The case for ending Amazon’s dominance(timharford.com)
timharford.com
The case for ending Amazon’s dominance
http://timharford.com/2018/02/the-case-for-ending-amazons-dominance/
326 comments
> at least be able to point to a way they’re abusing their power or are making a worse experience for customers
Didn't Amazon ban products from Apple and Google, that competed with their own, from their online store? Isn't this still the case even though they said last year they would eventually allow them again?
If you tell Alexa, "buy me a chromecast", it orders you an Amazon fire stick instead.
Didn't Amazon ban products from Apple and Google, that competed with their own, from their online store? Isn't this still the case even though they said last year they would eventually allow them again?
If you tell Alexa, "buy me a chromecast", it orders you an Amazon fire stick instead.
This is sort of a good point. I hate this behavior on Amazon's part, and I want them to stop. I would like it if the US government compelled them to stop. The bigger thing to me is how they prevent their customers from using Chromecast solely to attempt to hurt their competitors' products. That is anti-competitive behavior, and in a better world, the US government would compel them to allow their users to stream via Chromecast.
However, it's not that big of a deal if Amazon doesn't sell something. You just buy it somewhere else. I did not have any trouble acquiring a Chromecast when I wanted one, and I doubt anyone else did either. Using some kind of antitrust break-up to fix this would be like using a nuclear bomb to hammer in a nail. For a problem like this, a more targeted approach seems better, at least as an initial cut.
However, it's not that big of a deal if Amazon doesn't sell something. You just buy it somewhere else. I did not have any trouble acquiring a Chromecast when I wanted one, and I doubt anyone else did either. Using some kind of antitrust break-up to fix this would be like using a nuclear bomb to hammer in a nail. For a problem like this, a more targeted approach seems better, at least as an initial cut.
It’s also worth noting that Amazon has said as soon as those products support Prime Video apps they’ll allow them back on. It’s perhaps more reasonable that you don’t want to sell productd that are leveraging an anticompetitive position against you. So it’s kind of an antitrust tête-à-tête.
The products already "support" Prime Video apps. Amazon has just chosen not to create said apps. Amazon's language in this case is proof enough to me of its bad faith. But the point remains that this is a relatively minor case of anti-competitiveness, and I don't think the public interest would be served by breaking the company up.
>It’s also worth noting that Amazon has said as soon as those products support Prime Video apps they’ll allow them back on
source? IIRC amazon claimed it was confusing for its users if they sold the chromecast and their firestick at the same time.
source? IIRC amazon claimed it was confusing for its users if they sold the chromecast and their firestick at the same time.
Looking at the hundreds of duplicate Marketplace listings for pretty much every product ever, it's hard to get too excited about this argument.
Is Google banning Prime Video from using chromecast? I thought chromecast used an open API and anyone could cast to it.
https://developers.google.com/cast/docs/chrome_sender_integr...
https://developers.google.com/cast/docs/chrome_sender_integr...
No, but they have retaliated and blocked youtube on Alexa devices (Echo Show). I know Amazon struck first, but both sides are guilty of the same childish behavior at this point.
Echo Show violated Youtube's TOS, which is why they withdrew support from Amazon. If Amazon followed the rules and included the channels and subscriber functionality, they could use it like everyone else.
What anticompetitive position is being leveraged against Amazon in this case? The chromecast doesn't pretend to be an open marketplace for any apps. Amazon does pretend it's an open marketplace for goods.
Source? Last I checked, AppleTV has Prime Video and Google is not blocking Amazon from adding Chromecast to Amazon apps. Amazon is choosing not to add the feature.
>But it’s Amazon’s own fault that Prime Video doesn’t work with Chromecast. Amazon has the power to make it happen.
https://www.theverge.com/2017/12/5/16738752/google-youtube-a...
>But it’s Amazon’s own fault that Prime Video doesn’t work with Chromecast. Amazon has the power to make it happen.
https://www.theverge.com/2017/12/5/16738752/google-youtube-a...
The Google chromecast store does not allow you to purchase amazon firesticks.
And I can't buy Windows laptops at an Apple store. That's because Apple stores only sell Apple products, nothing else. People don't go to an Apple store when they want to buy some arbitrary item. People do go to Amazon when they want to buy an arbitrary item, because Amazon sells almost everything (but not chromecasts).
If Amazon only sold Amazon products and accessories for those products, that would be an insightful observation. As it is, I think you're missing that these two stores are different in kind.
* Google refuses to support Amazon Prime Video on Chromecast.
* Amazon refuses to sell Chromecast devices.
There's nothing really "anti-competitive" going on here. Two consumer tech giants are refusing to support each others' stuff. That's it. Consumers are free to pick one, or both!
* Amazon refuses to sell Chromecast devices.
There's nothing really "anti-competitive" going on here. Two consumer tech giants are refusing to support each others' stuff. That's it. Consumers are free to pick one, or both!
Chromecast is a feature that you develop on your own apps - i.e. Amazon can add it to their Prime App. Google isn't preventing Amazon Prime from having Chromecast support.
This is some pretty high level misinformation. Amazon (or anyone) can write apps against the Cast API (https://developers.google.com/cast/). Amazon has just chosen not to.
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Yeah I don't get it either. It doesn't impact consumer's ability to get either product.
Would we force Ford dealerships to sell Hondas as well? For Whole Foods to carry Safeway-branded products?
Of course not.
Would we force Ford dealerships to sell Hondas as well? For Whole Foods to carry Safeway-branded products?
Of course not.
Your car dealership analogy doesn’t hold any water. Amazon is an “open” marketplace with millions of products, some of which are amazon private label and compete against other third party sellers on Amazon. Amazons track record with this is ugly http://fortune.com/2016/04/20/amazon-copies-merchants/
This is more akin to a scenario if apple were to block Spotify from the App Store because apple provides a competing service to theirs, totally leveraging and abusing their power to diminish competition. It’s hard to argue that not allowing them to sell the physical product on amazon isn’t anti-competitive, regardless if amazon does or doesn’t develop chrome cast capabilities into fire sticks.
This is laughable - >> Both the Apple TV and Chromecast were pulled from Amazon in late 2015. The company’s justification for the move was that consumers would be confused and frustrated if they purchased streaming devices that didn’t offer a direct, convenient way to view Amazon Prime Video content https://www.theverge.com/circuitbreaker/2017/12/14/16777508/...
This is more akin to a scenario if apple were to block Spotify from the App Store because apple provides a competing service to theirs, totally leveraging and abusing their power to diminish competition. It’s hard to argue that not allowing them to sell the physical product on amazon isn’t anti-competitive, regardless if amazon does or doesn’t develop chrome cast capabilities into fire sticks.
This is laughable - >> Both the Apple TV and Chromecast were pulled from Amazon in late 2015. The company’s justification for the move was that consumers would be confused and frustrated if they purchased streaming devices that didn’t offer a direct, convenient way to view Amazon Prime Video content https://www.theverge.com/circuitbreaker/2017/12/14/16777508/...
How is Amazon any more an "open" marketplace compared to a grocery store? Because it's online?
I would say so, they are not limited to a certain amount of shelf space or square footage like grocery stores are. On average, grocery stores work much more intimately with their vendors than amazon works with theirs (or did, now that they’re breaking into the grocery business).
I was mainly thinking of how an unlimited number of third parties can essentially sell whatever they please on Amazon, unless of course you’re google or apple selling a competing product that doesn’t help amazon achieve their goals for an ancillary service that has nothing to do with their online marketplace. I can’t think of a good analogy to a grocery store scenario.
I was mainly thinking of how an unlimited number of third parties can essentially sell whatever they please on Amazon, unless of course you’re google or apple selling a competing product that doesn’t help amazon achieve their goals for an ancillary service that has nothing to do with their online marketplace. I can’t think of a good analogy to a grocery store scenario.
Amazon calls itself "The Everything Store" and has enough market share that it is legally reasonable to think about if it is a deal facto monopoly governed by antitrust law
Monopoly? There is nothing stopping other companies from selling the same things Amazon does.
Any what is Amazon's share of all retail sales? My understanding it's in the single digit percentages.
Any what is Amazon's share of all retail sales? My understanding it's in the single digit percentages.
Amazon had 4% of US retail sales in 2017, although that's 44% of US online retail sales. Online sales were 9% of retail sales.
Apple policy is in fact to block aps that compete with iOS standard apps, unless the are so popular that apple is forced to concede
Can you point to anything in particular? I can't find any examples of them doing this recently. I saw something from 2008 but since then they have likely realized they would open themselves up to anticompetitive claims if they continued.
I'm just transferring rumors, but I've read multiple times that Amazon reacted this way after Google blocked YouTube access to Amazon's Echo Show and Fire TV.
Seems like it's a back and forth kind of a thing between the two companies, with users being the ones facing consequences.
Seems like it's a back and forth kind of a thing between the two companies, with users being the ones facing consequences.
Which was blocked (the app) because Amazon distributed it outside of the play store, which is against the TOS iirc.
I believe it's still possible to access YouTube through a browser, but can't test anymore because I flashed lineage os on my Kindle tablet.
I believe it's still possible to access YouTube through a browser, but can't test anymore because I flashed lineage os on my Kindle tablet.
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Who do you trust more to do the right thing? Private industry or the government? Lately, it seems like private industry has been more on the side of the Angels than the government. Private industry - especially consumer facing ones - seem to be a lot more accountable to the public than the government.
That’s kind of a weird false dichotomy and the answer is “it depends”
Not really, once you get the government involved in capitalism, even if it is well meaning, there are always unintended consequences.
But in the real world, would Obama regulate tech companies? Would Trump regulate banks?
But in the real world, would Obama regulate tech companies? Would Trump regulate banks?
Read up on how antitrust law and labor law came into existence . The unfettered capitalism you love is actually quite fettered, and many people died for that right.
Technology moves much faster than regulation. It wasn't the slap on the wrist that MS received that brought down its influence - it was Facebook, Apple, Google, and Amazon. Especially Apple and Google that made PCs less relevant to most users and developers.
In 2016, the government was in the process of forcing cable companies to allow third party set top boxes. The cable companies fought back, the government dropped the pursuit and guess what? Technology made the need much less relevant.
https://www.recode.net/2017/1/31/14453444/fcc-tv-open-set-to...
Now even though the cable company "won" they loss anyway. They are still losing cable subscribers and companies like DirecTV and Sling came along.
I pay $35 a month for DirecTVNow, get all of the cable channels I care about and in my local market, get all of the OTA channels (NBC, CBS, Fox, ABC, and the CW). While the government was fighting the last war - cable set top boxes - the industry had moved on to creating services that let you watch live TV anywhere - on your phone, tablet, internet connected set top boxes, game consoles etc.
While the government was worried about MS unbeatable dominance on the desktop, during the next 10 years, the battle had moved to mobile.
In 2016, the government was in the process of forcing cable companies to allow third party set top boxes. The cable companies fought back, the government dropped the pursuit and guess what? Technology made the need much less relevant.
https://www.recode.net/2017/1/31/14453444/fcc-tv-open-set-to...
Now even though the cable company "won" they loss anyway. They are still losing cable subscribers and companies like DirecTV and Sling came along.
I pay $35 a month for DirecTVNow, get all of the cable channels I care about and in my local market, get all of the OTA channels (NBC, CBS, Fox, ABC, and the CW). While the government was fighting the last war - cable set top boxes - the industry had moved on to creating services that let you watch live TV anywhere - on your phone, tablet, internet connected set top boxes, game consoles etc.
While the government was worried about MS unbeatable dominance on the desktop, during the next 10 years, the battle had moved to mobile.
> Didn't Amazon ban products from Apple and Google
Yes, and you can't buy Rigid or Ryobi tools at Lowes either. (even on their website). You also can't find a Pepsi machine at the Coke headquarters. (You can even be fired for being seen drinking Pepsi). There is nothing wrong with not carrying products that compete with your own. There is something wrong with blocking access to purchasing those products from other places though. Right now, people are free to go to Overstock.com (please), Walmart.com, Target.com, Apple.com... the list seems endless.
Yes, and you can't buy Rigid or Ryobi tools at Lowes either. (even on their website). You also can't find a Pepsi machine at the Coke headquarters. (You can even be fired for being seen drinking Pepsi). There is nothing wrong with not carrying products that compete with your own. There is something wrong with blocking access to purchasing those products from other places though. Right now, people are free to go to Overstock.com (please), Walmart.com, Target.com, Apple.com... the list seems endless.
What about buying DeWalt, Bosch, Kobalt, Hitachi, Bostitch, Paslode, and Irwin tools at Lowes? Is Pepsi headquarters even open to the public?
Amazon didn't just ban it from their store, they also banned any of their sellers from selling it.
Amazon didn't just ban it from their store, they also banned any of their sellers from selling it.
I use to be a part time fitness instructor and when I taught at the Coke headquarters I was told by my coordinator not to bring in a water bottle that wasn’t a Coke brand.
If you go the World of Coke in Atlanta, you won’t see Pepsi products.
If you go the World of Coke in Atlanta, you won’t see Pepsi products.
Yep, I have a couple of family members who've done really well working for Coke throughout the years. The phrase, "they put the 'cult' in 'culture'" applies. I think it has done really well for them though. When you buy into culture, you become an automatic salesperson.
The latter part about not allowing their sellers to sell Chromecast is reprehensible, and I had no idea that was happening!
Regarding DeWalt, Bosch, etc, I'd highly expect Kobalt to have better product placement (at Lowes). Is that fair?
Regarding DeWalt, Bosch, etc, I'd highly expect Kobalt to have better product placement (at Lowes). Is that fair?
Would you expect that if you walk into Lowe's and ask for a DeWalt by name, they'd give you a Kobalt? That's what Amazon does with Chromecast
There is a problem if you are the de facto intermediary and using that to squash competition in other markets.
But are they using any tactics other than being cheaper and faster to ship? Their decision not to carry a Chromecast is sad, but, I was also unable to purchase one at radioshack.com. No one would accuse Radio Shack (do they even really exist anymore?) of attempting to use their weight against Google. My point being, it's just a simple business practice not to sell something competes with you in your own store. Apple doesn't sell Dell products either.
>tactics other than being cheaper and faster to ship?
Amazon regularly undercuts people to drive them out of the market - this is known as predatory pricing and it isn't new. It is an abuse of dominant position.
But most Western anti-competition efforts have measured abuse of dominant position in terms of consumer facing price gouging.
Operating under those assumptions, predatory pricing looks GOOD because it lowers consumer pricing, despite the fact that it liquidates market players, removes competition, and creates the accurate perception that you will use your bankroll as a barrier to entry of other market participants.
Once that occurs and you have control of the market's pricing and a dominant position on the logistics, your market already has price discovery problems, even before any further abuse of dominant positions occur. Best of all, this creates a 'new normal' which you can then use as evidence that things are fine in discussions with the competition bureaus you're dealing with.
Amazon regularly undercuts people to drive them out of the market - this is known as predatory pricing and it isn't new. It is an abuse of dominant position.
But most Western anti-competition efforts have measured abuse of dominant position in terms of consumer facing price gouging.
Operating under those assumptions, predatory pricing looks GOOD because it lowers consumer pricing, despite the fact that it liquidates market players, removes competition, and creates the accurate perception that you will use your bankroll as a barrier to entry of other market participants.
Once that occurs and you have control of the market's pricing and a dominant position on the logistics, your market already has price discovery problems, even before any further abuse of dominant positions occur. Best of all, this creates a 'new normal' which you can then use as evidence that things are fine in discussions with the competition bureaus you're dealing with.
Sounds like predatory behavior is the problem, since that’s been Walmart’s jam for decades
But let’s kick Amazon
The reality is they all need a kick in the stomach (figuratively speaking) to remind them the general public underlies their wealth
But it benefits the rich competition to use their media platforms for hang Amazon and Google.
Every time I see these stories it smacks of a Madoff type story: they knew he was a crook, but then he swindled rich people
But let’s kick Amazon
The reality is they all need a kick in the stomach (figuratively speaking) to remind them the general public underlies their wealth
But it benefits the rich competition to use their media platforms for hang Amazon and Google.
Every time I see these stories it smacks of a Madoff type story: they knew he was a crook, but then he swindled rich people
> Didn't Amazon ban products from Apple and Google, that competed with their own, from their online store?
I witnessed something similar at a former company[0] I had worked for. We had mobile apps for a reading product that could, theoretically, compete with Amazon's book business. Sort of a Netflix for books. Successfully launched both on Apple and Google's marketplaces, the app worked, had traction, wasn't a sketchy business or anything.
We experienced what we took to calling a soft-rejection. The app itself was approved but we were not able to launch / have it available on any of Amazon's devices. Now, you might be willing to write it off as the vagaries of dealing with a billion dollar corporation, your typical "Google locked me out and I'm SOL" thing. However, the owners of this company had sold a previous business[1] to Amazon. They had contacts and relationships at Amazon, decently high-level too such that were it an "oops, edge case" it should have been easily dealt with. Silence. They were stonewalled.
[0] - Grain of Salt: I was not on the mobile team, but we were a small operation, ate lunch daily, very open culture from the CEO to the junior folks. We talked about this a lot. This was also 5+ years ago, and I know of few of my coworkers lurk so please correct me if my memory is corrupted.
[1] - Given our very good team atmosphere, we ended up hearing a bit of history from the founders about the Amazon acquisition. From what I understand, it was extremely cut-throat and underhanded on Amazon's part. A former coworker succinctly summed it up as "The only relationship you want with Amazon is to be their customer."
I witnessed something similar at a former company[0] I had worked for. We had mobile apps for a reading product that could, theoretically, compete with Amazon's book business. Sort of a Netflix for books. Successfully launched both on Apple and Google's marketplaces, the app worked, had traction, wasn't a sketchy business or anything.
We experienced what we took to calling a soft-rejection. The app itself was approved but we were not able to launch / have it available on any of Amazon's devices. Now, you might be willing to write it off as the vagaries of dealing with a billion dollar corporation, your typical "Google locked me out and I'm SOL" thing. However, the owners of this company had sold a previous business[1] to Amazon. They had contacts and relationships at Amazon, decently high-level too such that were it an "oops, edge case" it should have been easily dealt with. Silence. They were stonewalled.
