Amazon.com, Inc. (AMZN) attracted more regulatory scrutiny recently with an amended antitrust suit filed against the tech powerhouse this week in Washington D.C.

If this sounds familiar, it’s because the original suit was filed in May 2021. That one focused on monopoly power obtained through pricing contracts with third-party sellers (those selling products on Amazon). The recent amendment broadens the scope to include wholesalers, or first-party sellers (those who sell to Amazon, which then sells on the products its platform).

It’s alleged that, since the first-party seller contracts force wholesalers to make up minimums if they don’t meet a quota, this artificially raises prices outside of Amazon. In my opinion, if Amazon forced this, someone else would come along and undercut the company.

It’s simple—if you don’t meet quota, you’re not selling enough product. So, you’d price things to move (i.e., lower). Conversely, you raise prices when you can’t keep up with demand, not when you’re falling short.

Thus, I personally don’t think the argument against Amazon holds much water. It really seems like posturing and attention grabbing without the legal teeth behind it, but I’m not an attorney. And while not surprising, the Amazon spokesperson agreed and said as much in the article linked above, noting that sellers set prices, not the platform. 

Now, this sort of news worries some investors. They’re concerned that Amazon could be sanctioned or forced to break up. But just as I wrote before, even if the company suffered either of those fates, whatever corporation(s) that resulted could still thrive.

Let’s assume the worst—Amazon is broken up into smaller businesses—say online retail, cloud services (Amazon Web Services), transport (Flex and trucking), and media (Prime Video and MGM). I think those could each become monster businesses.

I’ve mentioned that there is precedent for this with Standard Oil becoming 30 different companies, including Exxon (XOM), BP (BP), and Chevron (CVX). While history is no guarantee, I could see something similar happening if Amazon were broken up.

Big Money investors seem to agree. I follow Big Money activity (i.e., the institutional investors who move markets), looking for buy and sell signals that produce outlier stocks. Big Money has been all over Amazon stock for years.

In fact, there have been 24 instances of big buying in the shares since 2017. Below is a chart notating some of them:

Amazon is what I call an outlier stock … it’s one of the best of all time. I expect the stock to break higher in the years to come.

So, even if the company were split, there’s no reason to think that Big Money wouldn’t be attracted to the various firms that resulted. Plus, if each of those companies became dividend-paying stocks, investors could benefit more than if Amazon had stayed together.

Nobody knows the future, so there’s no telling how this could play out. But keeping in mind some of the above possibilities, we can maintain perspective and realize that there’s still way more to like about Amazon than dislike, even with a looming antirust threat.

The Bottom Line

Big, successful firms attract antitrust regulators. But even when companies split, multiple successful businesses can emerge. Big Money isn’t paying much mind because Amazon—whether as is, subject to restrictions, or fractured into smaller pieces—still has attractive fundamentals and growth potential.

Disclosure: At the time of publication, the author holds a long position in BP but no position in AMZN, XOM, or CVX.