WASHINGTON—The Federal Trade Commission is investigating
Amazon.com Inc.’s
AMZN -0.24%
$3.9 billion deal to buy
1Life Healthcare Inc.,
ONEM 0.35%
which operates One Medical primary care clinics in 25 U.S. markets.
1Life, which went public in 2020, disclosed the investigation in a securities filing. The disclosure says One Medical and
Amazon
AMZN -0.24%
each received a request on Friday for additional information about the deal from the FTC.
Amazon’s
AMZN -0.24%
bid for One Medical added momentum to the push by technology and retail giants to make inroads into the nation’s $4 trillion healthcare economy. The deal was the first major acquisition announced during the tenure of Chief Executive
Andy Jassy,
for whom expansion into healthcare is a priority.
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The FTC’s move to investigate the deal could delay its completion as federal competition investigations often take months to finish. Significant U.S. antitrust probes on average take about 11 months, according to data compiled by law firm Dechert LLP.
FTC Chairwoman Lina Khan is a critic of Amazon, having written a 2017 law review article that argued Amazon’s conglomerate-like structure shouldn’t have escaped antitrust scrutiny. Ms. Khan said Amazon’s entry into businesses beyond its e-commerce platform allowed it to gather data it could use to undercut other companies.
The FTC is investigating Amazon’s Prime membership program, according to a legal petition Amazon filed last month. The company argued that FTC staff had made excessive demands on founder
Jeff Bezos
and other company executives and asked officials to quash the subpoenas.
An Amazon spokeswoman declined to comment.
Mr. Jassy is focused on healthcare as an industry in which Amazon could find significant growth opportunities. The company recently revealed that it plans to shut down a healthcare unit it launched in 2019 called Amazon Care after it announced the One Medical deal.
The transaction would give Amazon more than 180 clinics with employed physicians across roughly two dozen U.S. markets. One Medical Chief Executive
Amir Dan Rubin
is expected to remain as CEO once the deal closes.
The line between Amazon and Walmart is becoming increasingly blurred, as the two companies seek to maintain their slice of the estimated $5 trillion retail market while chipping away at the other’s share, often by borrowing the other’s ideas. Photos: Amazon/Walmart
As Amazon seeks to grow in healthcare, the company faces added challenges from competitors such as
UnitedHealth Group Inc.’s
Optum health-services arm and
CVS Health Corp.
, in addition to hospital systems.
In a memo to employees,
Neil Lindsay,
senior vice president of Amazon Health Services, said the healthcare industry continues to be an important arena for innovation.
“As we take our learnings from Amazon Care, we will continue to invent, learn from our customers and industry partners, and hold ourselves to the highest standards as we further help reimagine the future of health care,” Mr. Lindsay wrote.
is accusing the Federal Trade Commission of making excessive and unreasonable demands on founder
Jeff Bezos
and company executives as the agency probes Amazon’s Prime membership program.
In a petition to the FTC filed earlier this month and recently made public, Amazon says the agency’s demands on the company have been “overly broad and burdensome,” and its legal tactics have been unfair.
It specifically requests that the FTC quash civil subpoenas issued to Mr. Bezos and Chief Executive
Andy Jassy,
contending that the FTC hasn’t identified a reason why their testimony is necessary.
An FTC spokeswoman declined to comment.
The commission launched the Amazon investigation and it wasn’t immediately clear how it would respond to the company’s request. But the 49-page filing offers a glimpse into the FTC’s investigative practices, at least through Amazon’s lens.
The filing offers further insight into the FTC’s focus on so-called dark patterns—online platform-design tactics intended to manipulate users into signing up for unwanted or unnecessary services, or to prevent them from canceling.
Dark patterns have been a particular concern for FTC Chairwoman Lina Khan, and the agency last year issued a new enforcement-policy statement warning companies against deploying them.
Seattle headquarters of Amazon, which contends that its sign-up and cancellation processes are clear and straightforward.
Photo:
David Ryder/Getty Images
The FTC’s original civil subpoena to Amazon said its Prime investigation focused on whether the company has engaged in unfair or deceptive practices by automatically enrolling consumers in the service, or failing to provide a simple mechanism for them to stop recurring charges, according to Amazon’s petition.
The Amazon filing, which was earlier reported by Business Insider, contends that its sign-up and cancellation processes are clear and straightforward.
To be sure, legal disputes over the scope of government investigations are common. Still, the Amazon petition also could provide further ammunition for business critics of Ms. Khan, who has become a target for groups such as the U.S. Chamber of Commerce who say she is overstepping her authority.
“The FTC is proving time and time again under Khan’s leadership that it isn’t acting in good faith, it’s not acting within the law, and is intent on hurting tech,” said Carl Szabo, vice president and general counsel of NetChoice, an industry-backed group that favors market-oriented policies toward the internet.
Among other claims, the Amazon filing asserts that the agency staff has come under pressure from FTC brass to wrap up the investigation later this year and has made excessive and unreasonable demands for information.
