Skip to Content

Why Amazon’s Banking Play Is Doomed

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.

It’s March 6, but Old Man Winter isn’t done with us yet on the East Coast. Aaron in for Adam, contemplating a history lesson about retailers and banking as Amazon is rumored to be eyeing the market for financial services (complete with semi-tongue-in-cheek headline).

The Wall Street Journal reported on Monday that Amazon was talking about partnering with J.P. Morgan and others to offer its customers a low cost, checking account type of product that would appeal to younger and perhaps lower income people who don’t have traditional bank accounts. That, in turn, reignited fevered speculation that Amazon was finally going to make the banking industry’s disruption nightmares come true, as McKinsey & Co. predicted last year.

The fact that Amazon can’t easily become a bank didn’t come up much. Nor did the history of intense political opposition to retailers becoming banks, whether it was Montgomery Ward in the 1960s or Sears and J.C. Penney in the 1980s or Walmart in 1990s. There are multiple reasons why lawmakers have opposed mixing banking and commerce, including expanding the federal safety net of deposit insurance in effect to cover another large part of the economy and creating too many possible conflicts of interest in lending and investing decisions. Walmart has certainly gotten the message. “We have no plans or intentions to be a bank. I think we’re great at being a retailer,” Walmart senior VP Daniel Eckert told NPR last year.

Another reason to tamp down the speculation about Amazon’s efforts is the rumored goal of reaching more customers who don’t have bank accounts. It’s certainly a tempting target and a laudable goal. There about 9 million households without bank accounts and another 25 million with limited banking who rely too heavily on payday lenders and other not-great alternatives. But this is a well, well trodden path strewn with failures. Most recently, another popular consumer brand, T-Mobile, tried to create a debit-card linked account with an accompanying smartphone app for its millions of lower income customers who didn’t have regular bank accounts. Two years later, the program was dead due to lack of interest. American Express has also tried and largely failed (although it still offers its Bluebird prepaid card with…Walmart).

The talks at Amazon come as the e-commerce giant may be reaching a saturation point in attracting wealthier Americans. The prospect of attracting more middle and low income customers, who rely more on Walmart, is no doubt appealing. But that doesn’t mean there’s a high-tech banking answer to bring them on board.

Aaron Pressman
@ampressman
aaron.pressman@fortune.com

NEWSWORTHY

See you in court. The state of Washington became the first state to pass its own net neutrality legislation after the Federal Communications Commission last year repealed its own rules barring discrimination against online sites and content. The battle has just begun, however, as another two dozen states are pursuing a similar course—a course that the FCC tried explicitly to bar in its repeal order.

See you in math class. We noted yesterday that usually friendly Uber CEO Dara Khosrowshahi had veered from his typical messaging style to strike out at an MIT study that claimed drivers for the service only make $3.37 an hour. Now the MIT researchers admit they made a mistake in how they worded the key survey questions in their study. Oops.

See you at dinner. Almost seven years ago, Google paid $151 million to buy the Zagat restaurant guide empire. The search giant never seemed to do that much with the acquisition and on Monday announced it was selling Zagat to a small online restaurant review site The Infatuation for an undisclosed sum.

I see you. The Moviepass service admitted that its app tracks the location of users even when they’re not at the cinema. “We get an enormous amount of information,” CEO Mitch Lowe said at the Entertainment Finance Forum in Los Angeles. “We watch how you drive from home to the movies. We watch where you go afterwards.” A spokesman clarified that the company was only “exploring” ways to use the data and did not sell it to third parties.

You encrypt me. Startups working on digital currencies like Bitcoin and the related blockchain technology have raised $1.3 billion in traditional venture capital since the start of 2017, but $4.5 billion via more controversial initial coin offerings, TechCrunch reported.

FOOD FOR THOUGHT

Almost all Twitter accounts are free to follow. Almost all. Alex Nichols at The Outline has the scoop on the tiny, but growing, market for premium feeds. Via a service offered by Premo, more than a dozen experts are locking their tweets behind an effective paywall and charging $10 to $30 per month for access. Nichols checked out the accounts, but didn’t find much valuable wisdom on display from the likes of political commentators John Schindler and Eric Garland.

There are quote tweets of Donald Trump, links to CNN articles about the Russia investigation captioned with different phrasings of “I told you so,” and frequent warnings to watch out for Kremlin trolls. At best, you might get some broad geopolitical analysis that borders on xenophobia: “The most important fact about the rise of China to great power status is that almost all their neighbors hate them, and have for thousands of years. For good reason.” In other words, premium Schindler is just free Schindler behind a paywall.

IN CASE YOU MISSED IT

Dating App Bumble Bans Users from Posting Photos With Guns By Laignee Barron

Spotify Is Preparing for Its IPO By Cracking Down on Freeloaders By David Meyer

Qualcomm-Broadcom Merger Battle Grows Angrier By Aaron Pressman

How Netflix Is Preparing for Disney’s Rival Streaming Service By Natasha Bach

Facebook Apologizes for Survey Asking If It’s Okay For Adults to Ask Minors For Sexual Images By Emily Price

Reddit CEO Steve Huffman Acknowledges Users Shared Russia Propaganda By Jonathan Vanian

Commentary: Uber’s Newest Venture Shows It’s Finally Growing Up By Richard Fries

BEFORE YOU GO

I’ve only been in a hang glider once, but it was a memorable trip offering a rare silent and open air view of the Earth from above. New Mexico photographer Chris Dahl-Bredine goes gliding all the time and he’s made a movie of some of the highlights. Gorgeous.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.