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Amazon.com Inc could be the next tech stock to crash

Readers may be aware that Facebook is under enormous pressure due to a privacy malfunction where British business Cambridge Analytica was able to use a personality quiz designed by a third party to harvest friends of quiz participants’ Facebook data, it captured many millions of people.

Now it is Amazon’s turn to perhaps face some music. The Amazon share price plummeted by 4.38% overnight after Axios reported that President Trump is ‘obsessed’ with regulating the internet retail giant.

Axios reported that President Trump could look into Amazon.com’s tax treatment. In the past he has also questioned Amazon’s US Post Office delivery prices as being too low.

Investors may look at the top tech stocks as being invincible but the last few weeks have shown that may not be the case. Governments and the media can have a big impact on them if there’s any indiscretions. Plus, some governments are questioning whether they need to be broken up.

It would not be the first time a dominant player was broken up. I’m not an expert on century-old business history, but around 100 years ago Standard Oil controlled 91% of production and 85% of final sales of oil in the US. The US ordered the breakup of Standard Oil into 34 companies. To finish the story, the two biggest companies of the broken-up companies became Exxon and Mobil, which then eventually merged. So, it sort of worked for a while.

It is a legitimate question to ask about Amazon’s dominance, but it could also be a very political move. Jeff Bezos is the main shareholder of Amazon and also owns the Washington Post. The Washington Post has often revealed negative news (“fake”) about Trump since he was first trying to become elected, so it wouldn’t surprise me if this was a vindictive move.

Foolish takeaway

Investors should always be cautious about the biggest companies in a country. They are often political targets – just look at how the Aussie banks are the ones under the microscope. Sure, they have done some bad things, but there are also a lot smaller businesses doing some questionable things too.

That’s why I invest in small growth shares like this one, which has less political risks compared to a lot of others.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia has recommended Amazon. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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