The FTC has been investigating Amazon’s marketing and cancellation practices for its Prime subscription service since March 2021, according to Amazon, which said that the probe has expanded into other subscription programs.
Under Chairwoman Lina Khan, the FTC has taken a more aggressive stance on enforcement.
Photo:
Tom Williams/Zuma Press
Those other programs include Audible, Amazon Music, Kindle Unlimited and Subscribe & Save, according to Amazon’s petition.
Amazon says it produced about 37,000 pages of documents in response to the agency’s initial demands. The company says the FTC staff unexpectedly disengaged from the investigation for several months.
Then in April, the company says it was notified that the FTC had put a new attorney in charge of the investigation and that staff was under “tremendous pressure” to finish the investigation—and was under instructions to make recommendations on the case before the fall.
At the same time, the staff increased its investigative demands and imposed tight deadlines for complying. The FTC also sought the testimony of almost 20 current and former Amazon employees by delivering requests to their homes, according to the petition.
The FTC under Ms. Khan has taken a more aggressive stance on enforcement. Amazon had previously sought, without success, for Ms. Khan to recuse herself from the investigation based on her past critical statements of the tech giant.
According to the Amazon petition, the FTC staff also has attempted to prevent Amazon attorneys from representing individual employees, according to the petition. The company says that is unfair.
The company also complained that the FTC is unfairly demanding to question Messrs. Bezos and Jassy about issues they don’t follow closely.
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“Preparing either to testify regarding the granular details of business operations for which they have no unique knowledge and no day-to-day responsibilities would be a tremendous burden on them, on counsel and on Amazon,” the petition says.
Under FTC rules, companies can object to investigative demands made by the agency’s staff. The commission has 40 days to respond to the petition. Amazon’s petition seeks to quash or limit the agency’s latest civil subpoena to the company, or at least extend the deadline for compliance to mid-September.
Amazon’s trouble in Washington isn’t limited to the FTC. Democratic and Republican members of the House Judiciary Committee have asked the Justice Department to investigate Amazon and some of its executives for what they said was possible criminal obstruction of Congress.
Amazon is also a target of antitrust legislation that, if passed, would bar it and other online giants from giving preferential treatment to their own products and services, such as steering consumers to in-house products instead of competitors’ offerings.
Write to John D. McKinnon at john.mckinnon@wsj.com and Dave Michaels at dave.michaels@wsj.com
to offer the entertainment company’s Paramount+ streaming service to subscribers of Walmart’s membership program.
Walmart has been exploring a subscription video-streaming deal to draw more people to Walmart+ as it seeks to challenge
Amazon.com Inc.,
which has grown its own Prime membership program to about 200 million global members.
The companies agreed to a 12-month exclusivity agreement and a two-year deal that would give Walmart+ members access to Paramount’s ad-supported streaming service, according to people familiar with the deal. The perk will be available starting in September, Walmart said.
Walmart’s announcement on Monday came after The Wall Street Journal reported the two companies had reached an agreement. Walmart is scheduled to announce quarterly earnings on Tuesday.
The deal is the latest tie-up in the fast-changing streaming industry, where a growing group of companies are looking to bundle content to draw viewers or customers. YouTube is planning to launch an online store for streaming video services and has renewed talks with entertainment companies about participating in the platform. YouTube, which is owned by
Alphabet Inc.,
would join
Apple Inc.,
Roku Inc.
and Amazon, which all have hubs to sell streaming video services.
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Walmart executives have held talks in recent weeks to discuss a streaming deal with executives at
Walt Disney Co.
,
Comcast Corp.
and Paramount Global, according to people familiar with the matter.
While this partnership is new, Paramount and Walmart have worked together for years. Paramount has had an office in Bentonville, Ark., dedicated to Walmart, which historically has been a big seller of its consumer products and home entertainment.
Paramount Global runs the Paramount+ service, which has shows such as “Halo,” the “Star Trek” series and “Paw Patrol.” The company said this month that Paramount+ had more than 43 million subscribers at the end of its latest quarter.
Walmart introduced Walmart+ in 2020 and aims to use the service to add new streams of revenue beyond selling goods, as well rival the success Amazon has had with its Prime membership services. A subscription to Walmart+ costs $12.95 a month or $98 a year and includes free shipping on online orders and discounts on gasoline. The retailer has added perks to build interest, such as six months of the
Spotify
music-streaming service.
Walmart said Monday that Walmart+ has had positive membership growth every month since its launch, without specifying membership numbers. A Morgan Stanley survey in May said the service has about 16 million members, compared with about 15 million the previous November.
Amazon has invested heavily to ramp up its own Prime Video service, adding original programming and live sports. Prime Video is included along with free shipping and other perks in its Prime membership, which costs $14.99 a month or $139 a year in the U.S. Amazon also recently added a year of Grubhub’s restaurant delivery services for Prime subscribers.
