Amazon is a “natural product monopoly” that will continue to grow, according to Social Capital CEO Chamath Palihapitiya.
Palihapitiya made clear, however, the e-commerce giant is “by no means a market monopoly,” because there are other rivals.
On CNBC’s “Squawk Box” Tuesday, he explained what he means by “product monopoly.”
“You build something and when it starts to work what happens is the usage tells you what the trail of breadcrumbs is [that] you should follow,” Palihapitiya told CNBC’s “Squawk Box” on Tuesday.
“So what Amazon has done elegantly is they built a product that has such a fantastic product market fit, they watch how people use it, then they actually use that to distill what to do next,” he said. “And what to do next becomes slightly easier and easier every turn and every time they do it.”
The former Facebook executive told CNBC in March that Amazon could be close to a “natural monopoly” in both online retail and cloud computing via its Amazon Web Services division.
Palihapitiya has been bullish on Amazon for some time, and said in May he thinks the internet retail titan will be worth $3 trillion in 10 years.
The venture capitalist on CNBC Tuesday also praised the pace of Amazon’s innovations, citing the “tens” of products that were released at the company’s annual Reinvent conference.
“When you take a step back and say, wait a minute, the totality of what they did is unbelievable. And then you think they did that in a year, and then they did that at a velocity that you could imagine, at a scale, at an impact Then you think to yourself well what is next year going to look like?” Palihapitiya said.
At Reinvent, Amazon launched a number of cloud products that run on AWS that “likely hurt start-ups trying to do similar things, and also the venture capitalists that back them,” Palihapitiya said.
“The things that [Amazon] did probably wiped out about $2 billion of equity value of VCs putting money into ideas that frankly made no sense in the first place,” he said.
Source: Tech CNBC
Amazon is not a monopoly but there's no question why it's so dominant, tech investor Palihapitiya says