Amazon is 'the great white shark,' regulation is 'the megalodon': analyst

Tech giants are facing scrutiny from both Wall Street and Washington and analysts are beginning to factor antitrust risks into their modeling.

Like Google (GOOGL) and Apple (AAPL), Amazon (AMZN) is vulnerable to antitrust probes. “We looked at the Animal Kingdom and apex predators... think of Amazon as the great white shark,” said Tom Forte, senior research analyst at D.A. Davidson, which just published its 15th white paper on the convergence of tech and retail. “Well, when you think of regulation, you think of the megalodon — so antitrust.”

In Amazon’s case the question is: “What ultimately are they [the U.S. Department of Justice] hoping. What's the ultimate outcome? Do they want to break the company into two pieces — retail and cloud computing? I would argue for shareholders that’s good news not bad news. Amazon, for the most part, lowers prices to the consumer,” Forte told Yahoo Finance.

Biggest risk for Amazon

Forte thinks the biggest risk for Amazon is on data.

“Would the government change Amazon's policies on data? Because I would argue that's their secret sauce in retail,” Forte explained, adding that it would hurt Amazon if the company was required to wipe out all the data from Alexas devices every night at midnight.

“The good news, though, for shareholders of Amazon is that we'll have multiple data points,” Forte said. “So, it isn't like the Department of Justice will file an antitrust on Tuesday and it'll be resolved on Wednesday. We'll learn over time what's going on.”

Taylor Locke is a producer for Yahoo Finance.

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