The deal would give Paramount+ a new avenue for growth in an increasingly competitive streaming market now that all of the major entertainment companies have streaming offerings and growth in the U.S. among many services, such as
Netflix Inc.,
has started to slow.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
The line between Amazon and Walmart is becoming increasingly blurred, as the two companies seek to maintain their slice of the estimated $5 trillion retail market while chipping away at the other’s share, often by borrowing the other’s ideas. Photos: Amazon/Walmart
Technology stocks have taken a beating this year. Many individual investors have used it as an opportunity to double down.
The Nasdaq Composite Index—home to the big tech stocks that propelled the market’s decadelong rally—has fallen 21% in 2022. Shares of
Amazon.com Inc.
AMZN 10.36%
and the parents of Google and
Facebook
META -1.01%
have suffered double-digit declines as well, stung by higher interest rates and souring attitudes about their growth prospects.
Yet many of those stocks remain the most popular among individual investors who say they are confident in a rebound and expect the companies to continue powering the economy.
In late July, purchases by individual investors of a basket of popular tech stocks hit the highest level since at least 2014, according to data from Vanda Research. The basket includes the FAANG stocks—Facebook parent Meta Platforms Inc., Amazon,
Apple Inc.
AAPL 3.28%
,
Netflix Inc.
and Google parent
Alphabet Inc.
GOOG 1.79%
—along with a handful of others like
Tesla Inc.
and
Microsoft Corp.
Meanwhile, Apple, chip company
Advanced Micro Devices Inc.
and the tech-heavy Invesco QQQ Trust exchange-traded fund have remained among the most popular individual bets since 2020.
Interest in risky and leveraged funds tied to tech and stocks like
Nvidia Corp.
has also swelled, a sign that investors have stepped in to play the wild swings in the shares.
It has been a fruitful bet for many. Tech stocks have been on the rebound of late, partly on investor hopes for a slower path of interest-rate increases in the months ahead. The Nasdaq gained 12% in July, its best month since April 2020, outperforming the broader S&P 500, which rose 9.1%.
Individual investor Jerry Lee says: ‘The market is severely undervaluing how much tech can actually play into our lives.’
Photo:
Peggy Chen
“I’m extremely bullish on tech,” said Jerry Lee, a 27-year-old investor in New York who co-founded a startup that helps people find jobs. “The market is severely undervaluing how much tech can actually play into our lives.”
In coming days, investors will be parsing earnings reports from companies such as AMD and
PayPal Holdings Inc.
for more clues about the market’s trajectory. Data on manufacturing and the jobs market are also on tap.
Mr. Lee said he recently stashed cash into a technology-focused fund that counts Apple and Nvidia among its biggest holdings, after years of pouring money into broad-based index funds. His experience working at firms such as Google has made him optimistic about the sector’s future, he said.
Gabe Fisher holds stock in Meta Platforms, Amazon and Alphabet.
Photo:
Ethan Kaplan
Even last week when many of the industry’s leaders, including Apple, Amazon and Alphabet, warned their growth is slowing, investors pushed the stocks higher and expressed confidence in the ability of the companies to withstand an uncertain economy. Apple logged its best month since August 2020, while Amazon finished its best month since October 2009, helped by a 10% jump in its shares on Friday alone.
Many investors also pounced on the tumble in shares of Facebook parent Meta Platforms. The stock was the top buy among individual investors on the Fidelity brokerage Thursday when it fell 5.2% in the wake of the social-media giant’s first-ever revenue drop. Tesla,
Ford Motor Co.
and leveraged exchange-traded funds tracking the tech-heavy Nasdaq-100 index were also widely traded that day.
Gabe Fisher, a 23-year-old investor near San Francisco, said he is holding on to stocks like Meta, Amazon and Alphabet.
“Even if these companies never grow at as fast of a pace, they’re still companies that are so relevant and so prevalent that I’m going to hold on to them,” Mr. Fisher said.
He said he also has a small position in
Cathie Wood’s
ARK Innovation Exchange-Traded Fund that he doesn’t plan to sell soon, even though the fund has lost more than half of its value this year.
Other investors have been turning to riskier corners of the market. Leveraged exchange-traded funds tracking tech have been the third- and fourth-most-popular ETFs for individual investors to buy this year, behind funds tracking the S&P 500 and Nasdaq-100 indexes. These funds allow investors to make turbocharged bets on the market and can double or triple the daily return of a stock or index.
Many individual investors have also turned to the options market to bet on tech. Bullish bets that would pay out if Tesla shares rose have been among the most widely traded in the options market, according to Vanda. Individual traders have spent more on Tesla call options on an average day this year than on Amazon, Nvidia and options tied to the Invesco QQQ Trust combined, according to Vanda. The firm analyzed the average premium spent on options that are out-of-the-money, or far from where the shares are currently trading.
Jeff Durbin, a 59-year-old investor based in Naples, Fla., said he regrets missing out on buying big tech stocks decades ago.
