Copy Paste Experiment: PACIFIC • The Supreme Court didn't hurt Amazon. It helped it.

June 21, 2018 | New York

What's Next: Amazon, Too Big To Hurt. The Supreme Court says states can require online retailers like Wayfair and Amazon to collect sales taxes even if they don't have a brick-and-mortar presence there. The ruling might look like a blow to Amazon, which has not historically collected sales taxes on the sales it facilitates for thousands of third-party retailers. But it's actually the opposite.

The breadth of Amazon's inventory, and the convenience of its delivery services, have made it such an integral part of people's lives that it probably will be unscathed if the ruling forces it to incrementally raise prices.

In fact, there's a good chance the 5-4 decision will help Amazon by disadvantaging competitors like Wayfair and Overstock, whose only selling point is their ability to offer lower prices:

• Overstock stock closed down 7%.

• Wayfair stock dropped 8% before correcting and closing down 1.6%.

• Amazon stock was only down 1.1%.

Moreover, Amazon already collects sales tax on goods it sells itself, and the company recently started collecting sales tax on third-party sellers in a few states, with more to come -- which means it has been preparing for this shift.

The irony is that President Trump, a vocal critic of Amazon and Jeff Bezos, is touting the vote as a victory, when in fact it is more likely to give Amazon a greater edge.

PACIFIC
The Agenda

Welcome to PACIFIC, and the longest, and slowest, day of the year.

Bad Intel
The Fall of Brian Krzanich

Intel CEO Brian Krzanich has been forced out of the company and booted from its board following an investigation into a "consensual relationship with an Intel employee," the company announced today.

• The relationship violated a company policy that says managers cannot have romantic relations with people who report to them.

• Krzanich joins a long line of CEOs who have resigned over relationships with employees, including Priceline's Darren Huston, Hewlett-Packard's Mark Hurd and Boeing Harry Stonecipher.

The Big Picture, via Nancy Shenker, the founder of ONswitch, to my colleague Bianna Golodryga:

• "When you're the CEO of a company, everybody is basically an employee. So people at that level have to be especially careful about following their own rules or, conversely, sitting down with human resources and saying, 'Maybe we should revisit our company policies' ..."

• "A lot of very successful relationships began in the workplace, including Bill and Melinda Gates and the Obamas. So it's not necessarily that fraternizing is a bad thing. It's the levels and the power thing."

• "The fact that he was the CEO of a company meant he should have been following his own rules."

Bad Service
T-Mobile's Lewandowski problem

T-Mobile faces mounting pressure to sever ties with former Trump campaign manager Corey Lewandowski over his cavalier dismissal of a story about a 10-year-old girl with Down syndrome who was separated from her mother after crossing the border illegally. Lewandowski famously said "womp womp" on Fox News when hearing the story and still refuses to apologize.

Lewandowski, who is advising T-Mobile on its proposed merger with Sprint, was dropped by his speakers bureau on Wednesday.

Fast Company's Mark Sullivan:

• T-Mobile should now demonstrate its own sense of social responsibility and dismiss Lewandowski's firm. Corporations, like people, are known by the friends they keep.

Bird's the Word
Twitter resurges

The same tech press that declared Twitter dead just two years ago now is now hailing its return as "an unexpected, somewhat miraculous comeback."

BuzzFeed's Alex Kantrowitz:

• "Rudderless and without product direction, the company was losing users and advertisers, and seemed unable to contain a metastasizing trolling crisis that was destroying its credibility. Employees left by the dozens and then got laid off by the hundreds. It tried to sell, and failed at that too."

• "But ... even as those eulogies were being published, things started changing. Twitter began beating earnings expectations. Star ex-employees trickled back in, finding a new, more positive internal culture than the toxic one they'd left. Advertisers came back too, as did users. The company finally began addressing its trolling problem. And its stock, once unappealing to analysts like Nathanson at $14, is now trading above $46."

What happened? Kantrowitz says news played an important role: "It's hard to overstate the importance of Twitter's decision to tie its identity to news. ... As soon as Twitter decided it was a news app, [in April 2016], it began investing in its core strengths."

VALINSKY'S LINKS

Amazon's Fire TV gets positive reviews (Verge)

Microsoft launches visual search (VB)

Google gets a security refresh (VB)

Lime's pitch deck gets leaked (Axios)

MTV launches a streaming studio (Deadline)

Talk of Tinseltown
Where's the M&A summer?

Recode's Peter Kafka throws a little cold water on all the M&A frenzy talk following the approval of the $86 billion AT&T-Time Warner deal:

• "So far the only people taking out their checkbooks are the ones who were already taking out their checkbooks. And there is a decent chance that they may be the only ones with a real appetite to buy TV and film companies."

• Lots of companies are buying content or content creators, instead of buying [companies] ... "Amazon getting into the 'Lord of the Rings' business; Apple getting into the 'Sesame Street' business."

The Big Picture: What we've been saying for weeks. Old media is in self-preservation mode and scaling up, but new players like Apple and Amazon are more likely to forgo buying media companies and simply create their own from the ground up.

The Stream
AT&T launches 'WatchTV'

AT&T unveiled its "WatchTV" streaming service today. The launch comes just one week after AT&T closed its acquisition of Time Warner.

The Details, via my colleague Jill Disis:

• "WatchTV will allow customers to stream more than 30 live channels — including AT&T's CNN, TBS and TNT — on smartphones, tablets and other devices."

• "AT&T wants to use products like WatchTV to compete with digital newcomers for younger viewers who don't want to pay for beefy cable subscriptions."

What's Next: AT&T's first foray into content distribution is almost certainly an opening salvo, with more sophisticated offerings still to come.