[0] - Grain of Salt: I was not on the mobile team, but we were a small operation, ate lunch daily, very open culture from the CEO to the junior folks. We talked about this a lot. This was also 5+ years ago, and I know of few of my coworkers lurk so please correct me if my memory is corrupted.
[1] - Given our very good team atmosphere, we ended up hearing a bit of history from the founders about the Amazon acquisition. From what I understand, it was extremely cut-throat and underhanded on Amazon's part. A former coworker succinctly summed it up as "The only relationship you want with Amazon is to be their customer."
I used to use an Apple tablet to watch things in bed. I could not buy a day pass for Sky Sports, nor rent/buy things on Amazon Prime Video from the apps. That worked all right with the xbox apps and it works now on the Android tablet I replaced the Apple one with.
> If you tell Alexa, "buy me a chromecast", it orders you an Amazon fire stick instead.
This is not true. I just tried it.
This is not true. I just tried it.
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Google Products:
https://www.amazon.com/s/ref=nb_sb_noss_2?url=search-alias%3...
Apple Products: https://www.amazon.com/Apple-iPhone-GSM-Unlocked-32GB/dp/B01...
https://www.neowin.net/news/amazon-extends-olive-branch-towa...
> If you tell Alexa, "buy me a chromecast", it orders you an Amazon fire stick instead.
Need a source on that.
Apple Products: https://www.amazon.com/Apple-iPhone-GSM-Unlocked-32GB/dp/B01...
https://www.neowin.net/news/amazon-extends-olive-branch-towa...
> If you tell Alexa, "buy me a chromecast", it orders you an Amazon fire stick instead.
Need a source on that.
Not to be a dick, but you get a slew of sources with a cursory Google search.
https://www.theverge.com/2015/10/2/9439281/amazon-ban-apple-...
https://www.wired.com/2015/10/amazon-apple-tv-chromecast/
http://www.nydailynews.com/news/national/amazon-ban-apple-tv...
And their more recent reversal: https://mashable.com/2017/12/14/amazon-to-sell-google-chrome...
https://www.theverge.com/2015/10/2/9439281/amazon-ban-apple-...
https://www.wired.com/2015/10/amazon-apple-tv-chromecast/
http://www.nydailynews.com/news/national/amazon-ban-apple-tv...
And their more recent reversal: https://mashable.com/2017/12/14/amazon-to-sell-google-chrome...
The claim was, "If you tell Alexa, 'buy me a chromecast", it orders you an Amazon fire stick instead.'"
None of the articles you linked describe that happening. It seems pretty unlikely. Perhaps at one point it suggested a Fire Stick as an alternative, but it doesn't seem to be doing that currently.
None of the articles you linked describe that happening. It seems pretty unlikely. Perhaps at one point it suggested a Fire Stick as an alternative, but it doesn't seem to be doing that currently.
you could just as easily make the argument against Apple and Google in these instances for not allowing Prime Video on their platforms.
Refusing to sell competitors’ products isn’t a very good case for antitrust when you can still buy them in hundreds of other places a click away.
Refusing to sell competitors’ products isn’t a very good case for antitrust when you can still buy them in hundreds of other places a click away.
It seems Amazon and Apple have settled their differences.
Prime Video is now available on AppleTV.
https://www.theverge.com/2017/12/6/16741136/download-amazon-...
And AppleTV is available for purchase on Amazon.com.
https://www.amazon.com/gp/aw/d/B075NFX24M
Prime Video is now available on AppleTV.
https://www.theverge.com/2017/12/6/16741136/download-amazon-...
And AppleTV is available for purchase on Amazon.com.
https://www.amazon.com/gp/aw/d/B075NFX24M
> Apple and Google in these instances for not allowing Prime Video on their platforms.
They're allowed. Amazon is choosing not to support it...
They're allowed. Amazon is choosing not to support it...
drewmol(1)
None of the "Chomecast" products are Google products, in fact the very first product says this in the description:
"Special note:
this isn't a Chromecast"
The iPhone while purchasable on Amazon, is not actually sold or shipped by Amazon.
The iPhone while purchasable on Amazon, is not actually sold or shipped by Amazon.
I just tried it: "I couldn't find anything for Chromecast. What else would you like?"
The Apple iPhone isn't a competing product.
Apple TV: https://www.amazon.com/s/ref=nb_sb_noss_2?url=search-alias%3...
Those also aren't chromecasts showing in those search results that you linked to...
Apple TV: https://www.amazon.com/s/ref=nb_sb_noss_2?url=search-alias%3...
Those also aren't chromecasts showing in those search results that you linked to...
That "Google products" link doesn't show a single Google product.
AppleTV was the device in question. It’s available now.
In the case of google: Didn’t they do that in response to google blocking certain services from Alexa?
No. Alexa runs on it's own hardware. Where did you hear that?
GP is probably referring to the fact that google blocked the youtube app from working on Alexa devices.
https://techcrunch.com/2017/12/05/google-is-pulling-youtube-...
https://techcrunch.com/2017/12/05/google-is-pulling-youtube-...
That happened because Amazon violated Youtube's TOS by stripping key services like subscriptions, channels, etc. Amazon can implement Youtube as long as they follow the TOS, which they're choosing not to.
It's a rule set that everyone has to follow when using Youtube, and isn't singling out Amazon the same way that Amazon is singling out Apple and Google.
It's a rule set that everyone has to follow when using Youtube, and isn't singling out Amazon the same way that Amazon is singling out Apple and Google.
Chrome cast is supposedly coming back
https://www.bloomberg.com/news/articles/2017-12-14/amazon-to...
But yeah “monopoly.” There is literally no where else to buy them online or otherwise
Damn you, Amazon!!!11
https://www.bloomberg.com/news/articles/2017-12-14/amazon-to...
But yeah “monopoly.” There is literally no where else to buy them online or otherwise
Damn you, Amazon!!!11
for case to be “antitrust” does not requires to be monopoly as such. it can be a company which is dominant in its market by big margin. Microsoft got involved in multiple antitrust cases, even if there are alternatives (mac, linux), but MS has captured majority of market. So I believe Amazon captured majority of online shop market too, so it can abuse situation in their favor.
It isn't illegal to be a monopoly, it's illegal to abuse your monopoly position. Which is what MS got in trouble for.
Big difference which people often forget.
Big difference which people often forget.
I wonder when it's going to happen.
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They banned products that didn’t support Amazon Video. You could always buy Roku boxes. Would Apple sell third party products in their store that only supported Android or Windows? Can you buy an Alexa powered device at an Apple Store? Does Microsoft sell PS4 or Nintendo games at their store?
Straw man argument. Apple doesn’t have a “general” marketplace that lets you sell almost anything under the sun. Neither is being a marketplace central to their business.
You make a great point. An interesting question is, are anti-trust laws in their current form, adequate for the networked era?
When organizations are able to use their network effects to decrease competition in markets (FB / Amazon / Google) does that create a negative outcome despite clearly delivering a better product for customers in the short run.
It's clear that network effects and big bank accounts decrease innovation and competition, and it's hard to think that won't have long term negative effects. Just think, is starting a social network a smart thing to do today if your only option is being bought by Facebook, or having them integrate your innovations into one of their services?
That being said, innovation thrives on constraints, and there is no indication that these companies wont fall prey to new technology and user demands. It just seems less likely given the powerful position they are all in.
When organizations are able to use their network effects to decrease competition in markets (FB / Amazon / Google) does that create a negative outcome despite clearly delivering a better product for customers in the short run.
It's clear that network effects and big bank accounts decrease innovation and competition, and it's hard to think that won't have long term negative effects. Just think, is starting a social network a smart thing to do today if your only option is being bought by Facebook, or having them integrate your innovations into one of their services?
That being said, innovation thrives on constraints, and there is no indication that these companies wont fall prey to new technology and user demands. It just seems less likely given the powerful position they are all in.
> It's clear that network effects and big bank accounts decrease innovation and competition
Network effects almost by definition often create a better user experience. For example, Facebook has a network effect in that all your friends are there. The reason that’s so powerful is you actually want to join a network where your friends are.
It seems like it hinders competition, but it only does so because it’s a much better user experience.
Very different than, say, Standard Oil where an entire natural resource and distribution line is owned by one company to the extent that it’s literally impossible to compete, then they start screwing you because they can.
Network effects almost by definition often create a better user experience. For example, Facebook has a network effect in that all your friends are there. The reason that’s so powerful is you actually want to join a network where your friends are.
It seems like it hinders competition, but it only does so because it’s a much better user experience.
Very different than, say, Standard Oil where an entire natural resource and distribution line is owned by one company to the extent that it’s literally impossible to compete, then they start screwing you because they can.
If social networks weren't walled gardens but had interoperability, it wouldn't matter where your friends were.
Regulation could enforce this, improving user experience while curtailing potential for corporate abuse.
Regulation could enforce this, improving user experience while curtailing potential for corporate abuse.
So now you want the government where hardly any of the lawmakers know anything about technology to regulate it?
I don't think an all-or-nothing knee-jerk approach is helpful here.
1) Should you have the right to do what you please with the data you create on a platform? Should companies be able to deny you this right? What should their obligations be RE: data portability?
2) Is it good for competition and customer choice for interoperability to exist? Conversely, is it bad if it doesn't? Are there any downsides to interoperability as a user?
Starting off with something as limited as an open standard for describing your node of a social graph would already be a huge improvement from where things are today. The question is whether users have the power to demand this, or if they even understand its benefits. At a certain point the incumbents become so rich and powerful that they just acquire or pound into dust any threat from new entrants.
1) Should you have the right to do what you please with the data you create on a platform? Should companies be able to deny you this right? What should their obligations be RE: data portability?
2) Is it good for competition and customer choice for interoperability to exist? Conversely, is it bad if it doesn't? Are there any downsides to interoperability as a user?
Starting off with something as limited as an open standard for describing your node of a social graph would already be a huge improvement from where things are today. The question is whether users have the power to demand this, or if they even understand its benefits. At a certain point the incumbents become so rich and powerful that they just acquire or pound into dust any threat from new entrants.
Why do you need “the government” to dictate that you should be allowed to do what you want with your data? I can export both my RSS subscriptions from my RSS aggregator and my podcast subscriptions from my podcast player to OPML. I chose software that lets me do that. I can export my email and calendar data using open formats.
I can’t think of any software or platform where you don’t have an alternative of choosing something that is interoperable and how is the government going to enforce it? Are they going to define the standard? Are they going to enforce that for all developers? Does that mean I have to follow some government standard every time I write software?
If they enforce an open social graph, does that mean the people I am connected to can export my information and import it into another service that I am not already on?
I can’t think of any software or platform where you don’t have an alternative of choosing something that is interoperable and how is the government going to enforce it? Are they going to define the standard? Are they going to enforce that for all developers? Does that mean I have to follow some government standard every time I write software?
If they enforce an open social graph, does that mean the people I am connected to can export my information and import it into another service that I am not already on?
You'll notice I didn't use the word government or regulation in my message. As I said I'm not so sure a knee-jerk response like regulation is the answer right now, but that there might be some intermediate steps that would keep regulation from becoming necessary.
> Why do you need “the government” to dictate that you should be allowed to do what you want with your data? I can export both my RSS subscriptions from my RSS aggregator and my podcast subscriptions from my podcast player to OPML. I chose software that lets me do that. I can export my email and calendar data using open formats.
Right, and I cannot do that with my social network connections. And there is a HUGE financial incentive to disallow users from ever doing this.
> I can’t think of any software or platform where you don’t have an alternative of choosing something that is interoperable and how is the government going to enforce it? Are they going to define the standard? Are they going to enforce that for all developers? Does that mean I have to follow some government standard every time I write software?
Look to the real world for examples here. Social networks work a lot like telecommunication networks and the internet itself. Can you imagine if you needed an account on AT&T, Spring, T-Mobile, etc etc and know each persons per-network-unique number to call or text them? How about if you had to have an account with each individual network provider that served websites, and they had no universal way to address them?
> If they enforce an open social graph, does that mean the people I am connected to can export my information and import it into another service that I am not already on?
Theoretically it doesn't require anything more than an signature/public key that it uses to match you and your connections when you have both joined some other new network. It could be designed in such a way that the new network cannot build a "shadow profile" of you because the "relationship keys" are unique per connection, eg. three friends that are all connected to each other would have unique keys representing their relationships.
> Why do you need “the government” to dictate that you should be allowed to do what you want with your data? I can export both my RSS subscriptions from my RSS aggregator and my podcast subscriptions from my podcast player to OPML. I chose software that lets me do that. I can export my email and calendar data using open formats.
Right, and I cannot do that with my social network connections. And there is a HUGE financial incentive to disallow users from ever doing this.
> I can’t think of any software or platform where you don’t have an alternative of choosing something that is interoperable and how is the government going to enforce it? Are they going to define the standard? Are they going to enforce that for all developers? Does that mean I have to follow some government standard every time I write software?
Look to the real world for examples here. Social networks work a lot like telecommunication networks and the internet itself. Can you imagine if you needed an account on AT&T, Spring, T-Mobile, etc etc and know each persons per-network-unique number to call or text them? How about if you had to have an account with each individual network provider that served websites, and they had no universal way to address them?
> If they enforce an open social graph, does that mean the people I am connected to can export my information and import it into another service that I am not already on?
Theoretically it doesn't require anything more than an signature/public key that it uses to match you and your connections when you have both joined some other new network. It could be designed in such a way that the new network cannot build a "shadow profile" of you because the "relationship keys" are unique per connection, eg. three friends that are all connected to each other would have unique keys representing their relationships.
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Government regulation brought us Micro-USB standardized phone charging and low-cost EU wide roaming. I'm cautiously hopeful.
And Apple offered an adapter -for a price -and the EU said they were in compliance. The whole purpose was to reduce ewaste.
Actually though, that goes to my point. The government mandated micro-usb, and now there is a better connector USB-C. How long will it take the government to update the law to catch up with technology?
Actually though, that goes to my point. The government mandated micro-usb, and now there is a better connector USB-C. How long will it take the government to update the law to catch up with technology?
It's not perfect, but it improves on the previous state of affairs. The free market did not even manage to give us standardized Micro-USB charging. Regulation is not competing against Utopia.
But it's slower to adopt change. We have USB-C now that is better than micro USB, gives all of the advantages of the lightning port. But now technology is being held back by the government. If the EU had just let the free market decide, the phone manufacturers would have eventually standardized on USB-C - except probably Apple - or the market would have decided it doesn't care.
>>Network effects almost by definition often create a better user experience. For example, Facebook has a network effect in that all your friends are there. The reason that’s so powerful is you actually want to join a network where your friends are.
This thinking is backwards. You’re not there because you want to be there, you’re there simply because your friends are there and if you’re not, you’re left out. It’s not the platform that pulls, friends on the platform pull.
This thinking is backwards. You’re not there because you want to be there, you’re there simply because your friends are there and if you’re not, you’re left out. It’s not the platform that pulls, friends on the platform pull.
Monopolies almost always create a better experience, at first, otherwise they wouldn't have been able to become a monopoly.
Yes, that is my point. Current anti-trust laws are only relevant when monopolistic behaviour leads to a worse product for consumers. Which is not the case for the big internet companies, who use network effects and their data advantages to build a better experience for the user (cheaper, faster, more etc)
The problem is, we have no way of knowing what ISN'T being built or what benefits or new offerings consumers aren't able to access because these companies have created an environment where competition is severely limited.
There's no easy answer here. Consumers are clearly better off being served a better product. Regulating based on the idea that there could be some future benefit that consumers are missing out on because of these monopolies, is a tough argument to make.
Should Facebook be able to buy up all the social graphs? If regulations prohibited them from doing so, would it really hurt facebook? Or would it create an environment with more choice, options and competition?
Exponent.fm podcast has some interesting episodes on this topic. Worth a listen.
The problem is, we have no way of knowing what ISN'T being built or what benefits or new offerings consumers aren't able to access because these companies have created an environment where competition is severely limited.
There's no easy answer here. Consumers are clearly better off being served a better product. Regulating based on the idea that there could be some future benefit that consumers are missing out on because of these monopolies, is a tough argument to make.
Should Facebook be able to buy up all the social graphs? If regulations prohibited them from doing so, would it really hurt facebook? Or would it create an environment with more choice, options and competition?
Exponent.fm podcast has some interesting episodes on this topic. Worth a listen.
>does that create a negative outcome despite clearly delivering a better product for customers in the short run
Yes. Nearly by definition the consumer generally benefits in the short run, which frequently contributes to the establishment of the monopoly in the first place.
The crux of antitrust law is concerned with the negative long-term effects, which frequently do lead to customer harm: lack of choice, price gouging, stifled innovation, etc.
Yes. Nearly by definition the consumer generally benefits in the short run, which frequently contributes to the establishment of the monopoly in the first place.
The crux of antitrust law is concerned with the negative long-term effects, which frequently do lead to customer harm: lack of choice, price gouging, stifled innovation, etc.
> Should we really seek to regulate away hard-earned (and valuable!) advantages because they make it possible to abuse the position?
"Regulate away" is a nice expression. It implies that "regulate" is the same as "take away", which I believe is a false assumption.
No one wants to take away their success - however, if you already have powers approaching monopoly, society should absolutely remind you of the responsibilities that come with those powers - and if necessary force you to obey those responsibilities. Nothing else is what regulation is doing.
> Surely we should wait until they’re actually abusing it?
You don't wait with the fireproofing until the house is already burning either.
> As an aside, I can’t think of any advantage Amazon has that wouldn’t open up opportunities for a competitor should they start to abuse them.
It would take a long time until a competitor is actually there that could practically provide the same services. During that time, the damage is done.
"Regulate away" is a nice expression. It implies that "regulate" is the same as "take away", which I believe is a false assumption.
No one wants to take away their success - however, if you already have powers approaching monopoly, society should absolutely remind you of the responsibilities that come with those powers - and if necessary force you to obey those responsibilities. Nothing else is what regulation is doing.
> Surely we should wait until they’re actually abusing it?
You don't wait with the fireproofing until the house is already burning either.
> As an aside, I can’t think of any advantage Amazon has that wouldn’t open up opportunities for a competitor should they start to abuse them.