He has scooped up shares of companies like artificial intelligence firm
Upstart Holdings Inc.
and
Shopify Inc.
SHOP -3.01%
—and hung on despite their sharp swings. Shopify, for example, dropped 14% in a single session last week as it said it would cut about 10% of its global workforce. “It’s painful, but I missed out on things like Amazon and Netflix when they were cheap,” Mr. Durbin said. “Who is going to be the Amazon and Apple 20 years from now?”
HONG KONG—Billionaire Jack Ma plans to relinquish control of Ant Group Co., people familiar with the matter said, part of the fintech giant’s effort to move away from affiliate Alibaba Group Holding Ltd. after more than a year of extraordinary pressure from Chinese regulators.
The authorities halted Ant’s $34 billion-plus IPO in 2020 at the 11th hour and are forcing the technology firm to reorganize as a financial holding company regulated by China’s central bank. As the overhaul progresses, Ant is taking the opportunity to reduce the company’s reliance on Mr. Ma, who founded Alibaba.
Mr. Ma, a 57-year-old former English teacher and one of China’s most prominent entrepreneurs, has been the target of government action that appears designed to reduce his influence and the power of his companies. He has controlled Ant since he carved its precursor assets out of Alibaba more than a decade ago. Over time he built it into a company that owns the Alipay payments network with more than one billion users, an investing platform that houses what was once the world’s largest money-market fund, and a large microlending business. Ant was expected to be valued at more than $300 billion had it gone public.
Diminishing his ownership could put back a potential revival of Ant’s IPO for a year or more. Chinese securities regulations require a timeout on public listings for companies that have gone through a recent change in control.
Mr. Ma doesn’t hold an executive role at Ant or sit on its board, but is a larger-than-life figure at the company and currently controls 50.52% of its shares via an entity in which he holds the dominant position. He could relinquish his control by transferring some of his voting power to other Ant officials including Chief Executive
Eric Jing,
after which they would collectively control the company, some of the people said.
Ant told regulators of Mr. Ma’s intention to cede control as the company prepared to convert into a financial holding company, the people familiar with the matter said. Regulators didn’t demand the change but have given their blessing, the people said. Ant is required to map out its ownership structure when it applies to become a financial holding company.
The People’s Bank of China has yet to officially accept Ant’s application to become a financial holding company. Any change of control isn’t likely to materialize until Ant’s restructuring is complete.
Ant owns the Alipay payments network that has more than one billion users.
Photo:
Qilai Shen/Bloomberg News
Mr. Ma has personally contemplated ceding control of Ant for years, some of the people said. He has been concerned about the corporate-governance risks arising from being too reliant on a single dominant figure atop the company, those people said.
The charismatic founder addressed those risks at Alibaba years ago by setting up a partnership structure to ensure a sustainable succession as its first generation of leaders moved on. He gave up the CEO job at Alibaba in 2013 and stepped down as chairman in 2019 when he retired from the company. He currently holds less than 5% of Alibaba’s shares.
American depositary shares of Alibaba traded in the U.S. fell 2.2% on Thursday. They have lost nearly half their value over the past 12 months.
The need to end Mr. Ma’s control at Ant gained new urgency as the souring regulatory environment spurred Ant and Alibaba to cut their ties. On Tuesday, Alibaba revealed seven top Ant executives had stepped down from the Alibaba partnership, the top echelon of management at Alibaba and its subsidiaries. The two companies also terminated long-running commercial and data-sharing agreements that had given Alibaba an edge.
Mr. Ma previously held back from giving up control of Ant because he didn’t want to delay the company’s plans for an initial public offering, some of the people familiar with the matter said. The scuttling of those plans—after Mr. Ma laid into financial regulators in a speech—removed that obstacle and created a fresh opportunity for Mr. Ma to resolve the matter, those people said.
A change in control could mean that Ant will have to wait a while longer before it tries going public again. Chinese securities regulations state that companies can’t list domestically on the country’s A-share market if they have had a change of controlling shareholder in the past three years—or in the past two years if listing on Shanghai’s Nasdaq-like STAR Market.
In less than six months, China’s tech giant Ant went from planning a blockbuster IPO to restructuring in response to pressure from the central bank. As the U.S. also takes aim at big tech, here’s how China is moving faster. Photo illustration: Sharon Shi
Hong Kong also imposes a waiting period but only for one year. Ant’s scuttled IPO plan included simultaneous listings in the former British colony as well as Shanghai.
Ant is in no rush to attempt an IPO again and intends to keep its options open, some of the people said. The company could consider other moves including spinning off units that could in turn be listed themselves, those people said.
Mr. Ma controls Ant through an entity called Hangzhou Yunbo Investment Consultancy Co., which in turn controls two vehicles that together own a little more than half of Ant’s shares.
