Written by CNN
Like the banks of the late 2000s, Amazon, Inc. is now too big to fail. There are two important aspects to note with this phrase - the first is a worrying reflection on the importance of Amazon to the US economy, and the second is an analysis of the staggering diversity of products and services the company currently operates.
Ten years before Jeff Bezos founded Amazon in his garage, Congressman Stewart McKinney first coined the term “too big to fail” to refer to businesses (often banks) that were so vital to the American economy that should they falter, the government should bail them out for the good of the nation. A brief stint in January as the world’s most valuable company undersells Amazon’s size and contribution to the economy.
Amazon, not Google, is the first place consumers go to find products, and represents almost 50% of all online sales. Though today it seems unlikely, should Amazon follow the banks of the late 2000s, it might be best for the Americans to have the government support Amazon through potential rough times.
The above conjecture about an Amazon collapse, however, seems so incredibly unlikely because Amazon has become a leader in so many industries. Rather than just be a monolith in the online shopping industry, Amazon has diversified to become a major player in smart homes, tablets, streaming services, and cloud computing.
Such diversity allows Amazon to take risks in product lines without endangering the bottom line, and insulates the company from even its worst mistakes. Amazon Web Services, which now provides the back end for many companies across the globe, is so well ingrained in each company’s workflow and so necessary to client operations that Amazon can rely on AWS to support their bottom line even during recessions.
This diversity also means that while Amazon may be too big to fail, it’s also too diverse for failure to be realistic. As the government considers regulating the tech industry, it must also consider how much American businesses industries across rely on these services for smooth operation.