliers by locking in big contracts, which can also boost their share prices, executives at several of the companies said they felt they couldn’t refuse Amazon’s push for the right to buy the stock without risking a major contract. The deals in some cases also give Amazon rights such as board representation and the ability to top any acquisition offers from other companies.
An Amazon spokesperson said that the warrants it obtains in commercial agreements are usually tied to milestones that Amazon has to meet, such as large purchases from the supplier.
Amazon declined t comment on specific deals or how many warrants it has exercised or the amount of money it has made from such agreements. The spokesperson said that it has warrant deals in fewer than 1 percent of the commercial agreements it enters into.
Read more at the Wall Street Journal here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or contact via secure email at the address email@example.com