Mr. Ma has a 34% stake in Hangzhou Yunbo. The other 66% is split evenly among Ant’s CEO, Mr. Jing, former CEO
Simon Hu
and veteran Alibaba executive and former Ant nonexecutive director Fang Jiang.
The billionaire originally owned all of the entity. He transferred two-thirds of the shares to the three executives in August 2020 before Ant filed its IPO prospectus. At the same time, Mr. Ma was given veto power over Hangzhou Yunbo’s decisions, according to the prospectus. The arrangement was designed to give the other executives more say in Ant’s affairs without triggering an effective change in control that could delay the IPO, a person familiar with the matter said.
Jack Ma doesn’t hold an executive role at Ant or sit on its board but controls 50.52% of its shares via an entity in which he holds the dominant position.
Photo:
bobby yip/Reuters
Mr. Ma could cede control of Ant by diluting his voting power in Hangzhou Yunbo via giving up his veto and transferring some of his stake to other executives, the person said.
Mr. Hu, who resigned as Ant’s CEO last year and recently retired, and Ms. Jiang, who left Ant’s board last year, will likely exit Hangzhou Yunbo and be replaced by other Ant executives. In addition to Mr. Jing, Ant’s most senior executives are now Executive Vice President Xiaofeng Shao and Chief Technology Officer Xingjun Ni. Mr. Shao is also the general secretary of Ant’s Communist Party committee, according to people familiar with the matter. Mr. Ni was instrumental in founding Alipay in 2004.
Mr. Ma’s control over Ant goes back more than a decade to the period when he was CEO of Alibaba. In 2011, it emerged that he had carved the payments business Alipay out of Alibaba without the knowledge of key shareholders including Yahoo Inc. and
SoftBank Group Corp.
9984 0.37%
Alibaba argued the transfer was needed for Alipay to secure a Chinese license that might not have been granted if the company had foreign shareholders. Following the move, China’s central bank in May 2011 gave Alipay a license to operate as a payment-services company. Yahoo and SoftBank were later compensated by an agreement that allowed them to share economic interests in Ant through their ownership in Alibaba.
In 2014, Ant Financial Services Group was created to hold Alipay and other financial businesses including consumer lending. The company in 2020 changed its name to Ant Group.
Write to Jing Yang at Jing.Yang@wsj.com and Raffaele Huang at raffaele.huang@wsj.com
is cutting roughly 1,000 workers, or 10% of its global workforce, rolling back a bet on e-commerce growth the technology company made during the pandemic, according to an internal memo.
Tobi Lütke,
the company’s founder and chief executive, told staff in a memo sent Tuesday that the layoffs are necessary as consumers resume old shopping habits and pull back on the online orders that fueled the company’s recent growth. Shopify, which helps businesses set up e-commerce websites, has warned that it expects revenue growth to slow this year.
Shopify’s shares fell 14% to $31.55 on Tuesday after The Wall Street Journal first reported on the layoffs. The shares have fallen more than 80% since they peaked in November near $175 adjusting for a recent stock split. The company reports quarterly results on Wednesday.
Mr. Lütke said he had expected that surging e-commerce sales growth would last past the Covid-19 pandemic’s ebb. “It’s now clear that bet didn’t pay off,” said Mr. Lütke in the letter, which was reviewed by the Journal. “Ultimately, placing this bet was my call to make and I got this wrong.”
The Ottawa-based company will cut jobs in all its divisions, though most of the layoffs will occur in recruiting, support and sales units, said Mr. Lütke. “We’re also eliminating overspecialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products,” he wrote. Staff who are being let go will be notified on Tuesday.
Shopify’s job cuts are among the largest so far in a wave of layoffs and hiring freezes that is washing over technology companies. Rising interest rates, supply-chain shortages and the reversal of pandemic trends, including remote work and e-commerce shopping, have cooled what was once a red-hot tech sector.
Shopify’s job cuts are the first big layoffs the company has announced since Tobi Lütke founded it in 2006.
Photo:
Cate Dingley/Bloomberg News
Netflix Inc.
cut about 300 workers in June as it deals with a loss in subscribers.
Twitter Inc.,
now mired in a legal standoff with
Elon Musk,
laid off fewer than 100 members of its talent acquisition team. Mr. Musk’s own company, electric-vehicle maker
Tesla Inc.,
late in June laid off roughly 200 people, after announcing it would cut 10% of salaried staff.
Other firms, including
Microsoft Corp.
and
Alphabet Inc.’s
Google, said they would slow hiring the rest of the year.
Tuesday’s announcement is Mr. Lütke’s first big move after Shopify’s shareholders approved a board plan to protect his voting power. The job cuts are the first big layoffs the company has announced since Mr. Lütke started the company in 2006.
Shopify’s workforce has increased from 1,900 in 2016 to roughly 10,000 in 2021, according to the company’s filings. The hiring spree was made to help keep up with booming business. E-commerce shopping surged during the pandemic, and many small-business owners created online stores to sell goods and services.
