NEW YORK (AP) — Amazon’s ramped up investments into speedier delivery for its Prime customers squeezed second-quarter profits.
The Seattle-based company says profits for the three-month period ended June 30 was $2.62 billion, or $5.22 per share. That compares with $2.53 billion, or $5.07 per share, in the year-ago quarter. Analysts had expected earnings per share of $5.56 per share, according to FactSet.
The Seattle-based company had pledged to spend $800 million in the second quarter to move to one-day delivery from two-day delivery for its Prime members who pay $119 a year. The service is now available on more than ten million items.
“Customers are responding to Prime’s move to one-day delivery — we’ve received a lot of positive feedback and seen accelerating sales growth,” said Jeff Bezos, Amazon founder, and CEO in a statement.
The move comes as Amazon faces increasing competition from the likes of Walmart and Target, both of which are speeding up deliveries. Walmart is offering next day delivery for shoppers in Phoenix, Arizona, Las Vegas, and southern California, and plans to roll out the service to 75 % of the U.S. population by year end.
At the same time, Amazon, along with Facebook, Google, and Apple, is feeling the heat from government investigations into Big Tech’s market dominance.
The Federal Trade Commission has been conducting an antitrust probe of the companies, and the Justice Department announced Tuesday it is opening a sweeping antitrust investigation of major tech companies and whether their platforms have hurt competition and stifled innovation.
The department’s announcement didn’t name any companies, but it mentions online retail services as an area of “widespread concern.”
Facebook disclosed late Wednesday that it’s under antitrust investigation by U.S. Federal Trade Commission. However, during a call with reporters Thursday after the earnings report, Amazon’s chief financial officer Brian Olsavsky declined to comment on the issue, saying that the company has a “long-standing practice of not commenting on regulatory matters.”
An increasing number of lawmakers of both parties as well as Democratic presidential candidates, meanwhile, have been calling for stricter regulation and oversight of Big Tech or even breaking up the companies.
President Donald Trump has frequently criticized Amazon and its billionaire owner Jeff Bezos. Trump also has condemned The Washington Post, owned by Bezos, for its coverage of his administration.
The Trump administration piled on Amazon on Wednesday. Treasury Secretary Steven Mnuchin told CNBC, “I think if you look at Amazon, although there are certain benefits to it, they’ve destroyed the retail industry across the United States, so there’s no question they’ve limited competition.”
Amazon’s business remains unscathed so far. The online leader reported a 20% increase in sales in the second quarter that beat Wall Street expectations.
The company has boosted its profits by expanding into businesses beyond selling goods online. Its cloud computing business, which powers the video-streaming service Netflix, digital scrapbooking site Pinterest, and many other companies, saw its revenue rose 37% from a year ago.
The field is getting more competitive, however; Microsoft has also been growing its cloud business, and both Amazon and Microsoft are vying for a multibillion contract with the U.S. military.
Amazon’s fast-growing advertising business has also become a big moneymaker, selling ads to companies that want their products to show up first when shoppers search on the site.
The company said net sales rose 20% to $63.4 billion. That’s higher than the $62.5 billion forecast by analysts.
Shares fell nearly 3% or $52.82 to $1,921 per share after the markets closed. Shares were down more than 1% or $26.99 to $1,973.82 in regular trading.
AP Business Writer Marcy Gordon in Washington contributed to this report.