The Darker Side of Amazon’s Acquisitions

[Outlier Insights]( The Darker Side of Amazon’s Acquisitions By Jason Bodner, Editor, Outlier Insights Amazon recently announced it’s acquiring iRobot (IRBT) in an all-cash deal for $1.7 billion. The company is best known for its robot vacuum cleaners – namely, its flagship product the “Roomba.” The Roomba Vacuum Source: iRobot Amazon execs say the deal is a natural extension as part of its mission to move further into robotics and smart home technology. But there’s a darker side to this deal than Amazon would care to admit. As of 2020, Amazon’s Alexa devices were already in 25% of U.S. homes. They sit on the shelf, tracking, listening, and mining data from our daily lives. And it’s estimated that the company has hundreds of millions of Ring doorbell security cameras active by our front doors. Now the company will have up to 40 million Roomba’s zipping around the inside of our homes. Some of these automated vacuums even use advanced LIDAR (laser mapping technology) and cameras. These technologies enable our Roombas to map out our homes to better see, understand, and avoid obstacles. And with Amazon behind them, these devices are capable of monetizing our homes in a whole new way. The Monetization of Our Private Spaces A report from this past April revealed what most of us have guessed –our conversations with Alexa provide data for the ads we’re served by the company. And Ring doorbells can watch and listen to us and our neighbors over 50 feet away from our doors, gaining more data on our lives. But Amazon knows there’s still more data to be obtained inside our houses. Bloomberg reported that the data Amazon will soon collect from Roombas could be used to determine the value of your home based on how big it is and what you have around the house. It could then combine that data with our Amazon shopping habits. All this can create an even more advanced customer profile about us. With Roomba’s help, Amazon will know exactly what kind of throw pillows would look great on our couch. And in the very near future, we may see it start to show us ads that pertain to what is or is not inside our homes. Big Tech Won’t Stop If any of us feel uncomfortable with a company gaining so much information about us, that’s completely understandable. Big tech has a dark side – it’s as plain and simple as that. If something as mundane as cleaning dog hair off the floor can be monetized, then big tech is going to find a way. And there’s no better example of an amazing monetizer than Amazon. It has a history of buying up other companies like this: Companies That Amazon Owns Source: SMB Compass It owns streaming hubs, Hollywood production studios, robotics companies, pharmacies, news agencies, grocery stores, and the list goes on. It’s safe to say Amazon is immersed in nearly every major industry in our lives today – and it is constantly working on ways to monetize it all. So it makes sense why Amazon has fought to integrate with so many areas of our lives. The more data Amazon has, the more it can market and sell to us. And Amazon isn’t going to stop its acquisitions anytime soon. It simply makes too much sense for Amazon to continue buying companies. When you play in the league Amazon is in, it’s cheaper to buy a business than to build your own. This strategy has allowed Amazon to become the marketplace for basically everything. And even with the huge anti-trust cases we’ve seen, the federal government has failed to rein in the Big Tech space, including Amazon. So it’s hard to imagine anything can stop this giant. If You Can’t Beat Them, Join Them “If you can’t beat them, join them” may be a cliché, but this is certainly a true statement with Amazon. Amazon is a giant, and as investors, there’s no way around that fact. Amazon’s revenue in 2021 grew 21.7% year-over-year to over $469 billion. The company is expecting to see that number grow to over $522 billion this year and over $604 billion in 2023. And with the recent stock split making share prices more affordable and attractive for everyday investors to buy, now is a fantastic time to buy shares of Amazon (AMZN). Right now, investors can even get into Amazon while it’s trading at a discount. Amazon is still down 17% since the beginning of the year. But in the past month shares have climbed 25% – which is consistent with the forecast of a continued rally into the fall that I discussed [here last week.]( Amazon’s current price and upward trend reflect a great opportunity to hitch ourselves to a stock with some serious momentum. Talk soon, Jason Bodner Editor, Outlier Insights --------------------------------------------------------------- Like what you’re reading? Send your thoughts to feedback@brownstoneresearch.com. 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