The Ridiculous Amazon-One Medical Deal
Amazon bought One Medical, and then immediately closed its own provider subsidiary.
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Amazon is on a buying spree, which is not a surprise considering the history of the firm. Of late it has purchased robot vacuum cleaner maker Roomba, and doctor clinic network One Medical, and is in the bidding for Signify Health, a home health care provider.
As one would expect, these deals are likely to result in a more concentrated marketplace, and we can see that happening already. Just a few weeks after buying One Medical, Amazon shut down its rival offering, Amazon Care.
Analysts said Amazon Care’s closure, which will come at the end of the year, should not be seen as a retreat on its efforts to gain a foothold in the $4tn US healthcare sector. “This is not a sign of failure by any means,” said Natalie Schibell at Forrester Research. “It’s a strategic move.”
Amazon’s decision comes after its recent agreement to acquire One Medical, a large network of primary care providers, for $3.9bn — its largest deal in the healthcare space. That takeover, if approved by regulators, would provide Amazon with much of the access to corporate employees it had been seeking with Amazon Care, said Christina Farr, health-tech investor at Omers Ventures, making the in-house platform redundant.
Companies such as Google offer One Medical to employees. “One Medical already has all these contracts, and does telemedicine,” Farr said. “It made sense for Amazon to acquire an existing network. Physician recruitment is really hard, building insurance contracts is really hard, building employer relationships is really hard. All of those things take a long time and One Medical was available to purchase.”
Both Amazon Care and One Medical sign deals with employers to provide health care to employees, so they are competitors. While neither Amazon Care nor One Medical has a particularly large market share, it’s clear that Amazon is foregoing internal investment in the hopes that it can buy its way into the health space. If the FTC blocks Amazon from buying One Medical, Amazon will simply build out its own doctor network, which would force it to compete to hire doctors.
This deal, in other words, is just about pulling a competitor out of the market and enabling Amazon to avoid having to invest in building its own services. That’s why this merger should be blocked, since it’s clearly reducing overall output in the market. It’s also astonishing that Amazon, while under investigation around the world, by Congress, and by the FTC, is entirely unchastened by any public scrutiny.
But then, these guys won’t believe that anything will happen to them, until something happens to them.