Shopify reported annual revenue growth of 86% in 2020 and 57% in 2021 to about $4.6 billion. However, the company reported a softening this year, and warned that 2022’s numbers wouldn’t benefit from the pandemic trends.
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In his memo on Tuesday, Mr. Lütke said, “What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful 5-year leap ahead.”
Shopify has been expanding its business in recent years to provide more services for merchants. It has developed point-of-sale hardware for retailers, launched a shopping app for its merchants to list products and created a network of fulfillment centers to ship orders for its business partners.
In May, Shopify agreed to buy U.S. fulfillment specialist Deliverr Inc. for $2.1 billion in cash and stock. It announced partnerships with Twitter in June and with YouTube earlier this month, allowing users to buy items that Shopify merchants post on those platforms.
Shopify is offering 16 weeks of severance to the laid-off workers, plus one week for every year of service.
Amazon on Thursday said it is paying $18 a share in cash for San Francisco-based 1Life Healthcare. Based on a recently disclosed share count, the deal would be worth about $3.5 billion excluding debt.
One Medical is a membership-based primary-care practice with offices in 12 major U.S. markets, according to its website. It offers healthcare service in person and provides access to virtual care as well. It works with more than 8,000 companies to provide One Medical health benefits to their employees.
The deal price marks a roughly 77% premium, based on where shares of 1Life Healthcare closed on Wednesday.
Shares of 1Life Healthcare rose 68% to $17.10 on Thursday. Amazon shares fell slightly to $122.37.
Amazon has significant ambitions in healthcare, and CEO
Andy Jassy
has made expansion in the space a priority.
“We think healthcare is high on the list of experiences that need reinvention,” said
Neil Lindsay,
senior vice president of Amazon Health Services.
Once the deal closes, One Medical’s chief executive officer,
Amir Dan Rubin,
will remain as CEO of the business.
Launched in 2019, Amazon Care expanded from a service offered to employees in Washington state to a health service with telemedicine components that the company is seeking to provide throughout the U.S. Amazon has said it has signed several agreements with companies to offer the service to their employees, in addition to its own workers.
Amazon’s goal is to be capable of providing a service that can begin with a chat in an app, continue with a virtual visit with a healthcare professional and even include a home visit within an hour after a user connects with the service. It could end with the delivery of prescription medication to a patient’s home, Amazon executives have said.
Amazon has also launched its own pharmacy business after buying online pharmacy PillPack Inc. about two years ago.
The most expansive version of Amazon Care isn’t yet available over all the U.S. The company said the telehealth component would be available nationwide last summer, and in-person care would be available in cities such as Washington, D.C., and Baltimore.
One Medical, a tech-based primary-care company, has sought to position itself as a convenient and flexible option for patients and for employers who offer healthcare benefits to workers.
Its concierge-like model offers members virtual medical visits, wellness coaching apps and in-person visits. One Medical ended last year with 182 medical offices in 25 U.S. markets and plans to expand its geographic reach this year, according to its Securities and Exchange Commission filings.
The company faced a Congressional investigation last year into its handling of Covid-19 vaccine distribution. The investigation concluded the company used “its access to scarce coronavirus vaccines to promote the company’s business interests and push vaccine seekers toward paying for One Medical memberships,” and that One Medical employees prioritized immunization for relatives and friends.
As part of the deal, the private-equity firm
Carlyle Group Inc.,
which made a minority investment of up to $350 million in One Medical in 2018, would exit its position in the company, according to a person familiar with the investment. The investment was made before 1Life Healthcare’s 2020 initial public offering.
has started drastically reducing the number of items it sells under its own brands, and the company has discussed the possibility of exiting the private-label business entirely to alleviate regulatory pressure, according to people familiar with the matter.
Amazon’s private-label business, with 243,000 products across 45 different house brands as of 2020, has been a source of controversy because it competes with other sellers on its platform. The decision to scale back the house brands resulted partly from disappointing sales for many of the items, the people said. It also came as the retail-and-technology giant has faced criticism in recent years from lawmakers and others that it sometimes gives advantages to its own brands at the expense of products sold by other vendors on its site.
Over the past six months, Amazon leadership instructed its private-label team to slash the list of items and not to reorder many of them, the people said. Executives discussed reducing its private-label assortment in the U.S. by well over half, one of them said.
Dave Clark initiated a review of Amazon’s private-label business.
Photo:
LINDSEY WASSON/REUTERS
The move was initiated after a review of the business by
Dave Clark,
a longtime Amazon executive who took over as head of its global consumer business in January 2021, the people said. Mr. Clark left the company last month. As a result of that review, Mr. Clark pushed the team to focus on bestselling commodity goods, along the lines of
Target Corp.’s
“Up & Up” or
Walmart Inc.’s
“Great Value” brands, rather than offer the extensive range of items Amazon currently does, the people said.