It would take a long time until a competitor is actually there that could practically provide the same services. During that time, the damage is done.
I do not think it is good public policy to wait until companies are abusing their power before something is done about their size; that suggests the problem is not size, but behaviors which should already be illegal if they're wrong regardless of size.
Are they a natural monopoly? If so they should be regulated as a monopoly. If they aren't a natural monopoly, then why is the market not more competitive; and why is it wrong for policy to create a competitive environment? And isn't there an opportunity cost in every case, even if you don't know what it is? What businesses aren't being created because of Amazon's sheer weight?
Many of these questions are asked and answered (not entirely satisfactorily in some cases) in the case of Standard Oil.
Are they a natural monopoly? If so they should be regulated as a monopoly. If they aren't a natural monopoly, then why is the market not more competitive; and why is it wrong for policy to create a competitive environment? And isn't there an opportunity cost in every case, even if you don't know what it is? What businesses aren't being created because of Amazon's sheer weight?
Many of these questions are asked and answered (not entirely satisfactorily in some cases) in the case of Standard Oil.
Taxpayer dollars and regulators' attention are rival commodities. There are plenty of monopolistic/oligopolistic companies and industries that merit examination and reform much, much earlier than Amazon because they currently are exploiting their market position (Chicken companies, Monsanto, etc.)
If no mono-/oligopolies existed that were abusing their power, then maybe our government could talk regulation Amazon, but still you'd have to make a strong case.
I think it's a tough sell to have an inefficient entity that does not have to compete in a corporate survival sense (the government) tell a very efficient entity that has seen many similar "monopolies" fall (e.g. microsoft) to act differently.
If no mono-/oligopolies existed that were abusing their power, then maybe our government could talk regulation Amazon, but still you'd have to make a strong case.
I think it's a tough sell to have an inefficient entity that does not have to compete in a corporate survival sense (the government) tell a very efficient entity that has seen many similar "monopolies" fall (e.g. microsoft) to act differently.
By definition, if a company has significant market power then they are not delivering the services/goods society wants from their market. Because they are able to set price they are setting output below optimum. This leaves demand unmet. But the worst part is it creates wasted goods. Ie they wind up making units that they won’t sell or hoarding resources that then may not be used by anyone. Market power leads to inefficiency and that’s supposed to be what free economy does better than the other resource allocation systems.
Sure lets trust a for profit cooperation. Their motives could be anything really?
I think destroying competition is something wrong. "Trust us completely forever while we ruin your ability to function without us" isn't something anyone should everyone should have to do. The tax breaks offered to them for their new headquarters (that could "pay for themselves" in 10-20 years and will bring "lots of jobs") are insane, and they don't come close to completely controlling all the markets they operate in. I shudder to imagine what they'll look like when they do. But are they abusing anything now? Lets look into their lobbying, their warehouse temporary workers, their deals with the USPS, and what it's like to be one of their delivery drivers. It sucks to work for Amazon.
I know when trying to bring "Amazon Fresh" to NYC, they failed because the only terms they'd offer truck drivers were crazy high risk and low pay and NYC is a big enough market they could collectively resist. That's not going to last forever.
I'm not against innovation, I'm not against your margin being my opportunity, I'm against living in an Amazon controlled world.
I think destroying competition is something wrong. "Trust us completely forever while we ruin your ability to function without us" isn't something anyone should everyone should have to do. The tax breaks offered to them for their new headquarters (that could "pay for themselves" in 10-20 years and will bring "lots of jobs") are insane, and they don't come close to completely controlling all the markets they operate in. I shudder to imagine what they'll look like when they do. But are they abusing anything now? Lets look into their lobbying, their warehouse temporary workers, their deals with the USPS, and what it's like to be one of their delivery drivers. It sucks to work for Amazon.
I know when trying to bring "Amazon Fresh" to NYC, they failed because the only terms they'd offer truck drivers were crazy high risk and low pay and NYC is a big enough market they could collectively resist. That's not going to last forever.
I'm not against innovation, I'm not against your margin being my opportunity, I'm against living in an Amazon controlled world.
You’re not “trusting” them, you’re just not going against them because they have the potential to do something. Those are quite different. I could murder someone quite easily. Do you put me in jail just in case?
On top of that, I can’t see any power Amazon has that doesn’t evaporate as soon as it’s abused. They have competition from every angle. The only reason they win is because they’re better.
On top of that, I can’t see any power Amazon has that doesn’t evaporate as soon as it’s abused. They have competition from every angle. The only reason they win is because they’re better.
How can a corporation whose raison d'être is profits be trusted with being in a monopolistic situation?
Sure Amazons power will evaporate as soon as it's abused just like Intels, Microsofts and Dow Chemicals. History tells us this isn't the case.
Sure Amazons power will evaporate as soon as it's abused just like Intels, Microsofts and Dow Chemicals. History tells us this isn't the case.
How can a government that has effectively unlimited power be trusted?
Because it is elected?
Elected yes - representative of the people no. By design - with both the electoral college for President and each state having two Senators, the desires of the less populous states are over represenrated in government. And those two parts of government are in control of deciding the third branch - the Supreme Court.
That's not even to mention how much regulatory power unelected officials in the beuracry has.
That's not even to mention how much regulatory power unelected officials in the beuracry has.
> I could murder someone quite easily. Do you put me in jail just in case?
Nope, you haven't. You have the potential to attack someone and hope they can't get away in time or protect themselves.
If you really wanted to get the ability to murder someone at your sole descision, you'd have to take someone hostage, plot a terrorist attack or build a nuke. All of which will instantly land you in jail.
In the same way, I think a monopolist should be regulated because basically the only thing stopping them tovdo harmful things is their own descision not to do so. A descision that could change for whatever reasons.
Nope, you haven't. You have the potential to attack someone and hope they can't get away in time or protect themselves.
If you really wanted to get the ability to murder someone at your sole descision, you'd have to take someone hostage, plot a terrorist attack or build a nuke. All of which will instantly land you in jail.
In the same way, I think a monopolist should be regulated because basically the only thing stopping them tovdo harmful things is their own descision not to do so. A descision that could change for whatever reasons.
If you attack size in general you avoid having to pick winners and losers and merely make a trade of giving up potential peak efficiency in exchange for avoiding potential peak abuse. I'd favor spinning out new ventures over conglomeration. Abuse comes in many forms; what our current market structure is bad at is preventing max efficiency from winning out over human considerations like workplace conditions.
A way to play with that balance in a still-market-based, evenly-applied way sounds very attractive.
Doing it preemptively, based on potential, has strong precedent in the US when applied to trying to restrict government power. Corporations today are large enough that we should start trying to restrict that sort of power in the same way.
A way to play with that balance in a still-market-based, evenly-applied way sounds very attractive.
Doing it preemptively, based on potential, has strong precedent in the US when applied to trying to restrict government power. Corporations today are large enough that we should start trying to restrict that sort of power in the same way.
I can’t imagine what this looks like if not the proven democratic socialism most of the western world has already agreed to.
There is no market measure for treating employees fairly; only social safety nets.
There is no market measure for treating employees fairly; only social safety nets.
What would happen if we had aggressive progressively scaled corporate taxes based on some mix of employee count, revenue, or other measures of size? As a thought experiment (disregarding international complications, measuring problems, etc, for now), how many of the worst effects of capitalism are mitigated if every company has several direct competitors?
With enough participants in the market, you might have enough potential defectors to keep oligopolistic collusion down. Employees get better treatment because they have options. BATNA.
Inspired by stuff like https://slate.com/business/2018/01/a-new-theory-for-why-amer... - the recipe to extracting maximum profit is to pay as little as you can get away with while demanding as much as you can get away with and charge as much as you can get away with. Our current tooling is fairly bad at limiting that "what you can get away with" for corporations. So what pressures would change it?
Currently we tilt the playing field in favor of larger corporations, in addition to the natural inclination in many areas of economies of scale, with stuff like forced arbitration being allowed. "Should Amazon be broken up?" is just a small part of the "how do we make sure economic power is well-distributed instead of concentrated?"
Or do we think systems with too-big-to-fail players are a good thing?
With enough participants in the market, you might have enough potential defectors to keep oligopolistic collusion down. Employees get better treatment because they have options. BATNA.
Inspired by stuff like https://slate.com/business/2018/01/a-new-theory-for-why-amer... - the recipe to extracting maximum profit is to pay as little as you can get away with while demanding as much as you can get away with and charge as much as you can get away with. Our current tooling is fairly bad at limiting that "what you can get away with" for corporations. So what pressures would change it?
Currently we tilt the playing field in favor of larger corporations, in addition to the natural inclination in many areas of economies of scale, with stuff like forced arbitration being allowed. "Should Amazon be broken up?" is just a small part of the "how do we make sure economic power is well-distributed instead of concentrated?"
Or do we think systems with too-big-to-fail players are a good thing?
I agree with you. Amazon, like Walmart, is sort of in this grey zone for me. They smell and feel a little funny.
Both are relentless in their customer focus, they drive prices down, they both continue to add more and more services and offerings that seem to be what consumers want and might even be good. There isn't any particular thing I can point to and say with any definitive backing that they are doing and it's bad. I like small indie stores, but Walmart and Amazon beat them on prices and win the market; that's capitalism. Truthfully, I don't see either of them really doing stuff that is bad for the market, they're just better than the competition. Worse, if you go to a small town after a Walmart is built (are there many of these left?) it seems like the locals are almost in a hurry to put the local businesses out of their misery, the Walmart parking lot will be full.
It's more of just a concern about the immense power these businesses have and an innate distrust I have of giving that much power to a business. There will be an Amazon backlash, there are already lot's of people that at least claim to not shop at Walmart for various reason, I expect the same will come true with Amazon. Not sure it will amount to much but it's coming. Nobody has made a move to break up Walmart, it's hard to say that anyone will for Amazon.
Both are relentless in their customer focus, they drive prices down, they both continue to add more and more services and offerings that seem to be what consumers want and might even be good. There isn't any particular thing I can point to and say with any definitive backing that they are doing and it's bad. I like small indie stores, but Walmart and Amazon beat them on prices and win the market; that's capitalism. Truthfully, I don't see either of them really doing stuff that is bad for the market, they're just better than the competition. Worse, if you go to a small town after a Walmart is built (are there many of these left?) it seems like the locals are almost in a hurry to put the local businesses out of their misery, the Walmart parking lot will be full.
It's more of just a concern about the immense power these businesses have and an innate distrust I have of giving that much power to a business. There will be an Amazon backlash, there are already lot's of people that at least claim to not shop at Walmart for various reason, I expect the same will come true with Amazon. Not sure it will amount to much but it's coming. Nobody has made a move to break up Walmart, it's hard to say that anyone will for Amazon.
> Maybe I’m alone in this, but I feel like if you’re going to break up a company with antitrust regulation you should at least be able to point to a way they’re abusing their power or are making a worse experience for customers.
How about selling shitty eclipse glasses that hurt peoples eyes and making it impossible to order the real ones?
How about combining counterfeit and genuine products in the same SKU to make it impossible to order the real ones?
How about the fact that Amazon are not held liable for selling counterfeit products period? If WalMart attempted to sell a counterfeit product on their website they'd have a class action against them yesterday.
Are those not "worse experience" for consumers?
How about selling shitty eclipse glasses that hurt peoples eyes and making it impossible to order the real ones?
How about combining counterfeit and genuine products in the same SKU to make it impossible to order the real ones?
How about the fact that Amazon are not held liable for selling counterfeit products period? If WalMart attempted to sell a counterfeit product on their website they'd have a class action against them yesterday.
Are those not "worse experience" for consumers?
> Should we really seek to regulate away hard-earned (and valuable!) advantages
Could somebody list those advantages (excluding AWS)? And how much better are those advantages than the existing alternatives?
Could somebody list those advantages (excluding AWS)? And how much better are those advantages than the existing alternatives?
The article seems to be focused on Amazon's retail operations, but there may be a stronger case to be made against AWS.
While AWS makes it easy to store and process data, it is essentially distributing open-source software. You could argue that AWS is a more successful open-source company than Red Hat, or at least, it is poised to become so. And AWS mostly distributes OSS while others bear the cost of developing it.
I've spoken with executives at both Red Hat and Cloudera who say that, while they are experiencing growth on the public cloud, AWS gives very little energy back to open-source. In fact, they say AWS is killing infrastructure software, and it's doing whatever it can to move into apps.
That's a much more serious charge than complaining about the societal effects of mom-and-pop shops dying, because in this case, AWS is using a platform they dominate to extend their power into new products and lines of business. Much as Microsoft used Windows to dominate word-processing and other apps, and as Google used search to dominate things like product search.
Given that the repercussions of AWS killing innovation in infrastructure software could have a huge effect on the evolution of tech and business in the U.S., I think this is an issue to be taken seriously.
While AWS makes it easy to store and process data, it is essentially distributing open-source software. You could argue that AWS is a more successful open-source company than Red Hat, or at least, it is poised to become so. And AWS mostly distributes OSS while others bear the cost of developing it.
I've spoken with executives at both Red Hat and Cloudera who say that, while they are experiencing growth on the public cloud, AWS gives very little energy back to open-source. In fact, they say AWS is killing infrastructure software, and it's doing whatever it can to move into apps.
That's a much more serious charge than complaining about the societal effects of mom-and-pop shops dying, because in this case, AWS is using a platform they dominate to extend their power into new products and lines of business. Much as Microsoft used Windows to dominate word-processing and other apps, and as Google used search to dominate things like product search.
Given that the repercussions of AWS killing innovation in infrastructure software could have a huge effect on the evolution of tech and business in the U.S., I think this is an issue to be taken seriously.
So regulate AWS because it’s not building enough open source software? How do you determine what the proper amount of open source for AWS to contribute to? Why should they be required to contribute to open source? Does their existence prohibit others from doing so?
Actually, I'm suggesting that their behavior dominating new business lines for software applications be examined. It's not only infrastructure, although infrastructure is where they started out. They shouldn't be required to do anything, certainly not contribute to open-source. But they are in a position, or will be soon, to abuse antitrust laws by leveraging their dominance of the public cloud. Should that be regulated? Yes. The laws exist and just need to be enforced.
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> Should we really seek to regulate away hard-earned (and valuable!) advantages because they make it possible to abuse the position?
The article argues the case that yes, we should.
The article argues the case that yes, we should.
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Overall, I think your point is excellent.
But what about selling books at a loss to make it up on higher-margin items, which contributed to putting bookstores of all sizes (mom and pop up to B&N) on the road to bankruptcy?
That example is sufficient for me.
But what about selling books at a loss to make it up on higher-margin items, which contributed to putting bookstores of all sizes (mom and pop up to B&N) on the road to bankruptcy?
That example is sufficient for me.
It is stated many times, present monopolies does not price custmers more. They just pay their workers less in terms of money or benefits.
no way man. without making any claims about amazon's specific case, i think its pretty convincing that when everyone sees one company becoming a huge monopoly of something crucial to everyone, we are right to worry, and act. you would really let a single company buy up the entire national water supply? no! hell no!
I have a little different take on the whole Amazon is too big argument. My family has owned small businesses for over 40 years. My dad and I have a vastly different opinion of Amazon. My dad is constantly frustrated by them, because its "cutting into our business". We simply can't compete on price on some items, and people choose not to buy products from us when they can just purchase them and have them shipped home.
Now this isn't a poor us, feel bad for us statement. Like I said my opinion of them is vastly different. I want them around. I need them around. They make logistics for us a 1000 times easier. In 3 clicks I can get items ordered that we need and not have to worry about it. (Need a new storage rack? BAM! Be here on Tuesday? We need a new printer ribbon? Phone camera + Amazon app = I have the exact one I need to replace.)
I hear retailers largely complain about them, because they are taking away business that they have come to rely on. That's not Amazon's fault; that's the business' fault. This is no different than the Walmart's, Barnes and Nobles (remember when there were small bookstores?), etc. of the world. Amazon is different, because it's threatening them too. Amazon is making people realize that they need to be constantly searching for new products and new sources of revenue, but the truth is that they should have been doing this all along. Literally every time I walk into the store, I talk to the manager and ask, "What are we doing to move forward?" Amazon isn't what should be scaring people, it should be the fact that they've been asleep at the wheel not realizing they are driving of the road.
My point is that competing directly with Amazon is stupid, but so is competing with any other large dominant company. They don't have a monopoly on anything, it's just that their presence is more widely felt by a larger number of people at the same time.
Now this isn't a poor us, feel bad for us statement. Like I said my opinion of them is vastly different. I want them around. I need them around. They make logistics for us a 1000 times easier. In 3 clicks I can get items ordered that we need and not have to worry about it. (Need a new storage rack? BAM! Be here on Tuesday? We need a new printer ribbon? Phone camera + Amazon app = I have the exact one I need to replace.)
I hear retailers largely complain about them, because they are taking away business that they have come to rely on. That's not Amazon's fault; that's the business' fault. This is no different than the Walmart's, Barnes and Nobles (remember when there were small bookstores?), etc. of the world. Amazon is different, because it's threatening them too. Amazon is making people realize that they need to be constantly searching for new products and new sources of revenue, but the truth is that they should have been doing this all along. Literally every time I walk into the store, I talk to the manager and ask, "What are we doing to move forward?" Amazon isn't what should be scaring people, it should be the fact that they've been asleep at the wheel not realizing they are driving of the road.
My point is that competing directly with Amazon is stupid, but so is competing with any other large dominant company. They don't have a monopoly on anything, it's just that their presence is more widely felt by a larger number of people at the same time.
Their monopoly is more abstract: they have a monopoly on convenience. They ensured their product selection covers a wide variety of common objects that most people end up buying and streamlined their checkout process (they had the patent for 1 click checkout for 20 years) to reduce as much friction as possible to ensure that carts would not be abandoned.
If the complaint is they had an unfair advantage because of software patents, then it's easy -- end software patents.
I'm frustrated that is patentable
Honestly, small knowledgeable shops owned by enthusiasts for the merch are the ones with the least to worry about from Amazon. It's the Walmarts and the Best Buys where the staff is basically untrained in their products that Amazon beats.
I go to Amazon when I know what I want. I go to a store when I need staff to tell me what I want.
