“You may want to take a seat,” Jeff Bezos told Amazon investors as the company announced its first quarter results last week. 

The company reported a revenue rise of 26% to $75.5bn in the three months to March, compared with $59.7bn in the same period last year. It’s little surprise. Stuck at home and unable to shop in physical stores, thirsty for entertaining content because there’s nothing else to do, and spending more and more hours aimlessly online – suddenly everyone is living the life of Amazon’s dream, captive customer.

For now, the boom in sales is coming with considerable extra costs for the company – hence the ‘brace yourselves’ warning.

“Under normal circumstances, in this coming Q2, we’d expect to make some $4bn or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4bn, and perhaps a bit more, on Covid-related expenses getting products to customers and keeping employees safe,” Bezos said.

PPE for staff, higher wages for hourly workers (up £2 an hour in the UK), extensive cleaning of facilities, “less efficient process paths” due to social distancing and the development of virus testing for staff doesn’t come cheap. And the 175,000 fulfilment and delivery network hires Amazon has made over the past two months to meet demand need paying too. Amazon is “not thinking small”, as Bezos put it, in its response to the virus.

But these pain points are manageable, at least for companies as big as Amazon. It’s in prime position to take advantage of the fact smaller, competing  firms are drowning in the downturn.

It’s already benefiting from the “significant decline in revenues” felt by food courier firm Deliveroo – which this week revealed it is laying off 15% of its global headcount – which told the UK’s Competition & Markets Authority it would “fail financially and exit the market” if its investment from Amazon was blocked.

According to documents published this week by the authority, the CMA looked set to halt the deal, commenced way ahead of coronavirus, finding Amazon would “acquire material influence” and so be a “relevant merger situation”.

But blocking the deal and losing Deliveroo from the market would be even worse for consumers, the CMA concluded. Provisionally waiving the deal through was, on balance, the “least detrimental” option. As an authority source put it: “The CMA can only investigate the transaction in front of it.”

“In the absence of the Covid-19 impacts, the outcome might well have been quite different given the CMA’s earlier concerns about the tie-up and its ongoing focus on acquisitions by digital platforms and big tech companies,” said Alan Davis, head of competition at Pinsent Masons.

“The deal is a fairly rare example of the CMA applying ‘failing firm’ principles to clear a transaction that otherwise could raise significant competition concerns,” he added.

There are undoubtedly going to be more failing firms as the pandemic continues. The CMA needs to be wary of behemoths like Amazon snapping up floundering smaller companies.

In the US, there are already calls for a complete halt on what have been dubbed “predatory” deals.

Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez are seeking to impose a moratorium on mergers and acquisitions involving large companies until smaller companies are back on their feet. Their proposed Pandemic Anti-Monopoly Act is worth considering in the UK too.

As Warren put it: “We can’t allow our economic recovery to become one more rigged game for the rich and powerful.”

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