Amazon’s private-label business started in 2009 with consumer electronics products such as cables and expanded into other categories. It now encompasses everything from vitamins and coffee to clothing and furniture, with brand names such as Amazon Basics, Goodthreads and Solimo. However, Amazon has said that its house brands only account for about 1% of its retail sales. Amazon’s revenue last year, including other businesses such as its cloud-computing operation, totaled $469.8 billion.
The growing scale of its own offerings increasingly put Amazon in competition with other sellers on its platform, angering those sellers and resulting in antitrust scrutiny.
In 2020, The Wall Street Journal detailed how Amazon employees used data from its platform on individual third-party sellers to develop Amazon-branded products that compete with those sellers. The Journal also reported that year how some major brands were angered by products Amazon developed for its own labels that closely resembled their items, claiming the tech company copied their designs.
Amazon at the time said it was opening an internal investigation into how its private-label employees use seller data and if they were violating a company policy not to use such data. In testimony to Congress, then-CEO
Jeff Bezos
said “I can’t guarantee you that policy has never been violated.”
Amazon’s handling of such competition issues has been under scrutiny from a congressional committee investigating big tech companies and from regulators including the Securities and Exchange Commission, which the Journal reported in April was examining how the company disclosed some details of its business practices. The Federal Trade Commission has been investigating Amazon’s competitive practices.
Amazon Basics products on display at an Amazon 4-star store in Berkeley, Calif., in 2019.
Photo:
Cayce Clifford/Bloomberg News
Amazon has said its platform provides opportunity for nearly two million small- and medium-size businesses that sell there, and that it competes fairly and in a way that benefits its customers.
The scrutiny has prompted Amazon executives over the past year to consider fully exiting private brands, and how the company might go about that, the people said. The executives decided not to take any action until necessary, potentially as a concession they could offer if the FTC or another regulatory agency were to threaten or file litigation, some of the people said.
After a version of this article published online, Amazon said in a statement that: “We never seriously considered closing our private label business and we continue to invest in this area, just as our many retail competitors have done for decades and continue to do today.”
A spokeswoman declined to comment on whether it has discussed the possibility, or to say how many private label items it is cutting.
U.S. lawmakers have proposed legislation aimed at big tech companies including Amazon that would bar dominant tech platforms from favoring their own products and services. On Thursday, Amazon proposed concessions to settle two antitrust cases against it in the European Union. Amazon promised not to use nonpublic data about sellers on its marketplace, after the EU accused Amazon of violating competition law by using nonpublic information from merchants to compete against them.
Mr. Bezos, who stepped down as CEO last year to be executive chairman, has long been a backer of the private-label business. In the past he has bristled at its relatively small sales, said some of the people.
A few years ago, Mr. Bezos gave the private-label team a goal to reach 10% of Amazon sales by 2022, the Journal has reported. The team responded by rapidly adding thousands of items to try to juice sales, said the people involved.
Many items ended up sitting in warehouses or needing to be marked down.
Under Mr. Clark, private-label teams did a profitability review of each private-label item, determining which ones didn’t sell enough to hit their profit threshold and targeting them to be phased out. The strategy now is to make fast-selling private-brand items, such as Amazon’s phone-charging cables, that it can place at warehouses all over the country to deliver quickly, some of the people said, instead of tens of thousands of items that sell in low quantities.
Americans’ retail spending declined in May, as consumers felt the pinch from inflation, higher gasoline prices and rising interest rates that make car purchases more expensive.
Retail sales—a measure of spending at stores, online and in restaurants—fell a seasonally adjusted 0.3% in May from the previous month, dropping from April’s revised 0.7% increase, the Commerce Department said Wednesday.
A sharp drop in vehicle sales—due to high prices, low inventory and rising interest on car loans—played an outsize role in the decline in month-over-month retail spending. Excluding autos, retail sales rose 0.5% last month.
Excluding gasoline station sales, retail spending fell 0.7% in May from April—a sign that high gas prices are taking up a greater share of consumers’ spending. Receipts at gas stations jumped 4% in May from the prior month.
Interest rates look set to rise further, a potential damper on consumer spending in the months ahead as car loans and credit-card debt get more expensive. Later Wednesday, the Federal Reserve is set to wrap up a two-day policy meeting. A string of troubling inflation reports in recent days is likely to lead Fed officials to consider surprising markets with a larger-than-expected 0.75-percentage-point interest-rate increase.
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Craig Johnson,
president of Customer Growth Partners, a research and consulting firm, said he anticipates a slowdown in retail spending.
“We’re in a little bit of a watershed in terms of what’s going to happen to the economy,” Mr. Johnson said. “The American consumer—she’s very resilient, but she’s not infinitely resilient.”
So far this year, consumer spending has broadly held up, according to government data through April. Consumer spending accounts for about 70% of U.S. economic output. A strong labor market and rising wages are helping to support spending on services, for which there is pent-up demand from the pandemic.
