- No one would call Amazon founder and world's richest man Jeff Bezos foolish. But in the last few weeks, Bezos has made some foolish moves that could weaken his company's brand and harm his personal reputation.
- The most recent poor decision is the plan of attack Amazon has chosen after losing the Pentagon's $10 billion cloud computing JEDI contract.
- Bezos is exhibiting more questionable behavior with his response to his ongoing and embarrassing "phone hacking" scandal.
No one would call Amazon founder and world's richest man Jeff Bezos foolish. But in the last few weeks, Bezos has made some foolish moves that could weaken his company's brand and harm his personal reputation.
The most recent poor decision is the plan of attack Amazon has chosen after losing the Pentagon's $10 billion cloud computing JEDI contract. Amazon's appeal of that decision now officially hinges on the claim that President Donald Trump held a personal bias against Bezos, and by extension Amazon, because Bezos owns the Washington Post, which publishes unflattering news about him.
Amazon's lawyers want to pursue that line of attack by requesting depositions from both Trump and former Defense Secretary James Mattis.
This is simply the wrong appeals strategy for Amazon to take. Remember that just about every major defense contract gets appealed by the losing bidder. The process rarely leads to a change in the Pentagon's decision, but it usually serves to improve the losing contractor's chances of winning the next defense contract.
For Amazon, the appeals process opportunities are better than usual. Unlike a fighter jet, nuclear bomb, or missile defense system, Amazon's cloud business is totally adaptable and legal for the company to market and sell to almost anyone.
No, there aren't that many potential customers throwing $10 billion contracts around. But data storage demand is so strong that it's become a driving force behind the tech sector's overall earnings and is growing at a 17% annual clip.
Bezos and Amazon have already gained much more than the value of that JEDI contract in personal wealth and market cap in just the last few weeks thanks to strong business results.
When Boeing or Lockheed Martin lose a Defense Department weapons contract bidding process, they can't just turn around and try to sell that product to Russia or China. By contrast, Amazon has many more potential customers.
By making its appeal all about an alleged Trump revenge plot, Amazon is throwing away a golden opportunity. Now, it's simply joining the very crowded chorus of Trump bashers and even anti-Trump conspiracy theorists. The company loses its chance to use this appeal solely as a massive publicity vehicle for AWS in front of those many other potential customers. In fact, this strategy really feels like just the kind of emotionally laden, revenge motivated move that Amazon is accusing Trump of making.
Sure, Amazon can probably make a decent list of examples of Trump tweets and comments at his rallies where he's bashed Bezos. But the administration's lawyers could easily counter with similar nasty exchanges Trump had with China, or Apple's Tim Cook. In both of those cases, the president was proud to make deals and even cultivate relationships with those antagonists. Amazon's better move here is to simply focus on why it believes AWS is superior for the Pentagon's needs.
Bezos is exhibiting more questionable behavior with his response to his ongoing and embarrassing "phone hacking" scandal. By now, you probably know about those infamous intimate pictures of Bezos stored on his phone that went public in 2018. Those photos helped confirm an affair Bezos was having with Lauren Sanchez, which led to his split from ex-wife MacKenzie and a more than $38 billion divorce settlement.
How those photos were leaked has remained a topic of speculation for more than a year. But the Wall Street Journal now reports that federal prosecutors believe Sanchez simply sent the photos to her brother who allegedly then sold them to the National Enquirer. This comes even as that brother, Michael Sanchez, has filed a lawsuit against Bezos accusing him of spreading false rumors to journalists that he sold the photos.
Yeah, the whole thing is that much of a big and confusing mess.
But in the midst of this supermarket tabloid fodder, Bezos has also pursued a theory that his phone is part of a serious international incident. He commissioned his own investigators to look into the matter and they "concluded" that Saudi Arabia hacked his phone in order to potentially blackmail Bezos at a later time. Bezos then handed over that report to the United Nations, and the U.N. is now demanding answers from the Saudis.
The subtext of all of this is the fact that Saudi Arabia has also admitted that members of its intelligence service murdered Washington Post editorial column contributor Jamal Khashoggi in 2018. Khashoggi had been writing critical pieces against the Saudi kingdom at the time, and Bezos and the Post have understandably taken the whole matter very personally.
But there are some tough questions for Bezos to answer: Even if his accusations are true, what possible punishment would Saudi Arabia face for it? Is going after the Saudis for this alleged phone hacking worth the embarrassment of reminding the public of the nude photos and highlighting the fact that even the world's richest tech CEO couldn't keep his data private? This feud with the Saudis comes with a lot of collateral damage.
For now, the Amazon money-making machine just churns on. Bezos and Amazon have already gained much more than the value of that JEDI contract in personal wealth and market cap in just the last few weeks thanks to strong business results.
Those good results should serve as a reminder to stick with the strictly business approach that got him and Amazon where they are today. Shifting the focus to personal vendettas is dangerous and unchartered territory for a man and a business that have the most to lose.
Jake Novak is a political and economic analyst at Jake Novak News and former CNBC TV producer. You can follow him on Twitter @jakejakeny.