Markets

Amazon has 'destroyed the retail industry' so US should look into its practices, Mnuchin says

Key Points
  • "I think if you look at Amazon, although there are certain benefits to it, they've destroyed the retail industry across the United States so there's no question they've limited competition," Treasury Secretary Steven Mnuchin tells CNBC.
  • The Justice Department said Tuesday it is opening a broad antitrust review of big technology companies and their competitive practices.
  • Mnuchin says it is "absolutely right that the attorney general is looking into these issues."
VIDEO2:3002:30
Mnuchin: It's 'absolutely right' for the DOJ to look into antitrust issues

Treasury Secretary Steven Mnuchin said Wednesday the Justice Department is right to be looking into Amazon's practices as part of its antitrust review of big technology companies.

"I think if you look at Amazon, although there are certain benefits to it, they've destroyed the retail industry across the United States so there's no question they've limited competition," Mnuchin told CNBC's "Squawk Box."

"I think it's very good that the attorney general is going to look into this. I think it's an important issue and I look forward to him reporting back to the president and hearing his recommendations," said Mnuchin.

The Justice Department said Tuesday it is opening a broad antitrust review of big technology companies, sending shares of Amazon, Alphabet and Facebook lower in off-hours trading. The DOJ said it is looking into how major online platforms have "achieved market power" and how their practices may have "reduced competition, stifled innovation, or otherwise harmed consumers."

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At the company's annual shareholder meeting in May, Amazon chief Jeff Bezos said "large entities deserve to be inspected and scrutinized."

Shares of Amazon ticked about 1% lower on Wednesday morning but closed up 0.32%. 

Mnuchin is no stranger to the world of retail. Prior to becoming Treasury Secretary for President Donald Trump, Mnuchin served on the board of directors for embattled department store chain Sears. Mnuchin's role at Sears and his relationship with former CEO Eddie Lampert have been criticized by left-wing politicians

"There's areas where [Amazon] really hurt small businesses," said Mnuchin.

In comparing Amazon to big-box retailer Walmart, Mnuchin said the companies' competitive practices are similar and different.

"People had those concerns about Walmart. Walmart developed a business where small business could continue to compete with them," he said.

Mnuchin said it is hard to lump the FANG tech giant stocks together regarding competitive practices.

"I don't think you can talk about competition among all these companies in the same way," said Mnuchin. "People talk about the FANG stocks like they're all the same. Each company is very different."

Amazon responded to Munchin's comments on CNBC.

"Small and medium-sized businesses are thriving with Amazon. Today, independent sellers make up more than 58% of physical gross merchandise sales on Amazon, and their sales have grown twice as fast as our own, totaling $160 billion in 2018. Amazon's retail business competes in the worldwide market for retail sales and represents less than 1% of global retail and less than 4% of U.S. retail. And the vast majority of retail sales – 90% – still occur in brick-and-mortar stores according to the U.S. Census Bureau."