A number of factors are contributing to the expected moderation in retail spending. Consumers are continuing to shift spending to services from goods as many Americans resume more in-person activities such as travel and dining out.
Where in Americans’ household budgets is inflation hitting the hardest? WSJ’s Jon Hilsenrath traces the roots of the rising prices to learn why some sectors have risen so much more than others. Photo Illustration: Laura Kammermann/WSJ
Higher prices are also giving consumers pause, analysts say. Retail sales aren’t adjusted for inflation. While consumers have continued to spend, they are getting less for their money due to rapidly rising prices. The dynamic is also driving an expected shift from discretionary purchases such as furniture and electronics to essentials like food and gasoline. Record prices for a tank of fuel mean spending at gas stations likely increased last month.
The average cost of a gallon of regular gasoline exceeded $4.60 a gallon in late May, up from about $3 a gallon a year earlier, according to the U.S. Energy Information Administration. Prices in June have risen above $5 a gallon.
Logan CoBell, 33 years old, who works in Chicago as a bartender and substitute teacher, said he is driving only for essential reasons, such as commuting to work, to save money on gasoline. He is watching his spending at the grocery store by cutting down on purchases of red meat and opting for cheaper alternatives such as pork and nonorganic chicken.
Mr. CoBell said he was holding off on upgrading to a new computer “so I have cash in hand just in case something weird happens, like another shutdown.”
U.S. consumer inflation reached its highest level in more than four decades in May, according to the Labor Department’s consumer-price index, as surging energy and food costs pushed prices higher.
Logan CoBell of Chicago says rising prices means he drives only when he needs to and has cut back on pricier groceries, including red meat.
Photo:
Alicia Castaneda
Companies are struggling with higher inflation, which they say is increasingly hard to pass on to consumers. Some large retailers such as
Walmart Inc.
and
Target Corp.
in recent weeks reported steep profit declines as rising supply-chain, wage and inflation-related costs ate into earnings.
Inflation and high fuel prices are also taking a toll on consumer confidence. Last week the University of Michigan reported that an index of consumer sentiment dropped in June to its lowest point since the inception of the survey in the late 1940s.
Bill Stoops, a 72-year old retiree living in San Diego, said the hit to asset values from financial-market turmoil in recent months means he is pulling in some spending.
“We thought about planning a trip to France and Germany, maybe Italy—we still want to do that but we don’t see it for this year at all,” he said, adding “I’m no longer talking about replacing my current fun car with another fun car.”
Write to Harriet Torry at harriet.torry@wsj.com and Rina Torchinsky at rina.torchinsky@wsj.com
is exchanging its top finance executive about four months after it named a new chief executive, a move that comes as the fitness-equipment maker navigates persistent losses.
The New York-based at-home exercise equipment company on Monday said
Liz Coddington
will serve as its chief financial officer, effective June 13. Peloton said its current CFO,
Jill Woodworth,
decided to leave after more than four years with the company.
Peloton said Ms. Woodworth will remain with the company as a consultant on an interim basis to help prepare the fiscal year 2022 financial results.
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Ms. Coddington most recently served as vice president of finance for Amazon Web Services, an
Amazon.com Inc.
subsidiary that provides on-demand cloud computing platforms. Before that, she held CFO and leadership finance roles at companies including retailer
Walmart Inc.
and streaming business
Netflix Inc.
Ms. Coddington joins Peloton as the company is dealing with waning demand from consumers after facing issues around its ability to meet orders, which soared during the early stages of the pandemic. The surge in demand for Peloton bikes led the company to break ground on a million-square-foot factory in Wood County, Ohio, last year.
Peloton is now looking to sell the factory that it will never use. The company also slashed prices for its equipment, projected slower growth and had to borrow $750 million to fund its operations.
Peloton in May reported its largest quarterly loss since the company went public in 2019, reporting a net loss of $757.1 million for the quarter ended March 31, compared with a loss of $8.6 million in the prior-year period.
In February, Peloton replaced Chief Executive
John Foley
with
Barry McCarthy,
who previously led the finances of digital music service
Spotify Technology SA
and Netflix. The company also cut 2,800 jobs amid reduced demand for its exercise equipment. Mr. Foley was closely associated with the company’s growth phase after its public offering and the revenue surge early in the pandemic.
The change in the CFO-seat makes sense given the continuing restructuring under Mr. McCarthy, said
Rohit Kulkarni,
managing director at equity trading and research firm MKM Partners LLC.
“As the new CEO puts his mark on the organization’s structure and aligns it with where he wants the company to go, these changes are not completely surprising,” he said.
With Peloton’s fiscal year ending June 30, Ms. Coddington will very quickly be “under a bigger investor microscope,” as the expectation is that the company will release fiscal year guidance soon after she joins, Mr. Kulkarni said. “It will be a challenging task to provide that new guidance.”
Write to Jennifer Williams-Alvarez at jennifer.williams-alvarez@wsj.com and Mark Maurer at Mark.Maurer@wsj.com