One day Amazon will finally learn to curate their products in some vaguely coherent sense of order instead of an infinite pile of semi-differentiated search results and then Best Buy is really screwed.
I go to Amazon when I know what I want. I go to a store when I need staff to tell me what I want.
One day Amazon will finally learn to curate their products in some vaguely coherent sense of order instead of an infinite pile of semi-differentiated search results and then Best Buy is really screwed.
I used to be a mid level manager at a small regional somewhat-niche retail chain. The last few years they have started to heavily focus on employee knowledge. Hiring full time staff whose only job are to be product experts to help customers, introducing huge amounts of product knowledge courses. They know they can't beat the big boys on price so they are trying to become THE local place you go to talk to someone about this specific niche. It has been working out very well for them.
The niche doesn't even really matter here. It could be car stereos, music, books, alcohol, grocery, whatever. I definitely think the path to survival for small retail shops going forward is going to be expert level knowledge and customer service. The days of people patronizing your store just because its physically nearby are numbered.
edit: Also, and this is totally anecdotal, but I personally shop at several places that aren't quite the cheapest (though none are TOO relatively high priced) but I continue to shop because the staff are far more knowledgeable than I and their assistance is well worth the extra ~10% in price.
The niche doesn't even really matter here. It could be car stereos, music, books, alcohol, grocery, whatever. I definitely think the path to survival for small retail shops going forward is going to be expert level knowledge and customer service. The days of people patronizing your store just because its physically nearby are numbered.
edit: Also, and this is totally anecdotal, but I personally shop at several places that aren't quite the cheapest (though none are TOO relatively high priced) but I continue to shop because the staff are far more knowledgeable than I and their assistance is well worth the extra ~10% in price.
Notable that yesterday one of the top stories was that Amazon's major book competitor, Barnes and Noble, just fired most of those exact "expert" staff. That they claim they cannot afford to loss lead books like Amazon does, so they must instead discard their highly paid, skilled workers in favor of minimum wage.
This is the general trend in most of America. Many now fall into one of three categories. Highly rewarded entrepreneur / chief officer, educated and well paid but fiercely worked salary, or minimum wage serf. The bands are also becoming more defined and logarithmically separated. ~$16000 (2^14) [serf], ~$90000 (2^16.5) [educated salary], $500000+(2^19) [wealthy / gentry]
Further, the middle section is mostly bleeding downward due to factors like the above mentioned layoffs (Sam's Club did similar), the increasing relative cost of education / health care / other barriers to entry, and the inflation adjusted erosion of buying power.
Its an argument to say the path is towards expert service, yet with the range of social review / recommendation pages / boards available now (much of which Amazon itself cultivates), even newcomers can quickly become informed if they are so inclined. No wonder many now prefer to use automated isles rather than human checkouts. The staff provide little and often just push annoying suggestive sells.
This is the general trend in most of America. Many now fall into one of three categories. Highly rewarded entrepreneur / chief officer, educated and well paid but fiercely worked salary, or minimum wage serf. The bands are also becoming more defined and logarithmically separated. ~$16000 (2^14) [serf], ~$90000 (2^16.5) [educated salary], $500000+(2^19) [wealthy / gentry]
Further, the middle section is mostly bleeding downward due to factors like the above mentioned layoffs (Sam's Club did similar), the increasing relative cost of education / health care / other barriers to entry, and the inflation adjusted erosion of buying power.
Its an argument to say the path is towards expert service, yet with the range of social review / recommendation pages / boards available now (much of which Amazon itself cultivates), even newcomers can quickly become informed if they are so inclined. No wonder many now prefer to use automated isles rather than human checkouts. The staff provide little and often just push annoying suggestive sells.
This actually sounds really great and I would actually go to such a store for certain things.
Yep, recently I've been buying Chess sets and Amazon sucks absolute balls at that, I can't filter the over priced shite from the decent stuff and figuring out who is supplying what is hard.
In the end I just bought from a uk chess specific supplier and all my questions where answered on the page.
Now that's a niche I acknowledge that but still with all their data and product ranges a small online retailer beat them.
In the end I just bought from a uk chess specific supplier and all my questions where answered on the page.
Now that's a niche I acknowledge that but still with all their data and product ranges a small online retailer beat them.
Exactly. Amazon's SRPs are an utterly miserable browsing experience because it's so hard to separate the wheat from the chaff. So many no-name Chinese garbage importers, out-of-stock-except-for-gougers, redundant listings for the same product, etc. Stuff you'd never have to deal with on a meatspace store shelf.
> I go to Amazon when I know what I want.
This part is probably going to be Amazon's undoing if they don't change their ways. If I'm buying a charger and know what I want, I really cannot safely buy from Amazon. It is much safer to buy from a Best Buy in that situation.
This part is probably going to be Amazon's undoing if they don't change their ways. If I'm buying a charger and know what I want, I really cannot safely buy from Amazon. It is much safer to buy from a Best Buy in that situation.
This is why I go to Ace over big box. I can walk in with 2 parts and say I need to connect these. They'll page the right person and a minute later they will be finding the right parts and get me set in a few minutes. This would take nearly an hour at Lowe's or Home Depot unless you lucked into the right employee. It would be a total time waste to try to do the same on Amazon. I don't care about paying 10% more for the convenience. Ace is also a retail co-op.
Ace is fantastic. Every Ace comes with an ambiguously old guy who knows everything about whatever project you're doing and can advise you about the tools you'll need, potential pitfalls,etc.
I always go to Ace first because of that guy. It's one trip to Ace vs the two+ trips to Lowe's when I'm doing something new.
Amazon can sell the parts cheaper, but the knowhow they can't provide is invaluable.
I always go to Ace first because of that guy. It's one trip to Ace vs the two+ trips to Lowe's when I'm doing something new.
Amazon can sell the parts cheaper, but the knowhow they can't provide is invaluable.
If you take something like a RC Car store that sells drones, batteries, kits etc. as an example, I think you are right, though those stores still need to keep their prices in check. I have no problem paying more for something local that I can walk out with immediately, but if their price ends up too much higher, I just can't justify it.
>I go to Amazon when I know what I want. I go to a store when I need staff to tell me what I want.
Bring your smartphone with you when you go to the store. That way after the staff tells you what you want, you can order it from amazon without leaving the store.
Bring your smartphone with you when you go to the store. That way after the staff tells you what you want, you can order it from amazon without leaving the store.
That's called showrooming and is a serious dick move to do to a small business.
Yeah it is, my parents owned a small business and they got owned by this tactic.
Don't rely on altruism for change. Expect the worst out of people.
Don't rely on altruism for change. Expect the worst out of people.
> I go to a store when I need staff to tell me what I want.
Or eventually, you and everyone will skip the store trip by asking Alexa on the Amazon Echo in your smart home.
Or eventually, you and everyone will skip the store trip by asking Alexa on the Amazon Echo in your smart home.
>They make logistics for us a 1000 times easier. In 3 clicks I can get items ordered that we need and not have to worry about it. (Need a new storage rack? BAM! Be here on Tuesday? We need a new printer ribbon? Phone camera + Amazon app = I have the exact one I need to replace.)
There's a balance between convenience and being subservient l or redundant to them long term.
People have found that the convenient (no pun intended) store that sold everything at nice prices also ended up killing local businesses, and eventually their own livelihood, even if not related to retail.
Not to mention the power the private interests behind those stores get in the country's politics or even globally.
There's a balance between convenience and being subservient l or redundant to them long term.
People have found that the convenient (no pun intended) store that sold everything at nice prices also ended up killing local businesses, and eventually their own livelihood, even if not related to retail.
Not to mention the power the private interests behind those stores get in the country's politics or even globally.
To me the real problem isn't the size of Amazon's business, but rather the nature of it.
Amazon is both the owner of the most successful and widely used marketplace, as well as a competitor of the merchants in that marketplace.
Having access to all of the transactional and user data, Amazon has an unarguable advantage over the rest of the merchants in it's market. They can beat anyone on price, placement, or delivery speed.
Barrier to entry into running a competitor market is effectively controlled by network effect. Simply running a competent customer service system and keeping prices within a certain range close to lowest provides an effective license to eternal profit.
Adding competing products when successful volumes are proven by their merchants gives them a very effective way to widen that profit on demand at the expense of their merchants and ultimately to the detriment of their customers who wind up paying more with less available selection.
Amazon is both the owner of the most successful and widely used marketplace, as well as a competitor of the merchants in that marketplace.
Having access to all of the transactional and user data, Amazon has an unarguable advantage over the rest of the merchants in it's market. They can beat anyone on price, placement, or delivery speed.
Barrier to entry into running a competitor market is effectively controlled by network effect. Simply running a competent customer service system and keeping prices within a certain range close to lowest provides an effective license to eternal profit.
Adding competing products when successful volumes are proven by their merchants gives them a very effective way to widen that profit on demand at the expense of their merchants and ultimately to the detriment of their customers who wind up paying more with less available selection.
How is that different that other big retailers ? I mean, any chain here (Carrefour, Auchan, Lidl, Aldi, ...) have their own products brand too from foods to clothes to electronics, to whatever, and they have the same advantage for them as amazon have for theirs.
This has nothing special to do with amazon.
This has nothing special to do with amazon.
Same with WalMart, Target, Trader Joe’s (which iirc is Aldi owned), Costco, and probably many I’m forgetting. Everyone who has a marketplace uses the opportunity to offer competing products.
The control brand is not necessarily a retailer-owned brand. It is a control variable to determine the value delta that consumers ascribe to branded goods in the absence of quality difference.
Every decade has its unstoppable juggernaut of a business, with endless articles pontificating that the government should step in and dismember them, and then some new business emerges that takes them apart, and the argument repeats itself.
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> They can beat anyone on price, placement, or delivery speed.
Well.. except for OEMs.
Well.. except for OEMs.
this points to the other side of a comment i just made yesterday (about uber):
"yes, that's how capitalism is designed to work. the window in which you can make outsized profits is meant to be temporary so companies can't just rest on their laurels.
it's beautiful when it works."
walmart has been smart enough over decades to never rest on its laurels, so it's competing fiercely (and successfully) with amazon.
barnes and noble and k-mart on the other hand are dying a slow painful death because all the pointy-haireds rushed in for their personal payday and didn't build a competitive business. both are probably hoping a white knight private equity deal will raise them from their ashes, as happened with target (don't think the brand equity is there, but who knows).
walmart and amazon have been setting the pace for competitors in retail. you can't use a low price strategy against those large players, but you can take a differentiation strategy (e.g., better, more knowledgeable service, as others have pointed to).
another area of pressure on large companies is on the labor side of the equation. walmart and amazon have squeezed labor to the bone and governments have done little to level that playing field (skills-based programs preferred there).
"yes, that's how capitalism is designed to work. the window in which you can make outsized profits is meant to be temporary so companies can't just rest on their laurels.
it's beautiful when it works."
walmart has been smart enough over decades to never rest on its laurels, so it's competing fiercely (and successfully) with amazon.
barnes and noble and k-mart on the other hand are dying a slow painful death because all the pointy-haireds rushed in for their personal payday and didn't build a competitive business. both are probably hoping a white knight private equity deal will raise them from their ashes, as happened with target (don't think the brand equity is there, but who knows).
walmart and amazon have been setting the pace for competitors in retail. you can't use a low price strategy against those large players, but you can take a differentiation strategy (e.g., better, more knowledgeable service, as others have pointed to).
another area of pressure on large companies is on the labor side of the equation. walmart and amazon have squeezed labor to the bone and governments have done little to level that playing field (skills-based programs preferred there).
I think this can be said about any franchise or marketplace vs small business.
For example:
If you started your own car rental company, at a glance it might be tough to compete with the 10 or so large companies that exist today. There's no way you're going to compete with them when it comes to advertising. They have an army and seemingly infinite funds for raising their brand awareness and you don't have that.
Let all of those 10 popular rental services race to the bottom on price and deal with razor thin margins (which works for them because their volume is a lot higher). You can't compete there.
You need to win on things like customer experience, support and maybe even go after a different target audience. Niche down, create a really good service and crush just that segment of the industry.
Justify your higher prices with your own uniqueness and value.
For example:
If you started your own car rental company, at a glance it might be tough to compete with the 10 or so large companies that exist today. There's no way you're going to compete with them when it comes to advertising. They have an army and seemingly infinite funds for raising their brand awareness and you don't have that.
Let all of those 10 popular rental services race to the bottom on price and deal with razor thin margins (which works for them because their volume is a lot higher). You can't compete there.
You need to win on things like customer experience, support and maybe even go after a different target audience. Niche down, create a really good service and crush just that segment of the industry.
Justify your higher prices with your own uniqueness and value.
> That's not Amazon's fault; that's the business' fault. This is no different than the Walmart's, Barnes and Nobles (remember when there were small bookstores?), etc. of the world.
One way in which Amazon is different is that they were able to loose boatloads of investor money to get to where they are today. That is not true for your father (who I empathize with) or even with Walmart or Barnes and Noble who have traditional investors who were not willing to allow the type of pie in the sky losses that Amazon got their investors to go along with. For one thing Amazon was a new (internet) business and those others were existing businesses. So this is not a case of simply 'work smarter and harder' or even close. Amazon is a special case. And despite what anyone thinks it was not assured in any way that they would get to the dominant position they are today. Honestly it defied many of the traditional rules of business. And only worked because Bezos (like Musk, Jobs) was able to be both a celebrity, visionary and have the type of control that they had. Not the same as what your Dad can do no matter how smart and driven he might be. [1]
[1] Back in the day there was a tv show about a blind man that made it through medical school. I believe it was based on a real situation (man became a psychiatrist). In any case an outlier like that does not prove 'it's possible' at least on any repeat basis.
One way in which Amazon is different is that they were able to loose boatloads of investor money to get to where they are today. That is not true for your father (who I empathize with) or even with Walmart or Barnes and Noble who have traditional investors who were not willing to allow the type of pie in the sky losses that Amazon got their investors to go along with. For one thing Amazon was a new (internet) business and those others were existing businesses. So this is not a case of simply 'work smarter and harder' or even close. Amazon is a special case. And despite what anyone thinks it was not assured in any way that they would get to the dominant position they are today. Honestly it defied many of the traditional rules of business. And only worked because Bezos (like Musk, Jobs) was able to be both a celebrity, visionary and have the type of control that they had. Not the same as what your Dad can do no matter how smart and driven he might be. [1]
[1] Back in the day there was a tv show about a blind man that made it through medical school. I believe it was based on a real situation (man became a psychiatrist). In any case an outlier like that does not prove 'it's possible' at least on any repeat basis.
Amazon accounts for 4% of ALL retail sales. Where are the calls about Walmart?
I think we have to see the bigger picture. Growth, momentum, and investments should be a good thing.
Dominance is not illegal. Nor technically is a monopoly. Using a monopoly illegally is.
Having said that we would have to fundamentally change the definition of a monopoly in order to break up the party responsible for 4% of the market -- and have a record of reducing prices.
I think we have to see the bigger picture. Growth, momentum, and investments should be a good thing.
Dominance is not illegal. Nor technically is a monopoly. Using a monopoly illegally is.
Having said that we would have to fundamentally change the definition of a monopoly in order to break up the party responsible for 4% of the market -- and have a record of reducing prices.
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When you compare Amazon to say Walmart or Google, I think the real consideration is that the later two have narrow verticals of dominance and Amazon's dominance spans e-retail, compute, storage, etc and is expanding. Having one entity control 60% of 50 verticals is much more dangerous for the economy anti-competitively than one company that controls 80% of say two verticals. The reason is simple they can use their multi-vertical footprint to apply pressures on a small competitor that a large competitor who was limited to a single vertical could not.
I don't understand why the author and many here consider splitting Amazon only AFTER they display behavior that is harmful to consumers (such as exorbitant prices and/or poor service).
Reading his article, he seems to be saying Amazon does everything good for the American economy and consumers, and he's against false positives (wrongly calling out anti competitive behavior). But at the very last paragraph he suddenly waves his wand and concludes "Amazon is too dominant, we should split them into two, after all two Amazons would be better then one". It just seems like he forgot or got lazy to consider the pros and cons of having two smaller Amazons for the sake of it.
Reading his article, he seems to be saying Amazon does everything good for the American economy and consumers, and he's against false positives (wrongly calling out anti competitive behavior). But at the very last paragraph he suddenly waves his wand and concludes "Amazon is too dominant, we should split them into two, after all two Amazons would be better then one". It just seems like he forgot or got lazy to consider the pros and cons of having two smaller Amazons for the sake of it.
Walmart has a narrow vertical? In many areas, Walmart is the main place people shop for everything, from groceries to clothes to electronics to tools to hobby equipment.
I would also not really consider search and ads narrow verticals. Those are broad industries that drive and direct large scale consumer behavior.
I would also not really consider search and ads narrow verticals. Those are broad industries that drive and direct large scale consumer behavior.
I wouldn't be surprised if the shareholders eventually got their way and have Amazon split its profitable businesses (like cloud infrastructure) from the unprofitable ones.
Alphabet is already taken so I guess they'll be the Numeric Table or something.
A pity 'Bigtable' is also taken.
The mistake you are making is that you are only looking at the harm that monopolies do to their competitors. You should also look at the harm that monopolies do to consumers. If you are a monopoly you can effectively set the price of whatever you are selling. Just operating is using your monopoly.
Amazon has been consistently losing money on retail since its inception. If they raised prices, they would lose their dominant position. The main reason you don't see more competition is that retail (online or offline) simply isn't very profitable to begin with.
Such selling at a loss is really weird from an anti-trust perspective.
As a worst case, it allows a company to 'invest' in market share by selling at a loss to strangle the competition. Once this is done, they can entrench themselves and raise prices.
If you only look at anti-trust as consumer protection, the above scenario only becomes problematic when its to late.
That said, lines are hard to draw. When is a company lowering prices to strangle the competition and when is the competition being strangled a side-effect of efficiency? Is it okay if amazon intends to always stay cheap, and use retail as a loss-leader? What should happen when supermarkets dampen price fluctuation, taking a loss when prices spike to appease their customers.
It's a hard problem, but we should be careful about companies operating at a loss just to strangle their competition. However, should this come at the cost of companies that strangle their competition by just being more efficient?
