A history of JPMorgan's two decade old, complex relationship with Amazon as the bank is trying to figure out how to avoid becoming Amazon's latest casualty
The JPMorgan chief and Amazon founder have found their companies' fortunes increasingly entwined, but the balance of power between their firms has shifted Tweets: @arampell , @sallyshin , @wsj , and @pinkpoloshorts Tweets: Alex Rampell / @arampell : Every company seeks to commoditize its complements. The lower your APRs on debt, the less you pay in fees, the higher your savings yields...the more money you have to spend at the “everything” store, Amazon. http://twitter.com/... Sally Shin / @sallyshin : Nearly two decades ago Jeff Bezos tried to hire Jamie Dimon as its president. Since then the JPM/Amazon relationship has become very complex. In 2017 Dimon assembled a team to answer the question “How should we think about Amazon?” http://www.wsj.com/... via @WSJ @wsj : JPMorgan is used to being the heavyweight in the room. Now, the bank is trying to figure out how to avoid becoming Amazon's latest casualty. http://www.wsj.com/... Pink Polo Shorts / @pinkpoloshorts : http://www.wsj.com/... Had no idea that Bezos tried to hire Dimon. JPM's concessions on their card agreement (5% cash back on Amazon purchases!) is pretty illuminating too http://twitter.com/...
Context & Ripple Effects
The relationship has inverted over two decades: Jeff Bezos once tried to hire Jamie Dimon as Amazon's president, but by 2017 JPMorgan had assembled an internal team just to evaluate how to think about Amazon — and it has since conceded 5% cash back on Amazon purchases in its card agreement. Alex Rampell's framing captures why the bank is on the back foot: every company seeks to commoditize its complements, and cheaper credit and lower fees leave customers with more money to spend at the 'everything' store.
First-order effects
- JPMorgan's card business absorbs the direct cost: the 5% cash-back concession hands reward economics to Amazon purchases, thinning the bank's most profitable consumer product exactly where Amazon touches it.
- The 2017 internal evaluation team signals that Dimon now treats Amazon as a strategic threat to be mapped, not a partner to be courted — a reversal of the presidential pitch Bezos made nearly twenty years ago.
Second-order effects
- Amazon's documented playbook of leveraging power in one market to force terms in another — detailed in reporting on how it compels vendors across markets (cross-market coercion) — suggests financial partners like JPMorgan face the same extraction dynamic as retail suppliers.
- AWS set the template under Andy Jassy of building features that compete with the very partners on its platform (AWS's partner-competing strategy); if that pattern extends to payments and lending, banks become infrastructure beneath an Amazon-owned customer relationship.
Third-order effects
- If the complements logic holds, consumer-banking margin migrates toward whichever platform controls the purchase moment, reducing banks to regulated utilities funding commerce they don't own — the same displacement Amazon applied to third-party sellers whose data fed its private-label push.
- The open question is whether regulators treat financial-services dependence on a single platform differently than retail vendor dependence; the balance-of-power shift JPMorgan is navigating may end up defined in Washington as much as in card negotiations.
The trend: Consumer finance is becoming a complement to commerce platforms, with banks' fee pools migrating toward whoever owns the checkout — and Amazon writing the terms.