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Trump is going after Amazon the wrong way

  • President Trump is telling an important truth about Amazon's unfair advantage over traditional retailers.
  • But he shouldn't be the one saying it.
  • Now, any legislative or legal remedy will be harder to achieve.
Jeff Bezos, chief executive officer of Amazon
Getty Images
Jeff Bezos, chief executive officer of Amazon

President Donald Trump went after Amazon again on Wednesday with a stinging tweet about how the internet retailer is killing jobs and alluding to its unfair tax advantage over traditional retailers:

Here's the thing: He's exactly right, and that should be clear to Trump supporters, Trump haters, and everyone in between.

Amazon is indeed a behemoth that is swallowing up too many American businesses and threatening consumers with monopolistic power in several product lines. It already is responsible for 43 percent of all annual online sales and half of all the internet sales growth in 2016. It's search algorithms dominate what consumers see before buying, and it already dominates the retail world for clothes and books. As legal expert and author Lisa Khan wrote earlier this year, Amazon's business practices are precisely what the antitrust laws were created to address.

But here's the other thing: He's fighting this battle in all the wrong ways, and now all the legal and legislative remedies for it are going to be much harder to achieve.

First off, President Trump has made it personal and we already know how the courts took his personal comments and statements in the immigration ban cases and used them to undermine his administration's case for key border protections. The result was that while the White House won a partial victory in banning most potential immigrants and visitors from a list of six countries, but its impact was weakened because of then-candidate Trump's comments about "banning Muslims."

Now Amazon's antitrust issues are being discussed in Congress. Rhode Island Democrat Rep. David Cicilline is pushing for antitrust hearings over Amazon's deal to buy Whole Foods. President Trump's comments wouldn't undermine the already political grandstanding we see at most Congressional hearings. But if the Trump Department of Justice brings some kind of antitrust or tax case against Amazon, all bets are off.

Federal judges from all parts of the country could give serious consideration to arguments that those cases are part of a personal White House vendetta instead of an effort to establish business fairness. It also doesn't help that so much of President Trump's anger against Amazon sure seems like a direct result of what's printed about him in the Washington Post owned by Amazon founder and CEO Jeff Bezos.

Remember that during the Bill Clinton administration's big antitrust efforts against Microsoft in the late 1990s, President Clinton never publicly bashed Bill Gates or Microsoft and thus kept the case from being corrupted by personal politics. Clinton wanted to project a more pro-business image he fought hard to win as compared with Democrats of the past.

But President Trump isn't just risking fouling up the legal process here. He's now made the very important and enduring national issues of how to deal with internet monopolies, how to prepare for automation's effects on jobs, and other economic questions impossible to address and answer without making them about being for or against this highly controversial president.

Pre-Trump Washington was far from a bipartisan love fest. But there was surprising cooperation over the similar question of internet retailer sales taxes when Republicans joined Democrats in the past to enforce internet sales tax rules back in 2013.

That's one reason why Amazon now does collect sales taxes everywhere in the U.S. Though that didn't become fully true nationwide until March of this year. That's not the end of the story either. More than half of the items bought on Amazon are actually sold by third-party sellers, who pay to use Amazon's storage, payments and other systems. And those parties generally aren't required to collect sales tax. That's a major sticking point for brick and mortar retailers and legal critics.

And getting back to Amazon itself, many experts believe that sales tax advantage that lasted for so many years is a big reason why Amazon grew to such size and power. And while Amazon does now employ more than 350,000 employees, up 43 percent from last year, it's still seen as a net destroyer of jobs by critics in many industries.

Still, any kind of bipartisan legislative effort to re-examine Amazon and its peers won't be possible without the politicians themselves and media critics painting that effort as "good" or "bad" for President Trump. And we know how that can poison the process. It's a genuine question whether Democrats like Cicilline or even leading progressives like Senators Bernie Sanders and Elizabeth Warren will be willing to lead a fight against Amazon's monopolistic practices now that all Amazon scrutiny is becoming all about President Trump.

And again, that's a shame that goes well beyond any one party's or politician's fortunes. The inherent advantage internet retailers have over brick-and-mortar chains and mom and pop stores should be examined closely.

No president should have singled out Amazon like President Trump did on Wednesday, but his decision to do so is more damaging because he has become the center of everyone's emotionally-charged attention in a way no president has before. And when emotions take over, reason usually goes out the window.

Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.

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