That said, lines are hard to draw. When is a company lowering prices to strangle the competition and when is the competition being strangled a side-effect of efficiency? Is it okay if amazon intends to always stay cheap, and use retail as a loss-leader? What should happen when supermarkets dampen price fluctuation, taking a loss when prices spike to appease their customers.
It's a hard problem, but we should be careful about companies operating at a loss just to strangle their competition. However, should this come at the cost of companies that strangle their competition by just being more efficient?
Entrenchment is an issue in markets with a high barrier to entry, or one where the barrier can be shifted arbitrarily by the dominant player.
Retail isn't really that high, if you count anyone who chooses to open up online, and value additions other than price- shipping policies, returns, service and so forth- are important.
If Amazon drops prices to a significant loss on a single product to specifically undercut a new competitor, that might be an issue. Running one side of a business at a loss and propping it up with another is quite common, though perhaps not at this scale. Either way, splitting it now could only harm customers.
Retail isn't really that high, if you count anyone who chooses to open up online, and value additions other than price- shipping policies, returns, service and so forth- are important.
If Amazon drops prices to a significant loss on a single product to specifically undercut a new competitor, that might be an issue. Running one side of a business at a loss and propping it up with another is quite common, though perhaps not at this scale. Either way, splitting it now could only harm customers.
"Once this is done, they can entrench themselves and raise prices"
If that strategy really worked in the long run, you would see countless examples of it. So called "price dumping" can actually be illegal, but it rarely needs to be enforced.
If that strategy really worked in the long run, you would see countless examples of it. So called "price dumping" can actually be illegal, but it rarely needs to be enforced.
They are using the Starbucks method and playing the long game. Move into an area, lower prices till the incumbents go out of business then raise prices.
People have been saying, "Amazon's gonna destroy their competition and then screw their customers with high prices any day now, just you wait!" for like a decade. We're still waiting for it to happen.
I think you hit upon a really important idea. Amazon has been investing in itself for years, and focusing on longer term growth and success even at the cost of short term profit maximization. Which is... exactly what we as a society want. We want companies to think long term, to be investing in innovative new ways to succeed and relying on growing outward and always trying to be on the cutting edge.
All that stuff is great, far better than companies run by finance degree holding businessmen that haven't invented anything in 3 decades and keep existing purely through rent seeking or quarter-to-quarter profit pumping.
To bring Amazon down now, before its had a chance to reap the benefits of its prudence feels like the worst possible signal we could give the market. It'd basically be saying "Don't bother actually focusing on technical improvement, because if you ever do get really big as a result the government will step in and take it away from you".
Though the article does kind of share this sentiment, so kudos to Tom Harford:
>If that is a worrisome state of affairs — and it should be — then Amazon is the shining counterexample. The online retailer’s strategy is driven not by short-term profit but by investment, innovation and growth. If only there were a few more companies like Amazon, capitalism would be in a happier spot.
I suppose the core disagreement then becomes I don't think the threat of Amazon becoming abusive is worth the negative signal going after them would generate, and he does. I'd be interested in reading a 2nd article from him that delves more specifically into this part of the issue.
All that stuff is great, far better than companies run by finance degree holding businessmen that haven't invented anything in 3 decades and keep existing purely through rent seeking or quarter-to-quarter profit pumping.
To bring Amazon down now, before its had a chance to reap the benefits of its prudence feels like the worst possible signal we could give the market. It'd basically be saying "Don't bother actually focusing on technical improvement, because if you ever do get really big as a result the government will step in and take it away from you".
Though the article does kind of share this sentiment, so kudos to Tom Harford:
>If that is a worrisome state of affairs — and it should be — then Amazon is the shining counterexample. The online retailer’s strategy is driven not by short-term profit but by investment, innovation and growth. If only there were a few more companies like Amazon, capitalism would be in a happier spot.
I suppose the core disagreement then becomes I don't think the threat of Amazon becoming abusive is worth the negative signal going after them would generate, and he does. I'd be interested in reading a 2nd article from him that delves more specifically into this part of the issue.
I don't think the threat of Amazon becoming abusive
The idea of regulating on a hypothetical is insane to me. If Amazon becomes abusive, the US Government will still be able to take them. Let's not start prosecuting pre-crime because Bezos is super rich.
The idea of regulating on a hypothetical is insane to me. If Amazon becomes abusive, the US Government will still be able to take them. Let's not start prosecuting pre-crime because Bezos is super rich.
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That's because you're papering over the abuse that Amazon already inflicts on workers and rural communities and you need to make up for the the logical hole left by a bad-faith deregulation starting point of your argument.
Has Amazon made it worse for those groups than if Amazon didn't exist? I think generally not. Don't like Amazon's working conditions? Pretend that Amazon didn't exist and stop going to work there.
I note that this is a fully general argument for the permissibility of sweatshops of all sorts (as long as the company hasn't done anything other than set up and run the sweatshop). I also agree with it.
I really wonder why the the exploitation of workers and the immiseration of people who have no hope for economic mobility is acceptable in any circumstance. "Simply" operating a sweatshop in capitalism is by definition an effort to expand it.
The idea is, miserable though the conditions in a sweatshop may be, they are better than the alternatives the workers face, or else they wouldn't choose to be in the sweatshop. If donating $0 to that country is permissible, then surely doing something that makes things slightly better is at least as permissible.
Also, if the company that runs the sweatshop is in fact making huge profit margins from it (I assume that's one thing "exploitation" implies), and if the company isn't especially unusual, then that suggests there's a lot of room for some other company to set up another factory, offer a slightly higher wage or better conditions to attract workers away from the first one, and still make great profits. If there are no artificial barriers to this, then foreign companies competing for workers may end up really improving matters after a while. Contrariwise, if there are significant risks to setting up more sweatshops—e.g. suffering bad PR, running afoul of new or newly interpreted legislation—then the few sweatshops will tend to remain few and miserable, and be run by companies that are more immune to the above dangers (probably large, with good legal departments and/or political pull, and those that don't depend as much on a good reputation).
This implies that people who manage to cause serious problems for companies by protesting their use of sweatshops are probably making things worse for the workers. It is interesting to reflect on.
Also, if the company that runs the sweatshop is in fact making huge profit margins from it (I assume that's one thing "exploitation" implies), and if the company isn't especially unusual, then that suggests there's a lot of room for some other company to set up another factory, offer a slightly higher wage or better conditions to attract workers away from the first one, and still make great profits. If there are no artificial barriers to this, then foreign companies competing for workers may end up really improving matters after a while. Contrariwise, if there are significant risks to setting up more sweatshops—e.g. suffering bad PR, running afoul of new or newly interpreted legislation—then the few sweatshops will tend to remain few and miserable, and be run by companies that are more immune to the above dangers (probably large, with good legal departments and/or political pull, and those that don't depend as much on a good reputation).
This implies that people who manage to cause serious problems for companies by protesting their use of sweatshops are probably making things worse for the workers. It is interesting to reflect on.
workblood(1)
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> If Amazon becomes abusive, the US Government will still be able to take them.
I agree that we shouldn't preemptively act, that "but what if they attack us first" mentality, but I contest the accuracy of that statement.
Amazon has the resources to entrench themselves into the political system and are surely already doing so in ways we cannot yet see.
I agree that we shouldn't preemptively act, that "but what if they attack us first" mentality, but I contest the accuracy of that statement.
Amazon has the resources to entrench themselves into the political system and are surely already doing so in ways we cannot yet see.
On the other hand Amazon is notorious for tax shenannigans in Europe and that's something that a small company just can't do effectively, so Amazon can leverage it's size and reach to compete on a field the small retailers can't get on to play on.
That isn't an Amazon problem though, that's a "the smart guys are on the wrong side of the table" problem, big business pays better than government.
That isn't an Amazon problem though, that's a "the smart guys are on the wrong side of the table" problem, big business pays better than government.
Right, except it's the fault of countries like UK and Ireland (among others) for creating the conditions for legal massive tax avoidance. And the EU for not smacking that down as a priority immediately. When I relocated to the UK one of the first things the banks did for me was create an offshore account (Isle of Man, I think it was). I thought to myself, this is strange, who do you think I am, Pablo Escobar ? This was Barclays.
And all my Amazon packages to London had Luxembourg return addresses.
Sorry, Europeans, you can blame big American tech companies for dodging taxes all you want, but it's hypocritical when you legally allowed the conditions for them to do so.
And all my Amazon packages to London had Luxembourg return addresses.
Sorry, Europeans, you can blame big American tech companies for dodging taxes all you want, but it's hypocritical when you legally allowed the conditions for them to do so.
> Amazon is notorious for tax shenannigans in Europe
There are a dozen nations in Europe that are notorious for intentionally encouraging tax shenannigans. What are you planning to do to the nice people of Ireland and Switzerland to correct that situation? Their extraordinary GDP per capita figures are directly related to said tax conditions.
There are a dozen nations in Europe that are notorious for intentionally encouraging tax shenannigans. What are you planning to do to the nice people of Ireland and Switzerland to correct that situation? Their extraordinary GDP per capita figures are directly related to said tax conditions.
> focusing on longer-term growth and success
Traditionally, the market has not supported this. Government parties need funding now not some time in future. That said I do not know about the US. I think if you run a big business, you need to keep everyone happy which includes investors and governments for that you need money today. The easiest way always has been to extract more money from customers.
Traditionally, the market has not supported this. Government parties need funding now not some time in future. That said I do not know about the US. I think if you run a big business, you need to keep everyone happy which includes investors and governments for that you need money today. The easiest way always has been to extract more money from customers.
You ever seen that Swole Bezos picture? He's that doughy, slightly nerdy guy who transformed himself into a hard assed cutthroat. This is Amazon.
Bezos obviously has an incredible nose for business, but he's mainly shown that he's not incompetent and just by being that he's run circles around others.
I've had too many bad experiences with Amazon that it tells me that his genius businessman mythology doesn't extend to the details. Went searching for a new smartphone recently. Was seconds away from spending $300 for what seemed like a new device only to see review after review from people who had been shipped poorly refurbished phones (shipped by Amazon) that would break a few months later.
There's too much stuff like that. That's their own damn site, an Apple product, and it shows that people are getting regularly ripped off and they are powerless to stop it (or won't). I see that and I see them getting into groceries and healthcare and it scares me. How can they possibly keep quality up?
There's too much mythology there, too much obvious greed, and not enough care that they appear to be building the world's greatest monopoly and we're patting them on the back.
Bezos obviously has an incredible nose for business, but he's mainly shown that he's not incompetent and just by being that he's run circles around others.
I've had too many bad experiences with Amazon that it tells me that his genius businessman mythology doesn't extend to the details. Went searching for a new smartphone recently. Was seconds away from spending $300 for what seemed like a new device only to see review after review from people who had been shipped poorly refurbished phones (shipped by Amazon) that would break a few months later.
There's too much stuff like that. That's their own damn site, an Apple product, and it shows that people are getting regularly ripped off and they are powerless to stop it (or won't). I see that and I see them getting into groceries and healthcare and it scares me. How can they possibly keep quality up?
There's too much mythology there, too much obvious greed, and not enough care that they appear to be building the world's greatest monopoly and we're patting them on the back.
Bezos worked on Wall Street for 8 years before starting Amazon. Judging from the early employee stories, if any change happened it was Bezos mellowing after the first 5-10 years of Amazon.
> You ever seen that Swole Bezos picture? He's that doughy, slightly nerdy guy who transformed himself into a hard assed cutthroat
Except Bezos provided an extremely logical explanation for that. He transformed himself physically because he wants to live as long as possible and be physically fit enough to travel into space when it becomes possible. Bezos is 54, which means his window is closing physically, he's attempting to delay that as long as possible.
Cutthroat, with what? The way he's taking on Walmart? The way he's taking on Apple? The way he's taking on Google? The way Amazon routinely gets voted as one of the best customer service companies?
Except Bezos provided an extremely logical explanation for that. He transformed himself physically because he wants to live as long as possible and be physically fit enough to travel into space when it becomes possible. Bezos is 54, which means his window is closing physically, he's attempting to delay that as long as possible.
Cutthroat, with what? The way he's taking on Walmart? The way he's taking on Apple? The way he's taking on Google? The way Amazon routinely gets voted as one of the best customer service companies?
Never said it was wrong, just emblematic.
Their customer service ratings might be high, but those ratings are inflated by the same people who, if they managed to notice that their new phone was actually refurbished will get a quick turn around on it, nevermind that they shouldn't have to deal with that at all.
The customer service is also inflated because they'll screw over sellers to do that. Maybe I'm too vindictive over my really negative experience, but there's plenty of stories of them screwing over sellers. It's also a notoriously bad place to work (friends and HN stories attest to that).
That stuff combined suggests a company that will do what it wants to win, cracked eggs be damned. It's admirable in a way, but it doesn't seem there's much in that company except a desire to dominate.
Their customer service ratings might be high, but those ratings are inflated by the same people who, if they managed to notice that their new phone was actually refurbished will get a quick turn around on it, nevermind that they shouldn't have to deal with that at all.
The customer service is also inflated because they'll screw over sellers to do that. Maybe I'm too vindictive over my really negative experience, but there's plenty of stories of them screwing over sellers. It's also a notoriously bad place to work (friends and HN stories attest to that).
That stuff combined suggests a company that will do what it wants to win, cracked eggs be damned. It's admirable in a way, but it doesn't seem there's much in that company except a desire to dominate.
Your argument rings hollow. You are free to shop anywhere else, right? Also, amazon has provided you the capability to make an informed decision based on the reviews. I shop at amazon a lot - but not blindly. I also use other stores when the deals are right or I can just drive over and get what I want.
It's admirable that Amazon allows negative reviews on its site. But that's the catch, they could change their mind. Or they could be less aggressive about stopping fake positive reviews. There isn't a good, independent source of reviews on specific listing.
EDIT: Typo fixed. And full disclosure, I host reviews of my products on my own site.
EDIT: Typo fixed. And full disclosure, I host reviews of my products on my own site.
Yes it could, but then my guess is that it would reduce traffic to their site quite a bit. That review system is generally the reason that online shopping works. The point is that Walmart has been more anti-competitive than amazon. I believe they have policies which discourage their vendors / resellers from hosting on AWS - http://www.foxbusiness.com/features/2017/06/21/wal-mart-to-v...
Edit: I’m not an amazon fan. I’ve had issues with their delivery and I would definitely prefer ups or fedex to them in that area. I also prefer Apple products to kindle fire series, and so on. I’m not against intelligent regulation either. I’m really against a rush to regulate or calls to regulate in the absence evidence.
Edit: I’m not an amazon fan. I’ve had issues with their delivery and I would definitely prefer ups or fedex to them in that area. I also prefer Apple products to kindle fire series, and so on. I’m not against intelligent regulation either. I’m really against a rush to regulate or calls to regulate in the absence evidence.
> Where are the calls about Walmart?
Are you seriously saying you've never heard anyone call for ending Walmart's dominance?
> I think we have to see the bigger picture. Growth, momentum, and investments should be a good thing.
The big picture for involves looking outside of the myopic view of growth, momentum, and investments, and seeing how it affects people. Growth, momentum, and investments are only a good thing when the gains benefit society, which only happens if they occur throughout a diverse market. Growth, momentum, and investments for Amazon only benefit Amazon, and if they're only in Amazon, it's at the expense of the rest of the market.
> Dominance is not illegal. Nor technically is a monopoly. Using a monopoly illegally is.
The implication that companies with monopolies don't use them, in direct opposition to incentives, is incredibly naive.
Also, this is a conversation about policy should be, so telling people what policy is, isn't really very relevant.
> Amazon accounts for 4% of ALL retail sales.
> Having said that we would have to fundamentally change the definition of a monopoly in order to break up the party responsible for 4% of the market -- and have a record of reducing prices.
On what basis have we decided that "retail sales" is the most relevant market segment? Why not "book sales" or "online sales"? It should absolutely be concerning to us that Amazon is dominant even in these smaller markets, with little hope of competition.
Are you seriously saying you've never heard anyone call for ending Walmart's dominance?
> I think we have to see the bigger picture. Growth, momentum, and investments should be a good thing.
The big picture for involves looking outside of the myopic view of growth, momentum, and investments, and seeing how it affects people. Growth, momentum, and investments are only a good thing when the gains benefit society, which only happens if they occur throughout a diverse market. Growth, momentum, and investments for Amazon only benefit Amazon, and if they're only in Amazon, it's at the expense of the rest of the market.
> Dominance is not illegal. Nor technically is a monopoly. Using a monopoly illegally is.
The implication that companies with monopolies don't use them, in direct opposition to incentives, is incredibly naive.
Also, this is a conversation about policy should be, so telling people what policy is, isn't really very relevant.
> Amazon accounts for 4% of ALL retail sales.
> Having said that we would have to fundamentally change the definition of a monopoly in order to break up the party responsible for 4% of the market -- and have a record of reducing prices.
On what basis have we decided that "retail sales" is the most relevant market segment? Why not "book sales" or "online sales"? It should absolutely be concerning to us that Amazon is dominant even in these smaller markets, with little hope of competition.
That is not a naive understanding of American antitrust law; it's perfectly accurate. It's not illegal to have a monopoly, it's illegal to abuse your monopoly position to harm consumers. This is in contrast to EU antitrust law.
And yes, this is what I think the policy should be. We don't want to punish success. We want to protect consumers.
And yes, this is what I think the policy should be. We don't want to punish success. We want to protect consumers.
> That is not a naive understanding of American antitrust law; it's perfectly accurate.
I never said it was a naive understanding of American antitrust law.
> And yes, this is what I think the policy should be. We don't want to punish success. We want to protect consumers.
What is naive is thinking that current American antitrust law adequately protects consumers.
I never said it was a naive understanding of American antitrust law.
> And yes, this is what I think the policy should be. We don't want to punish success. We want to protect consumers.
What is naive is thinking that current American antitrust law adequately protects consumers.
Which is odd, considering the plain language of the Sherman Anti Trust act not only makes monopolies illegal, but makes pursing a monopoly illegal. Has there been any laws passed that override this, or have the courts been unwilling to enforce the law as it's written?
I can't see any area in which Amazon has a monopoly by the section 2 definition.
