Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.'s Emerging Public Relations Snafu

|, Inc. (AMZN) Includes:Barnes & Noble Inc (BKS) (NASDAQ:AMZN) is no stranger to the kind of snafu that's again going viral in the webs. Back in 2009, due to a copyright issue, decided to wipe out two books from its customers' Kindles without their consent. By chance or by destiny, one of these two books was "1984".

Yesterday, again, a similar story hit the web. Martin Bekkelund, a Norwegian blogger, tells the story of a friend of his whose Kindle and account were blocked and all the content she had bought was erased and kept from her. Martin shows the Kafkaesque exchange of e-mails between his friend and's customer support, where basically says his friend's account was connected to some other account which had done some kind of wrongdoing and as such his friend's account was being wiped clean.

This story is now going viral in all sorts of places, from the media to Facebook and seems likely to present a significant public relations nightmare for Once again, customers are being exposed to the theory that when they buy e-books from Amazon, it's more like they're renting than owning the books, since at any point seems able to wipe the books from under the customer's nose.

Likely motive

Regarding this particular case, it's being speculated that the likely motive stems from Martin's friend, Linn, also being a Norwegian living in Norway, but buying books from It's speculated that there might be regional copyright issues, and thus that is wiping out the account to keep itself from facing those issues. It's impossible to tell, though, without straight out stating it.

Other issues remain

If can wipe out anything that's in its accounts or Kindles even if people have bought it fair and square, then the question beckons. What about the cloud? Increasingly is incentivizing the use of its cloud for storage, including free storage for any content bought from But that leaves customers exposed to's arbitrary deletion of content. This case might thus be seen as a deterrent towards relying more extensively on cloud storage.


This snafu going viral might present a chance for Barnes & Noble (NYSE:BKS) to take some market share in the e-book market, if it can credibly promote the thesis that no such event could take place with its own Nook device. This seems somewhat similar to Nokia trying to capitalize on Apple's Mapgate.

Not the only snafu

As I've said recently, seems like a gusher when it comes to news, particularly negative news. Predictably, the viral snafu above is not the only ongoing snafu in the last couple of days. AWS is again having trouble, after having had several outages in the last year. Increasingly, AWS' reliability image is taking lumps, in a field - the cloud - where reliability is paramount, especially for those businesses whose web presence is the entire business.

Amazon now says library is accessible

In the middle of this PR fiasco, is now indicating that having a suspended account should not restrict access to one's library. Also, Martin's friend says she has gotten access to her account again. seems to have reacted quickly to the building momentum on this particular story.

Finally, what's with all the rumors?

In just the last week, we've had rumors of buying Texas Instrument's mobile SoC business, buying a Brazilian bookseller and buying British online clothes retailer Asos. If these deals were all to become true, would have to put up $5 billion or more. But above all, it's weird that so many of these rumors are cropping up all at once, and this on the heels of actually buying its headquarters for $1.16 billion. It's not like was swimming in cash, either, with its current ratio already approaching 1 in the last quarter.


Again, generates a couple more negative news. It's quite amazing to see a company that not only regularly manages to produce bad press, but also shows deeply declining earnings and imploding earnings estimates. And does all this while carrying a $106 billion market capitalization and a forward 2012 P/E of 343. At this point the only phrase that comes to my mind is "what could ever go wrong?".

Anyway, continues to have huge downside. It's not going to trade at 300 times earnings forever and there aren't many reasons to believe earnings will manage to turn strongly upwards, not with embroiled in low margin businesses while facing every tech giant simultaneously and trying to beat those in their own playgrounds.

Finally, all the acquisition rumors - unrealistic as they seem - might still portend the kind of hubris that not only can make stumble and fall, but can actually risk its very existence.

Disclosure: I am short AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Stocks: BKS, AMZN