Amazon may become a threat to automakers, with this potential acquisition

Amazon is reportedly close to buying the self -driving car company, Zoox. Yahoo Finance's Tech Editor Dan Howley joins Yahoo Finance's The First Trade to discuss.

Video Transcript

BRIAN SOZZI: Amazon is close to reportedly buying Zoox, the self-driving car company. If the purchase does go through, the online retailer may pose an even larger threat to the shipping, auto, and ride-hailing industry. Our tech editor Dan Howley joins us now.

Dan, what-- how did-- would this even get past-- lawmakers have to be sitting in DC worrying, among many things, Amazon potentially getting even bigger, and really taking the fight to a UPS and a FedEx.

DAN HOWLEY: Yeah, I mean, we already talked about-- yeah, earlier this week, I wrote a piece explaining how they need to-- or they could potentially go out and buy planes on the cheap now, just because prices for aircraft are so low at this point, depressed because there aren't enough people buying them, and there are a few that were recently retired. But this would allow them to do that last-mile shipping on the cheap, eliminating drivers which rely on their businesses now-- and which, by the way, Amazon props up, and basically says come on in, you can get good jobs right now delivering for us. This would eliminate those.

It would allow them to basically have these units or whatever, shipments sent out from the fulfillment centers to smaller centers, potentially cutting down on those big Amazon trucks you see driven by drivers, and have them drive on their own. So it would make them more efficient, yes.

But I think that you're a regulator in Washington looking at something like this, you have to say, well, OK, they have Whole Foods. They have AWS. They have their e-commerce side. They're getting big in advertising. What's this self-driving stuff now?

BRIAN SOZZI: Don't they have a stake, to, in Rivian? Didn't they invest money in Rivian?

DAN HOWLEY: Yes, so I mean, they could-- they could end up making these obviously electric self-driving. But I think really the issue is the idea that they could then take on the likes of FedEx and UPS, which they're already trying to do, remember. They do have their third-party shipping service.

They briefly suspended it as a result of COVID. They haven't brought it back on. But it was something they were working up.

So they're in direct competition with FedEx and UPS now. This would just put them-- I mean, who knows how far ahead it would put them at the end of the day if something like this were to go through.

ALEXIS CHRISTOFOROUS: I mean, I think you hit it a second ago there, Dan, when you were talking about regulation. I mean, is Amazon just getting too big for Washington? Is there going to have to be a regulatory response? And what might that look like?

DAN HOWLEY: As far as regulatory responses go, they're already under investigation by the DOJ. And then there's states attorneys general that are-- I love saying that, attorneys general-- that are looking at them. There's no clear answer as to whether or not they would be broken up by any stretch of the imagination.

A lot of experts we spoke to when this originally came up said that there would just be some kind of action taken where they would have to abandon-- if they were participating in any kind of monopolistic behavior, they would have to abandon it. And that would really be the remedy to that. I don't think they're going to be broken up.

But it is another issue where you have them already-- regulators already looking at the company. But then Amazon is still saying, it's OK. We'll go ahead and go out and buy some more.

BRIAN SOZZI: Dan, if you're a-- if you're an Amazon investor, you have to love stuff like this, if they go out and buy Zoox, the stake in Rivian, Whole Foods-- data. The data this company continues to amass is spectacular.

DAN HOWLEY: Yeah, I mean, it really is. I mean, they have the obvious consumer data, what you buy and things like that. They use their advertising data differently than the likes of Facebook and Google, though. And they're careful to say that.

And really, when they use the data for something along their advertising arm-- which again, they're number three at advertising now behind Facebook and Google. So they're really big there. They market it more as you come to our site. People will see what's on the top bar. You can advertise there.

And it ends up working. And they're doing really well there. I don't know how they would use the data here. But it's just interesting to see that they are jumping into this. And it really does come down to the logistics arm, and taking on the likes of FedEx and UPS.

BRIAN SOZZI: Dan, do you think this is the precursor to Amazon eventually opening up more stores? Is this some form of acknowledgment that yes, they might need more stores beyond just Whole Food grocery stores?

DAN HOWLEY: Yeah, I mean, it could come down to them having physical brick and mortar stores-- and larger physical brick and mortar stores, by the way. They have a few now. I mean, if it is something that would help Whole Foods, then maybe that's not as bad as taking on FedEx and UPS.

But look, they already are arguing that, using the self-driving cars-- or self-driving trucks, rather, if they get them-- to deliver groceries to their stores, goods to and from warehouses. That's internal Amazon stuff. But I think this will go beyond that. And it'll be a bigger issue.

BRIAN SOZZI: Yeah, I tell you, Dan, it really is an Amazon world, and we just get to live in it. Dan Howley, thanks so much, Dan.