What is it that I can only buy from or using Amazon and where there is no ready substitute in the market? (Saying I can't buy Amazon Basics AA batteries or an Echo doesn't count [IMO] as I can buy Duracells or Google Home things.) Almost invariably when I look for something on Amazon, I also do a Google shopping and Ebay check.
What is it that I can only buy from or using Amazon and where there is no ready substitute in the market? (Saying I can't buy Amazon Basics AA batteries or an Echo doesn't count [IMO] as I can buy Duracells or Google Home things.) Almost invariably when I look for something on Amazon, I also do a Google shopping and Ebay check.
I never claimed Amazon has a monopoly. I just hear what the GP posted a lot, but when reading the actual law it seems to be incorrect. So I'm trying to figure out why what the GP stated seems to have become the case: because lawmakers passed something else? Or courts didn't like it? Or what?
Case law defines coercive vs. innocent monopolies.
https://www.antitrustcriminalattorney.com/antitrust-defenses...
https://www.antitrustcriminalattorney.com/antitrust-defenses...
"It should absolutely be concerning to us that Amazon is dominant even in these smaller markets"
Serious question. Why? Every market has a leader, a dominant player, and sometimes a couple of them vying for the top against myriad smaller players. Why should I be "concerned" about this natural state of affairs?
Serious question. Why? Every market has a leader, a dominant player, and sometimes a couple of them vying for the top against myriad smaller players. Why should I be "concerned" about this natural state of affairs?
It's not concerning if there are actually a couple significant contenders for the top, competing in the same space in a fair market.
The problem is that when you get one dominant player, they use their dominance to change the market so that it's no longer fair, buying any competitors that approach relevance, lobbying for laws that no competitors have enough voice to combat, etc. In a fair market, consumers benefit because companies compete to provide better products/services/prices. But a single dominant player can compete in other ways, which don't benefit the consumer.
One example of this: Amazon allows third-party sellers to sell on Amazon. If you create a product, such as Iron Gym pull up bars[1], you can create an online store for it. But your store is competing with Amazon, and even though the Iron Gym pullup bar was better than the pull up bars on Amazon which required you to screw them into the wall, people would likely buy an inferior, more expensive product from Amazon simply because they didn't know your product existed. You can easily compete in the home gym equipment market, but Amazon's dominance in the online retail market forces you to sell through their platform. No big deal, you're trying to compete in the pull up bar market anyway.
So you sell your Iron Gym pull up bars on Amazon[2]. Now Amazon has all the market data on your product, and sees that it's doing well. So they release an AmazonBasics version of your product[3], price it automatically cheaper than your product because they don't have to pay a cut of their profits as an Amazon third-party seller, prioritize it higher in their search results, and wait for you to go out of business. Amazon's dominance in the online retail market lets them completely reverse dominance in the pull up bar market, without any real competition in the pull up bar market.
It might seem that this is good for consumers, because Amazon provides a cheaper product, but keep in mind that if Iron Gym goes out of business, Amazon is free to hike the price of the pull up bars up to whatever they want.
[1] https://www.irongym.com/products/total-upperbody-workout-bar...
[2] https://www.amazon.com/Iron-Gym-Total-Upper-Workout/dp/B001E...
[3] https://www.amazon.com/AmazonBasics-Pull-Upper-Body-Workout/...
The problem is that when you get one dominant player, they use their dominance to change the market so that it's no longer fair, buying any competitors that approach relevance, lobbying for laws that no competitors have enough voice to combat, etc. In a fair market, consumers benefit because companies compete to provide better products/services/prices. But a single dominant player can compete in other ways, which don't benefit the consumer.
One example of this: Amazon allows third-party sellers to sell on Amazon. If you create a product, such as Iron Gym pull up bars[1], you can create an online store for it. But your store is competing with Amazon, and even though the Iron Gym pullup bar was better than the pull up bars on Amazon which required you to screw them into the wall, people would likely buy an inferior, more expensive product from Amazon simply because they didn't know your product existed. You can easily compete in the home gym equipment market, but Amazon's dominance in the online retail market forces you to sell through their platform. No big deal, you're trying to compete in the pull up bar market anyway.
So you sell your Iron Gym pull up bars on Amazon[2]. Now Amazon has all the market data on your product, and sees that it's doing well. So they release an AmazonBasics version of your product[3], price it automatically cheaper than your product because they don't have to pay a cut of their profits as an Amazon third-party seller, prioritize it higher in their search results, and wait for you to go out of business. Amazon's dominance in the online retail market lets them completely reverse dominance in the pull up bar market, without any real competition in the pull up bar market.
It might seem that this is good for consumers, because Amazon provides a cheaper product, but keep in mind that if Iron Gym goes out of business, Amazon is free to hike the price of the pull up bars up to whatever they want.
[1] https://www.irongym.com/products/total-upperbody-workout-bar...
[2] https://www.amazon.com/Iron-Gym-Total-Upper-Workout/dp/B001E...
[3] https://www.amazon.com/AmazonBasics-Pull-Upper-Body-Workout/...
Think amazon is winning? You can own it very easily.
> Where are the calls about Walmart?
Everywhere you look. They have been criticized for decades about their business practices, the way they treat their employees, their usage of scale to crowd out small-town retail, then jack up prices once they are the only place left in town... all because they are big enough to make it work.
If you haven't heard complaints about Walmart, you haven't been listening.
Everywhere you look. They have been criticized for decades about their business practices, the way they treat their employees, their usage of scale to crowd out small-town retail, then jack up prices once they are the only place left in town... all because they are big enough to make it work.
If you haven't heard complaints about Walmart, you haven't been listening.
>I think we have to see the bigger picture. Growth, momentum, and investments should be a good thing.
Why? As a an a-priori assertion?
Why? As a an a-priori assertion?
Agreed. I'm a big fan of free markets. But the modern tendency toward a sort of fundamentalist capitalism is repulsive.
A good way to make a profit is to make something people need at a price they can afford while paying your employees well. But you can't work that backwards. Not everybody making a profit is creating value or contributing to society. If you don't have a conscience, or even if you're just not thinking very hard, it's easy to privatize a gain and socialize the losses. It's our job as citizens to make sure that is minimized.
A good way to make a profit is to make something people need at a price they can afford while paying your employees well. But you can't work that backwards. Not everybody making a profit is creating value or contributing to society. If you don't have a conscience, or even if you're just not thinking very hard, it's easy to privatize a gain and socialize the losses. It's our job as citizens to make sure that is minimized.
Unfortunately, If you make something people need whilst paying your employees well you'll have to charge more than your competitors for it and most people simply will not buy it.We all pay lip service to wanting employees to be paid well (after all, we're all mostly underpaid employees ourselves) but the reality is that most people just want to stretch their meagre wages as far as possible. Which means compromising on quality, and ethicality.
That can happen, but it's not the only thing that can happen. Look, for example, at the way Toyota easily beat American carmakers for decades.
"Respect for People" was at the core of the Toyota Production System, and by that they meant both workers and customers. Their extensive investment in workers let them create better products for less money. Their refusal to lay people off cost them in the short term, but gained them substantial competitive advantage in the long term.
This only becomes more true the more we automate things. If machines are doing the dumb stuff, that only leaves smart stuff. And unhappy, underpaid people don't do smart stuff very well.
For those interested in how a different philosophy can lead to a deep competitive advantage, check out the This American Life episode on NUMMI: https://www.thisamericanlife.org/radio-archives/episode/561/...
"Respect for People" was at the core of the Toyota Production System, and by that they meant both workers and customers. Their extensive investment in workers let them create better products for less money. Their refusal to lay people off cost them in the short term, but gained them substantial competitive advantage in the long term.
This only becomes more true the more we automate things. If machines are doing the dumb stuff, that only leaves smart stuff. And unhappy, underpaid people don't do smart stuff very well.
For those interested in how a different philosophy can lead to a deep competitive advantage, check out the This American Life episode on NUMMI: https://www.thisamericanlife.org/radio-archives/episode/561/...
> Dominance is not illegal.
This is tautological. Legality the wrong question to ask when we're talking about what laws we need.
A good question to be asking is whether net harm outweighs net benefit. Another is whether we can get the same benefits with less harm.
This is tautological. Legality the wrong question to ask when we're talking about what laws we need.
A good question to be asking is whether net harm outweighs net benefit. Another is whether we can get the same benefits with less harm.
Walmart carries a very narrow range of goods, and leaves tremendous room for local businesses to still exist. Amazon will compete with everything at any time.
Walmart doesn't carry criterion releases or foreign films, and there is potential for local art movie stores or houses to exist to fill the need. Amazon carries movies at a much lower price than a local business ever could, and streams them too, again at lower prices than a theater. They try an get their fingers into everything, even service-based businesses, while walmart just does low prices on a selection of goods.
Walmart doesn't carry criterion releases or foreign films, and there is potential for local art movie stores or houses to exist to fill the need. Amazon carries movies at a much lower price than a local business ever could, and streams them too, again at lower prices than a theater. They try an get their fingers into everything, even service-based businesses, while walmart just does low prices on a selection of goods.
Sure Walmart carries Criterion series films:
https://www.walmart.com/search/?query=criterion%20collection...
https://www.walmart.com/search/?query=criterion%20collection...
The author does not offer ANY evidence for Amazon's supposed "dominance".
How exactly is Amazon dominating?
What percentage of online retail sales does Amazon have? What percentage of TOTAL retail sales (online and offline)?
And more importantly, how is Amazon's market position harming consumers?
It's remarkable that Tim Harford wrote this entire article without citing a single figure or statistic.
What seems to be going on is that there is a PERCEPTION that Amazon is totally dominating and monopolizing retail, but retail is so big that you can grow massively and have revenues of a $100 billion without coming close to being a monopoly.
Points to note:
(1) Amazon has no MOAT. Anyone can set up shop and start delivering things to people. There is no switching cost.
(2) Amazon has MASSIVE well-funded competition in all of its areas: online retail (Walmart), Cloud (Google), video streaming (Netflix), Books (the big publishers who own the content)
(3) You can live quite comfortably and cheaply and conveniently get almost everything that Amazon has to offer without having to use Amazon if you don't want to (books, retail items, cloud services, etc.). This is not the case with pure monopolies like utilities, or monopolies like Intel or Microsoft where completely avoiding them is a big pain for the average person.
How exactly is Amazon dominating?
What percentage of online retail sales does Amazon have? What percentage of TOTAL retail sales (online and offline)?
And more importantly, how is Amazon's market position harming consumers?
It's remarkable that Tim Harford wrote this entire article without citing a single figure or statistic.
What seems to be going on is that there is a PERCEPTION that Amazon is totally dominating and monopolizing retail, but retail is so big that you can grow massively and have revenues of a $100 billion without coming close to being a monopoly.
Points to note:
(1) Amazon has no MOAT. Anyone can set up shop and start delivering things to people. There is no switching cost.
(2) Amazon has MASSIVE well-funded competition in all of its areas: online retail (Walmart), Cloud (Google), video streaming (Netflix), Books (the big publishers who own the content)
(3) You can live quite comfortably and cheaply and conveniently get almost everything that Amazon has to offer without having to use Amazon if you don't want to (books, retail items, cloud services, etc.). This is not the case with pure monopolies like utilities, or monopolies like Intel or Microsoft where completely avoiding them is a big pain for the average person.
Amazon dominated author’s mindshare; therefore must be same for all others.
This is just OP’s solipsism and projection.
This is just OP’s solipsism and projection.
While google is a cloud competitor, azure remains a larger competitor. Regardless, AWS is positioned to hold the large majority of the cloud market for a while. Not to say that any of this is unhealthy.
https://imgur.com/a/TA5zg
https://imgur.com/a/TA5zg
That graph seems to be from this Techcrunch article: https://techcrunch.com/2017/10/30/aws-continues-to-rule-the-.... It also has another graph showing the growth of Azure and Google being much higher than AWS. AWS has a head-start, but others are driving pricing down. Yay competition!
With 30-35% of the market (if that graph/article is to be believed), it's not even really fair to say AWS has a majority (majority being usually used for >50%).
With 30-35% of the market (if that graph/article is to be believed), it's not even really fair to say AWS has a majority (majority being usually used for >50%).
The graph I posted shows Azure and Google growth being much higher as well. Think of it like this though: if you have 100 pennies and your growth rate is 75% then next year you will have 175 pennies. If you have 700 pennies and your growth rate is 35% then next year you'll have 945 pennies. Amazon offers a stronger product and just isn't going to "lose" market share at any point soon. I'm surprised IBM is even on there - I'd guess 90% of their cloud revenue is current customers that they converted over.
IBM acquired Softlayer, because otherwise their "cloud" offerings were basically marketing wank. Softlayer offered dedicated hardware, which a few years ago might have been appealing because of compliancy issues or lack of beefy machines on other cloud providers. In classical fashion, IBM snoozed and the competition has caught up (<insert IBM being morons rant here>). Great post if you want more detail: https://thehftguy.com/2018/01/15/the-inevitable-demise-of-ib...
That's interesting - thanks for sharing!
Just to counter the statement:
> Amazon has no MOAT.
Consider the following:
- Distribution. Amazon has their own distribution system, and has deals with third-party distributors
- Data. Amazon has a lot of data on consumer buying patterns.
- Books. When selling books online, amazon is apparently a requirement for success.
These aren't the best moats, but they are something.
> Amazon has no MOAT.
Consider the following:
- Distribution. Amazon has their own distribution system, and has deals with third-party distributors
- Data. Amazon has a lot of data on consumer buying patterns.
- Books. When selling books online, amazon is apparently a requirement for success.
These aren't the best moats, but they are something.
Data. Amazon has a lot of data on consumer buying patterns
I have a folder of screenshots I keep of hilariously bad Amazon product suggestions. I have been a regular Amazon customer since the '90's and I can say with a high degree of confidence that their consumer data isn't that valuable. All the recommendations that make sense are directly off products, if I buy one flavour of food for my cats it will suggest another but hell, anyone can do that. It's not even smart enough to suggest other cat-related products.
I have a folder of screenshots I keep of hilariously bad Amazon product suggestions. I have been a regular Amazon customer since the '90's and I can say with a high degree of confidence that their consumer data isn't that valuable. All the recommendations that make sense are directly off products, if I buy one flavour of food for my cats it will suggest another but hell, anyone can do that. It's not even smart enough to suggest other cat-related products.
It's not even smart enough to realise most items I buy are items you only need one of. E.g. if I buy a screwdriver set, or desk, or frying pan, I'll keep getting recommendations for other similar products. I'm pretty sure a random product suggester could do better.
Their competition has data too. Maybe not as much, but plenty. Walmart sells more than they do, I bet they have more data...
Walmart has dramatically more data on retail sales than Amazon.
They're famous for having an extraordinary logistics and purchase data system. It's how they've survived on 2%-3% net income margins for decades.
They're famous for having an extraordinary logistics and purchase data system. It's how they've survived on 2%-3% net income margins for decades.
But any business has the opportunity to smart small and grow organically. Nothing has changed about the market since Amazon started, as far as barriers to entry. In fact if anything, in some sense barriers to entry are lower because it's easier than ever to make an ecommerce website.
Worth considering that Netflix is both a compeititor and customer of Amazon.
Fully agree to all but (3). From personal experience (here in Spain), every year it is getting more difficult for me to not buy from them (yes, I "religiously" avoid giving companies I consider harming society a dime, if I can...)
How is Amazon harming society? I don't see how they harm consumers since either way, consumers are the biggest winners of those low prices.
If you are referring to self-published authors distributing ebooks being forced to take 35% on < $3 sales and 70% on > $3 sales on their platform; or merchants leveraging their reach to sell to a larger audience being undercut by Amazon on price then yes, they are harming society in some way.
But even their "harm" is as debatable as the "harm" of Henry Ford's mass produced cars displacing horse-drawn carriages mostly because they were more efficient at transporting people over the same distances as horses.
https://www.quora.com/How-long-did-it-take-to-get-horse-draw...
If you are referring to self-published authors distributing ebooks being forced to take 35% on < $3 sales and 70% on > $3 sales on their platform; or merchants leveraging their reach to sell to a larger audience being undercut by Amazon on price then yes, they are harming society in some way.
But even their "harm" is as debatable as the "harm" of Henry Ford's mass produced cars displacing horse-drawn carriages mostly because they were more efficient at transporting people over the same distances as horses.
https://www.quora.com/How-long-did-it-take-to-get-horse-draw...
Plenty, here is a selection:
- Nice jobs with plenty of human interaction at local stores get replaced by low-wage, brain-dead jobs in sweatshops (distribution centers) and employees get replaced with self-employed gig workers (transportation services)
- Amazon makes huge profits it immediately keeps reinvesting, so it pays no taxes on gains, reducing the redistribution of wealth
- Of the taxes that would apply, Amazon, like all multinationals, makes use of legal loopholes only the privileged can "access"
- Amazon's data-centers are probably one of the world's largest consumer of electricity - which in turn mostly comes from fossile fuels and atomic energy, therefore polluting the world and driving global warming
- Having a large, controlling piece of the "job pie" means such companies can push wages and prices down, ultimately eliminating the middle class, that was built around SMEs
a.s.f.
- Nice jobs with plenty of human interaction at local stores get replaced by low-wage, brain-dead jobs in sweatshops (distribution centers) and employees get replaced with self-employed gig workers (transportation services)
- Amazon makes huge profits it immediately keeps reinvesting, so it pays no taxes on gains, reducing the redistribution of wealth
- Of the taxes that would apply, Amazon, like all multinationals, makes use of legal loopholes only the privileged can "access"
- Amazon's data-centers are probably one of the world's largest consumer of electricity - which in turn mostly comes from fossile fuels and atomic energy, therefore polluting the world and driving global warming
- Having a large, controlling piece of the "job pie" means such companies can push wages and prices down, ultimately eliminating the middle class, that was built around SMEs
a.s.f.
I disagree with all your points:
>> Nice jobs with plenty of human interaction at local stores - Cashiers and other such store jobs are nice? Most such jobs at least here in the US are minimum wage, dead-end jobs which includes having to deal with rude customers and managers who would replace you in a heartbeat with two others for half your pay. What may be 'nice' to you the customer isn't necessarily 'nice' for the employees. Amazon offers convenience and time savings instead of human interaction. If this niceness of human interaction was that important or valuable to everyone, they would have voted with their wallets and gone to the stores instead of shopping on Amazon which means they value convenience and time more than the niceness of human interaction with strangers. So Amazon's popularity means capital is just being redirected to the most valuable actions.
>> self-employed gig workers (transportation services) - I believe it's the lack of healthcare and good social security (more so a problem in the US) that is the main 'problem' or 'risk' with the gig economy. Otherwise I am hard-pressed to see why people working on their own terms is really not better than long-term employments especially for commodity jobs like driving and transportation.
>> Amazon makes huge profits it immediately keeps reinvesting, so it pays no taxes on gains, reducing the redistribution of wealth - It keeps reinvesting its profits which means the money and capital is going back into the economy - in the means of cheaper prices, more services that startups and businesses be more efficient which means a whole order of more people than just the shareholders, benefit in some way from this capital. How is this reducing the redistribution of wealth? In fact companies who take and store profits (like Apple) and/or use them for share buybacks (like Google) are using this money less efficiently by returning it to only a small number of people who are Apple/Google share owners.
>> Of the taxes that would apply, Amazon, like all multinationals, makes use of legal loopholes only the privileged can "access" - You mention that all multinationals do this and that these are 'legal'. I really don't know why only Amazon is the one harming anyone here. I agree that everyone, including Amazon should pay their fair share of taxes. I am not a tax expert, but I just think that the fact that these 'legal loopholes' exist means that in todays world of global economies and multi-national companies, defining 'fair taxation' is very complex and not a simple black and white decision.
>> Amazon's data-centers are probably one of the world's largest consumer of electricity - which in turn mostly comes from fossil fuels and atomic energy, therefore polluting the world and driving global warming. - I can actually argue that Amazon's cloud would be a net positive for world pollution and energy consumption. Amazon's cloud data centers pack multiple millions of customer workloads from what would have been many, inefficient data centers into smaller number of very large, but also highly efficient data centers. Amazon has whole teams working on green/renewable energy sourcing for their data centers as well as designing more efficient hardware which means millions of businesses are automatically gaining the benefits. This is an important business effort for Amazon too because of their scale and visibility. I doubt that smaller businesses running their own hardware or data centers would ever care about their efficiency and/or the cleanliness of their source of their power.
>> Having a large, controlling piece of the "job pie" means such companies can push wages and prices down, ultimately eliminating the middle class, that was built around SMEs - Most if not all of Amazon's services have been built up on enabling others to do business and create more value - be it authors, sellers, or tech companies. Plenty of SMEs have leveraged and built on top of Amazon's services and had access to opportunities that they could never have. The SMEs that are getting 'eliminated' (like bookstores and such) need to adopt to the new situation where the value/services they provide are simply not in demand or the market has moved on and they have not adapted. Yes, there is a risk of having a large number of businesses depending on a single company but that is not the same discussion as Amazon being harmful.
>> Nice jobs with plenty of human interaction at local stores - Cashiers and other such store jobs are nice? Most such jobs at least here in the US are minimum wage, dead-end jobs which includes having to deal with rude customers and managers who would replace you in a heartbeat with two others for half your pay. What may be 'nice' to you the customer isn't necessarily 'nice' for the employees. Amazon offers convenience and time savings instead of human interaction. If this niceness of human interaction was that important or valuable to everyone, they would have voted with their wallets and gone to the stores instead of shopping on Amazon which means they value convenience and time more than the niceness of human interaction with strangers. So Amazon's popularity means capital is just being redirected to the most valuable actions.
>> self-employed gig workers (transportation services) - I believe it's the lack of healthcare and good social security (more so a problem in the US) that is the main 'problem' or 'risk' with the gig economy. Otherwise I am hard-pressed to see why people working on their own terms is really not better than long-term employments especially for commodity jobs like driving and transportation.
>> Amazon makes huge profits it immediately keeps reinvesting, so it pays no taxes on gains, reducing the redistribution of wealth - It keeps reinvesting its profits which means the money and capital is going back into the economy - in the means of cheaper prices, more services that startups and businesses be more efficient which means a whole order of more people than just the shareholders, benefit in some way from this capital. How is this reducing the redistribution of wealth? In fact companies who take and store profits (like Apple) and/or use them for share buybacks (like Google) are using this money less efficiently by returning it to only a small number of people who are Apple/Google share owners.
>> Of the taxes that would apply, Amazon, like all multinationals, makes use of legal loopholes only the privileged can "access" - You mention that all multinationals do this and that these are 'legal'. I really don't know why only Amazon is the one harming anyone here. I agree that everyone, including Amazon should pay their fair share of taxes. I am not a tax expert, but I just think that the fact that these 'legal loopholes' exist means that in todays world of global economies and multi-national companies, defining 'fair taxation' is very complex and not a simple black and white decision.
>> Amazon's data-centers are probably one of the world's largest consumer of electricity - which in turn mostly comes from fossil fuels and atomic energy, therefore polluting the world and driving global warming. - I can actually argue that Amazon's cloud would be a net positive for world pollution and energy consumption. Amazon's cloud data centers pack multiple millions of customer workloads from what would have been many, inefficient data centers into smaller number of very large, but also highly efficient data centers. Amazon has whole teams working on green/renewable energy sourcing for their data centers as well as designing more efficient hardware which means millions of businesses are automatically gaining the benefits. This is an important business effort for Amazon too because of their scale and visibility. I doubt that smaller businesses running their own hardware or data centers would ever care about their efficiency and/or the cleanliness of their source of their power.
>> Having a large, controlling piece of the "job pie" means such companies can push wages and prices down, ultimately eliminating the middle class, that was built around SMEs - Most if not all of Amazon's services have been built up on enabling others to do business and create more value - be it authors, sellers, or tech companies. Plenty of SMEs have leveraged and built on top of Amazon's services and had access to opportunities that they could never have. The SMEs that are getting 'eliminated' (like bookstores and such) need to adopt to the new situation where the value/services they provide are simply not in demand or the market has moved on and they have not adapted. Yes, there is a risk of having a large number of businesses depending on a single company but that is not the same discussion as Amazon being harmful.
Amazon has a strong triple moat according to Ben thompson's exponent podcast. A moat around a moat around a moat. Its unbeatable.
Network effects, AWS, data, large distribution, tv network, alexa and finally customers love it.
They are getting into ad business now and they also do the amazon basics. They even have an amazon clothing label in India.
Network effects, AWS, data, large distribution, tv network, alexa and finally customers love it.
They are getting into ad business now and they also do the amazon basics. They even have an amazon clothing label in India.
> and finally customers love it.
I think this expresses everything that's wrong about a lot of other companies. And if they can't figure this out, they deserve to fail. How this can even be considered a "moat"? You'd think customer trust/experience should be at the root of good business, especially repeat business.
I think this expresses everything that's wrong about a lot of other companies. And if they can't figure this out, they deserve to fail. How this can even be considered a "moat"? You'd think customer trust/experience should be at the root of good business, especially repeat business.
This article misses the real issue of "the Amazons" of today: The low-wage workers Amazon has built it's empire on (or, the "gig-economy" of others), and the massive scale, legal tax avoidance schemes only companies with global scale can play with.
If anything, companies of a certain revenue level should be taxed by (localized) revenue, not (globalized) gains. That alone would already go some way to put SMEs on a little more equal footing.
Addendum: In fact, we should tax all companies by a progressive revenue scale.
If anything, companies of a certain revenue level should be taxed by (localized) revenue, not (globalized) gains. That alone would already go some way to put SMEs on a little more equal footing.
Addendum: In fact, we should tax all companies by a progressive revenue scale.
The hourly employees are paid significantly more than Walmart/Best Buy/Target employees. In my home state, they start at $14-$15. About 2x Walmart.They also have programs for veterans to make even more.
They will also pay for community college degrees for those employees -- and it doesn't have to be related to their job nor do they have to stay at Amazon. I believe only in certain fields though, like STEM degrees.
They will also pay for community college degrees for those employees -- and it doesn't have to be related to their job nor do they have to stay at Amazon. I believe only in certain fields though, like STEM degrees.
> In my home state, they start at $14-$15. About 2x Walmart.
Walmart's minimum wage nationally is moving to $11 this year.
https://www.cnbc.com/2018/01/11/walmart-to-boost-starting-wa...
Target has recently moved to $11 and is moving its minimum wage to $15 by around 2020.
https://www.cnbc.com/2017/09/25/target-to-raise-its-hourly-m...
Walmart's minimum wage nationally is moving to $11 this year.
https://www.cnbc.com/2018/01/11/walmart-to-boost-starting-wa...
Target has recently moved to $11 and is moving its minimum wage to $15 by around 2020.
https://www.cnbc.com/2017/09/25/target-to-raise-its-hourly-m...
Well, those are not really SMEs with high quality jobs either...
I'll happily accept your word that Amazon's sweatshops are better than X's sweatshop - but that just makes more shitty jobs...
I'll happily accept your word that Amazon's sweatshops are better than X's sweatshop - but that just makes more shitty jobs...
Ah yes, the world without "shitty jobs" utopia. "Shitty" as compared to what? Who should do those jobs? Robots?
Assuming what parent said is true, except for paying employees much more than competitors and education options, what should they do in your opinion to make the jobs less "shitty"?
Assuming what parent said is true, except for paying employees much more than competitors and education options, what should they do in your opinion to make the jobs less "shitty"?
> Ah yes, the world without "shitty jobs" utopia. "Shitty" as compared to what? Who should do those jobs? Robots?
For the life of me I can't figure out how this argument would be different if we were talking about actual slaves rather than terrible jobs. If we decide that labor standards are shitty, we dictate that wages be raised, that children not work, that machines be as safe as possible, etc.
For the life of me I can't figure out how this argument would be different if we were talking about actual slaves rather than terrible jobs. If we decide that labor standards are shitty, we dictate that wages be raised, that children not work, that machines be as safe as possible, etc.
My issue was with "shitty", which is pretty vague. Whatever you consider the bottom tier = "shitty", okay, let's do something about those. Now, bottom tier = "shitty" again. Okay, so we need to define a minimum limit of shittiness, which we're all happy with. That is called minimum wage, labour protections, etc. And this differs from country to country, depending on how society values people with limited options. Of the top of my head, two things that would predict this are a countries wealth, and how much influence corporations have in the political system, i.e. how broken/corrupt it is. However, I must admit that I'm living in a fairly wealthy and "socialist" European country, so it's easy for me to say.
I can't figure out if OP is hating the game or the player (Amazon), but the former is a bit of a tangent w.r.t. to the article.
I can't figure out if OP is hating the game or the player (Amazon), but the former is a bit of a tangent w.r.t. to the article.
Doesn't matter, that bright future is an Utopia, as you already correctly derived. So the question becomes, how to avoid the opposite, the dark future of extreme inequality that our world is steering into. Which brings us back on track: Taxing corporations by revenue, not gains, thereby allowing for a better distribution of wealth.
Nonsense, what's the point of progressive revenue taxes for businesses?
https://a16z.com/2014/09/05/why-amazon-has-no-profits-and-wh...
So on the contrary, I still am looking for a non-bullshit treason not to do it.
So on the contrary, I still am looking for a non-bullshit treason not to do it.
It's very easy to agree with what you say, but something that I think is difficult to answer is breaking it down into real numbers. How much do you think somebody should be paid for moving boxes? Again you'd probably like to respond with a phrase like a 'livable wage', but I'm curious about an exact number with a natural understanding that it'd be higher for workers in e.g. San Francisco and lower for workers in the middle of Idaho.
To avoid making this a trap question, I'll give you my response to any number ahead of time. The US GDP/capita is $52k. So if each and every person received a perfectly equal share of every penny created, that'd be a total of $52k. And society certainly sees value in creating a much stronger economic incentive for e.g. being a doctor or an engineer than for moving boxes. So where would you put the number? It's not easy to answer when you consider that the current average salary for our box movers is already about $26k, or 50% of a perfectly equal share of all wealth generated in the nation.
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And I have one other entirely separate question for you, due to the phrasing of your question. Would you have been happier with Amazon had these jobs simply not existed? There's many possibilities there. In the future these jobs will likely be eliminated through automation. Other business situations, such as Apple's, enable them to avoid US blue collar labor by shipping the jobs off to factories in China where conditions and lifestyles are substantially worse than low wage jobs stateside.
To avoid making this a trap question, I'll give you my response to any number ahead of time. The US GDP/capita is $52k. So if each and every person received a perfectly equal share of every penny created, that'd be a total of $52k. And society certainly sees value in creating a much stronger economic incentive for e.g. being a doctor or an engineer than for moving boxes. So where would you put the number? It's not easy to answer when you consider that the current average salary for our box movers is already about $26k, or 50% of a perfectly equal share of all wealth generated in the nation.
---
And I have one other entirely separate question for you, due to the phrasing of your question. Would you have been happier with Amazon had these jobs simply not existed? There's many possibilities there. In the future these jobs will likely be eliminated through automation. Other business situations, such as Apple's, enable them to avoid US blue collar labor by shipping the jobs off to factories in China where conditions and lifestyles are substantially worse than low wage jobs stateside.
I think you're misunderstanding my point. The salary indeed is as a distribution question, and with localized inequality on the rise, this is getting worse every year since around 1973, probably. Beyond that, however, these companies are exchanging humane jobs with rich human interaction for sweatshop/factory/gig jobs.
So as you say, hopefully automation will make all these jobs superfluous in the future. After which, then, the question becomes: So how will those having lost those already shitty jobs fare then? I have my doubts the answer will be "better..."
So yes, I am all for less regulation and state interference overall - if in exchange the world can become a nicer place for the "average Joe" to live in. To reply with your own class of questions: How much more is the landlord's work worth in comparison to his underlings?
So as you say, hopefully automation will make all these jobs superfluous in the future. After which, then, the question becomes: So how will those having lost those already shitty jobs fare then? I have my doubts the answer will be "better..."
So yes, I am all for less regulation and state interference overall - if in exchange the world can become a nicer place for the "average Joe" to live in. To reply with your own class of questions: How much more is the landlord's work worth in comparison to his underlings?
> Beyond that, however, these companies are exchanging humane jobs with rich human interaction for sweatshop/factory/gig jobs.
Stacking selves or doing robotic, scripted interactions as a cashier in a regular big store is probably not that much better than working in Amazon's warehouse.
Stacking selves or doing robotic, scripted interactions as a cashier in a regular big store is probably not that much better than working in Amazon's warehouse.
What you're probably referring to with 1973 is probably something like the increasingly lopsided share of income on the top of society. To put some exact numbers to your intuition in 1979 the middle class controlled 46% of all income, and the upper/rich classes controlled 30%. Today (as of 2014) the rich and upper class control 63% with the middle class left with 26%. [1] There's even been a chiseling out of the middle class as a whole declining from 38.8% of society to 32% of society. I also find these topics fascinating. But that paper also has another datum in it that was completely eye opening to me. This is the change in the size of each economic group as measured by share of total income from 1979 to 2014.
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- Rich: 0.1% -> 1.8%
- Upper Middle Class: 12.9% -> 29.4%
- Middle Class: 38.8% -> 32%
- Lower Middle Class: 23.9% -> 17.1%
- Poor or Near-Poor: 24.3% -> 19.8%
-----
That's a very positive and rapid change. As another example China is experiencing something similar on a very rapid scale. They've gone from a relatively egalitarian society, to one where you have billionaires alongside people putting together $1000 iPhones living in on-site dormitories with suicide nets lining the building, working for a couple of bucks an hour. The contrast is stark, yet at the same time their overall population is starting to benefit from unprecedented opportunity and a gradual upward push. And what's left out of that picture is that even there those workers are striving for greater things, taking that money and then using it to return to their villages and open businesses of their own hoping to get their own piece of the pie. As an extreme example there Jack Ma, now one of the richest people in the world, spent years manually biking, what would have been from his perspective, 'rich' tourists around in China from international hotels.
Maybe the biggest point about the $52k figure is how shockingly small it really is. That's with all these crazy motivations for people to earn and generate as much as they possibly can, and then some. At times it might seem that post-scarcity is just a matter of logistics and benevolence, but that's just not justified by the actual numbers. So in the mean time, rather than dream of utopia, we need to create systems that enable people with sufficient drive to get as far as they can. And while our system has an immense number of flaws, I think you'd be hard pressed to come up with a robust alternative. Social systems have a strong allure, but I think this conflict of reality and ideology is really the fundamental reason that these systems collapse, in brief order, time and again - often with extreme consequences. China's inequality may be off putting now, but it wasn't 60 years ago that Chinese were dying and starving to death by the tens of millions in their execution of a so-called 'Great Leap Forward' to a full on social system. Ultimately you need to keep perspective in mind.
[1] - https://www.urban.org/research/publication/growing-size-and-...
-----
- Rich: 0.1% -> 1.8%
- Upper Middle Class: 12.9% -> 29.4%
- Middle Class: 38.8% -> 32%
- Lower Middle Class: 23.9% -> 17.1%
- Poor or Near-Poor: 24.3% -> 19.8%
-----
That's a very positive and rapid change. As another example China is experiencing something similar on a very rapid scale. They've gone from a relatively egalitarian society, to one where you have billionaires alongside people putting together $1000 iPhones living in on-site dormitories with suicide nets lining the building, working for a couple of bucks an hour. The contrast is stark, yet at the same time their overall population is starting to benefit from unprecedented opportunity and a gradual upward push. And what's left out of that picture is that even there those workers are striving for greater things, taking that money and then using it to return to their villages and open businesses of their own hoping to get their own piece of the pie. As an extreme example there Jack Ma, now one of the richest people in the world, spent years manually biking, what would have been from his perspective, 'rich' tourists around in China from international hotels.
Maybe the biggest point about the $52k figure is how shockingly small it really is. That's with all these crazy motivations for people to earn and generate as much as they possibly can, and then some. At times it might seem that post-scarcity is just a matter of logistics and benevolence, but that's just not justified by the actual numbers. So in the mean time, rather than dream of utopia, we need to create systems that enable people with sufficient drive to get as far as they can. And while our system has an immense number of flaws, I think you'd be hard pressed to come up with a robust alternative. Social systems have a strong allure, but I think this conflict of reality and ideology is really the fundamental reason that these systems collapse, in brief order, time and again - often with extreme consequences. China's inequality may be off putting now, but it wasn't 60 years ago that Chinese were dying and starving to death by the tens of millions in their execution of a so-called 'Great Leap Forward' to a full on social system. Ultimately you need to keep perspective in mind.
[1] - https://www.urban.org/research/publication/growing-size-and-...
Amazon re-invests nearly everything back into the company, that is to be desired and they deserve to win because of it. Competing with them is hard due to this intense research and development investment culture they have.
It would be hard to claim they are a monopoly with Wal-mart out there but also in cloud computing, there are many competitors. Amazon just knows how to develop not only products but markets for their product.
Amazon has helped small to medium retailers sell on Amazon and small to medium development/technology companies compete with infrastructure.
Amazon will hopefully disrupt healthcare with their new venture with Berkshire (who owns Geico and should make healthcare/insurance more consumer focused like auto insurance) and it is a welcome initiative. They might even solve the fixed pharmaceutical pricing market.
It would be hard to claim they are a monopoly with Wal-mart out there but also in cloud computing, there are many competitors. Amazon just knows how to develop not only products but markets for their product.
Amazon has helped small to medium retailers sell on Amazon and small to medium development/technology companies compete with infrastructure.
Amazon will hopefully disrupt healthcare with their new venture with Berkshire (who owns Geico and should make healthcare/insurance more consumer focused like auto insurance) and it is a welcome initiative. They might even solve the fixed pharmaceutical pricing market.
The problem is breaking up Amazon or any of the other big tech will just be replaced with another.
The issue is things gravitate to winner take all or at least most. We had tons of ecommcerce companies but now one dominate.
We had tons of search engines and now one dominate.
I believe the issue is the Internet. I was involved in 86 and honestly thought it would be the most democratizing thing ever.
But intuition was wrong and instead it is causing capitalism to break. Instead we are getting crazy concentration with companies and solutions.
The issue is things gravitate to winner take all or at least most. We had tons of ecommcerce companies but now one dominate.
We had tons of search engines and now one dominate.
I believe the issue is the Internet. I was involved in 86 and honestly thought it would be the most democratizing thing ever.
But intuition was wrong and instead it is causing capitalism to break. Instead we are getting crazy concentration with companies and solutions.
Isn't this just the 80/20 rule though?
What inherent property of the internet would prevent the majority of people flocking to the few websites that are slightly better than their counterparts?
What inherent property of the internet would prevent the majority of people flocking to the few websites that are slightly better than their counterparts?
There isn’t one that I can think of. The Internet is accessed using just a handful of browser clients. That in itself drives most users to start browsing at only a few websites.
This article concludes by saying "... wouldn't two amazon's be better than one?"
But I didn't find any case made for this claim in the article.
But I didn't find any case made for this claim in the article.
The point of having a direct competitor to Amazon is to limit the possible actions they could do. Right now Amazon is well behaving and its supported by the customers. However, if Amazon were to change its actions, we would have a near monopoly that is not positively affecting people. Therefore, the theory of the author is to limit the power of Amazon by entroducing a competitor that would challenge the dominant position instead of waiting for the negative outcome.
Amazon has many direct competitors. It’s likely that this is why they are behaving so well. But my guess is just Bezos’ philosophy as a driver.
maybe the article didn't lay out a case but that question should really be viewed from the perspective of more vibrant competition in the marketplace. We know in general that competition is good both for consumers and in the case of the technology sector competition is good for innovation.
I think the question applies to the likes of facebook (find me someone who is truly happy with facebook as a service, the whole world's social media needs cannot possibly be well served by the ideas of a handful of people in California), google..etc.
There is also the question of economic equity (geographic for instance), there is a direct relationship between the concentration of market share and concentration of wealth.
I think the question applies to the likes of facebook (find me someone who is truly happy with facebook as a service, the whole world's social media needs cannot possibly be well served by the ideas of a handful of people in California), google..etc.
There is also the question of economic equity (geographic for instance), there is a direct relationship between the concentration of market share and concentration of wealth.
OP is dreaming. The US has perhaps never been more pro-business, hands off, and unwilling to do any anti-trust, than they are now. They will not be breaking up any companies any time soon. A 1990s Microsoft anti-trust case, you wont see.
In fact I think we’ll see corporations increasing their influence. acting as banks, keeping private armies, controlling political affairs.
In fact I think we’ll see corporations increasing their influence. acting as banks, keeping private armies, controlling political affairs.
And the MS case resulted in basically a flick on the wrist, nothing else.
It definitely slowed them down a lot. Things could be looking very different if there had been no action.
MSFT was always about owning the platform. All platforms. The writing was on the wall about mobile devices overtaking desktops/laptops - as it took time for the telcoms to build out faster wireless networks.
Windows CE was supposed to be where iOS and Android are in 2018. They blew that plain and simple.
I'm no iPhone fan, its overpriced and overhyped as a computing device IMO. But, the watershed moment that created today'd mass computing - was the invention of the iPhone. It just obliterated Palm and the WinCE alternatives of the time.
Windows CE was supposed to be where iOS and Android are in 2018. They blew that plain and simple.
I'm no iPhone fan, its overpriced and overhyped as a computing device IMO. But, the watershed moment that created today'd mass computing - was the invention of the iPhone. It just obliterated Palm and the WinCE alternatives of the time.
Yeah, they might not have made that investment in Apple in 1997 -- where would they be today with no Apple?
That was driven by an Apple lawsuit.
https://en.m.wikipedia.org/wiki/Apple_Computer,_Inc._v._Micr....
https://en.m.wikipedia.org/wiki/Apple_Computer,_Inc._v._Micr....
[deleted]
Like what? Pretty baseless claim without examples.
For example they had to decouple their browser from the OS. In Europe they were forced to offer alternative browsers.
I also wonder if their investment in Apple was at least in part motivated by them being investigated. There may be no Apple today without that.
I also wonder if their investment in Apple was at least in part motivated by them being investigated. There may be no Apple today without that.
I think the EU was right to do it, because they realised how important the web is. But we didn't really feel the effects. Normal people still used IE, until they didn't.
In the end, I think Microsoft brought the demise of IE on themselves, because of how terrible it was. They couldn't undo that reputation, not even with Edge, which still feels clunky compared to FF or Chrome.
So this example is ambiguous w.r.t. hands-off vs. hands-on regulation at best.
In the end, I think Microsoft brought the demise of IE on themselves, because of how terrible it was. They couldn't undo that reputation, not even with Edge, which still feels clunky compared to FF or Chrome.
So this example is ambiguous w.r.t. hands-off vs. hands-on regulation at best.
It was not only about the browser as such but a lot of APIs were connected to IE. I don't remember the details but on several projects I worked on you needed IE installed to do stuff that was unrelated to the browser.
Also, Gates's reputation took a big hit with his behavior during the Congress hearings.
All this together caused a lot of harm to MS's image which may not have happened without the DOJ and the EU going after them.
Also, Gates's reputation took a big hit with his behavior during the Congress hearings.
All this together caused a lot of harm to MS's image which may not have happened without the DOJ and the EU going after them.
> The US has perhaps never been more pro-business, hands off, and unwilling to do any anti-trust, than they are now.
Well let's consult history, shall we?
You must mean other than the first 160 or so years of the country's existence, when the US operated as something dramatically closer to a free market, there were few regulations, few taxes, no welfare state, very few state interventions into the economy, few or no national business or economic-related laws, etc.
Well let's consult history, shall we?
You must mean other than the first 160 or so years of the country's existence, when the US operated as something dramatically closer to a free market, there were few regulations, few taxes, no welfare state, very few state interventions into the economy, few or no national business or economic-related laws, etc.
Products are commodities and they often do not win on price before shipping. Shipping is the secret sauce. Their ability to ship at lower costs.
I used to prefer ebay, prices are better, but after 2day shipping, you cant go back.
I can start an online retailer tomorrow, but i cant ship a package for less than $3. China too. I bought an iphone case for 80 cents, problem there you have to wait 3 weeks but their shipping too also government subsidized.
You wont find any huge corporation that wasnt somehow subsidized with public money.
I used to prefer ebay, prices are better, but after 2day shipping, you cant go back.
I can start an online retailer tomorrow, but i cant ship a package for less than $3. China too. I bought an iphone case for 80 cents, problem there you have to wait 3 weeks but their shipping too also government subsidized.
You wont find any huge corporation that wasnt somehow subsidized with public money.
As I said in a prior discussion, a broad catalog plus pretty predictable 2-day shipping was a real eye opener for me.
I first got Prime mostly for the video because Netflix had just started charging for it separate from their DVD service. But I soon realized that I could order a broad assortment of items and get them before I'd probably have gotten around to going to the store anyway. The fact that I travel a fair bit and can reliably order things at a time when I'll be home is another big plus.
I first got Prime mostly for the video because Netflix had just started charging for it separate from their DVD service. But I soon realized that I could order a broad assortment of items and get them before I'd probably have gotten around to going to the store anyway. The fact that I travel a fair bit and can reliably order things at a time when I'll be home is another big plus.
> but after 2day shipping, you cant go back
Maybe it's a US-market issue, but I don't understand why Amazon is lauded for two-day shipping as if it is unique.
They don't have any particular delivery logistics genius except bulk-purchase discounts from the carriers.
The 'Amazon Prime' air cargo fleet is leased from an industry-standard cargo airline, nothing unique or exclusive.
And they make silly errors that show how their shipping system works; they won't ship lithium batteries ( or even DSLR cameras ) to Northern Ireland even though they have a logistics warehouse here. Because the inter-warehouse backhaul is via Royal Mail, who won't carry hazardous items.
Maybe it's a US-market issue, but I don't understand why Amazon is lauded for two-day shipping as if it is unique.
They don't have any particular delivery logistics genius except bulk-purchase discounts from the carriers.
The 'Amazon Prime' air cargo fleet is leased from an industry-standard cargo airline, nothing unique or exclusive.
And they make silly errors that show how their shipping system works; they won't ship lithium batteries ( or even DSLR cameras ) to Northern Ireland even though they have a logistics warehouse here. Because the inter-warehouse backhaul is via Royal Mail, who won't carry hazardous items.
They made massive capital investments that allowed Amazon to bypass carrier routing.
So they use government subsidy to deliver to expensive addresses (USPS), UPS to handle exceptions, (and to tie up capacity from competitors) and job out delivery to cut rate services whenever possible.
Few other retailers do that. A retailer like Willams Sonoma has one warehouse in northern Mississippi and one in Nevada, close to UPS/Fedex hubs. They probably get 3 day delivery for 50% of orders, but can not commit to anything.
So they use government subsidy to deliver to expensive addresses (USPS), UPS to handle exceptions, (and to tie up capacity from competitors) and job out delivery to cut rate services whenever possible.
Few other retailers do that. A retailer like Willams Sonoma has one warehouse in northern Mississippi and one in Nevada, close to UPS/Fedex hubs. They probably get 3 day delivery for 50% of orders, but can not commit to anything.
It is pretty unique in the US. Most other vendors will take 5-7 days to get to me in the north east (probably because a lot of imported goods end up warehoused on the west coast).
I don't think too many other online vendors in the US have their own delivery vans/trucks.
I don't think too many other online vendors in the US have their own delivery vans/trucks.
Nobody else ships like them in the US.
Getting a product to me from California is 500 more land miles than someone in Rome ordering from Moscow.
Getting a product to me from California is 500 more land miles than someone in Rome ordering from Moscow.
I don't believe that most investors really have a grasp on how "long term" Bezos' thinking is. It's not multi-year, it's multi-decade... maybe even multi-century[0].
This is all just speculation from his involvement with the Long Now Foundation, but one of their goals is to foster long lived institutions... I believe that this is Bezos' vision for Amazon and that investors hoping for it to stop its self investment and growth are in for a very long wait.
[0] http://www.wideopencountry.com/there-is-a-10000-year-clock-u...
This is all just speculation from his involvement with the Long Now Foundation, but one of their goals is to foster long lived institutions... I believe that this is Bezos' vision for Amazon and that investors hoping for it to stop its self investment and growth are in for a very long wait.
[0] http://www.wideopencountry.com/there-is-a-10000-year-clock-u...
Bezos dream of shifting all heavy industry and mining to the asteroids would be so beneficial to humanity and the planet, that whatever short term pain (short as in timescale of decades) to either current incumbents business performance or consumer choice should be balanced against this promise.
Meh, Amazon does good things, many different good things, so we must stop them? If they start abusing their position we can have this discussion, but until then I'll enjoy the good they provide instead..
This seems more like jealousy they're doing so well. Screw that
This seems more like jealousy they're doing so well. Screw that
I think a good criterium for antitrust applicability (which the article implicitly mentions) is potential for damage: Even if a company doesn't hike prices, cut quality or blocks customers right now, how easy could they do this and how large would the damage to society be?
I think by that metric, Amazon (and others) should ring some alarm bells: If Jeff Bezos woke up tomorrow with an irrational hatred of redheads, he could immediately decide that his company should stop doing business with any redhead and denand that any partner company does the same - or they, too, will be kicked off Amazon. That would probably put redheads at a severe disadvantage in day-to-day activities pretty quickly.
Another thing I haven't seen discussed so far is creating sub-markets within your product. E.g., in the market for smartphone apps, Google and Apple are not large competitors or even monopolists, they are the government. They have full information about each market participant, can subject all participants to arbitrary regulations and instantly sanction players who don't confirm. Except, unlike an elected government, they are not required to justify the regulations, make them fair or even make them completely public.
Im kind of surprised such "sub-markets" seem to be completely unrelated so far.
I think by that metric, Amazon (and others) should ring some alarm bells: If Jeff Bezos woke up tomorrow with an irrational hatred of redheads, he could immediately decide that his company should stop doing business with any redhead and denand that any partner company does the same - or they, too, will be kicked off Amazon. That would probably put redheads at a severe disadvantage in day-to-day activities pretty quickly.
Another thing I haven't seen discussed so far is creating sub-markets within your product. E.g., in the market for smartphone apps, Google and Apple are not large competitors or even monopolists, they are the government. They have full information about each market participant, can subject all participants to arbitrary regulations and instantly sanction players who don't confirm. Except, unlike an elected government, they are not required to justify the regulations, make them fair or even make them completely public.
Im kind of surprised such "sub-markets" seem to be completely unrelated so far.
As much as I believe in free markets and less regulation, I believe we do need a law / regulation which disallows companies to use profits from one business to subsidize completely unrelated business while undercutting economics of the second one. For startups, they should be allowed to subsidize low prices only for a specified duration of time or until they hit a threshold of marketshare in a given market.
So Amazon should not be able to use AWS profits to subsidize retail, when other retailers don't have such cushions. Google should not be able to use Ads profits to undercut economics of browser or mobile OS. Uber/Lyft should not be allowed to capture more than 5-10% of SF/NYC taxi market unless they are profitable there.
Just to be clear - if someone can upend an entire business while being profitable, they should be allowed to flourish (eg. Netflix with rental movies, Apple with phones).
One possible exception - if there is no established business in a field and someone wants to move the technology forward there, they should be given some exception. So SpaceX can experiment with their rockets and Google can experiment with self driving cars because they won't be competing unfairly with any competitors.
Finally, I really hope EU adopts regulations along these lines. I have no hopes from US or China.
So Amazon should not be able to use AWS profits to subsidize retail, when other retailers don't have such cushions. Google should not be able to use Ads profits to undercut economics of browser or mobile OS. Uber/Lyft should not be allowed to capture more than 5-10% of SF/NYC taxi market unless they are profitable there.
Just to be clear - if someone can upend an entire business while being profitable, they should be allowed to flourish (eg. Netflix with rental movies, Apple with phones).
One possible exception - if there is no established business in a field and someone wants to move the technology forward there, they should be given some exception. So SpaceX can experiment with their rockets and Google can experiment with self driving cars because they won't be competing unfairly with any competitors.
Finally, I really hope EU adopts regulations along these lines. I have no hopes from US or China.
> Apple with phones
Apple uses their phone/hardware profits to upend other businesses. What Apple is doing to Spotify is the most recent example. Apple runs their iTunes/Music on a break-even basis. Apple has the dominant smartwatch market share. Apple runs adverts pushing Apple Watch+Apple Music combo. Apple privileges their Music app on the smartwatch and doesn't provide the needed APIs for Spotify to compete on that platform. Apple Music marketshare is growing and might catch up to Spotify soon.
Apple uses their phone/hardware profits to upend other businesses. What Apple is doing to Spotify is the most recent example. Apple runs their iTunes/Music on a break-even basis. Apple has the dominant smartwatch market share. Apple runs adverts pushing Apple Watch+Apple Music combo. Apple privileges their Music app on the smartwatch and doesn't provide the needed APIs for Spotify to compete on that platform. Apple Music marketshare is growing and might catch up to Spotify soon.
Two points:
1. Apple would be forbidden to subsidize unrelated unprofitable businesses for too long.
2. Developing a feature of an existing business is okay under my proposal (so iPhone upending P&S cameras is okay because camera is just a feature of iPhone and hence not completely unrelated business).
1. Apple would be forbidden to subsidize unrelated unprofitable businesses for too long.
2. Developing a feature of an existing business is okay under my proposal (so iPhone upending P&S cameras is okay because camera is just a feature of iPhone and hence not completely unrelated business).
That would unleash a pandora's box of corruption and abuse by inviting bureaucrats to even more directly control the economy through vague notions such as "too long." If you think the system is bad now, it'd be 10x worse if what you're suggesting were implemented.
Every layer of bureaucrat control and vagueness that is applied, dramatically harms the economy and brings it down toward stagnation of zero growth. We got 30+ years of that demonstration from France, where their GDP growth and wage growth has averaged 1/4th to 1/5th that of the US over the last several decades. Similarly Japan has a hyper regulated and rigid economy, with predictably bad growth as a consequence. As the US has grown more regulated over the last 40 years, its GDP growth has dramatically slowed (while the global economy has routinely grown far faster, and the US share of the global economy has not fundamentally changed).
Instead of considering these political concepts in an idealized fantasy scenario, you have to actually apply them to things as they are. You have to apply them with politicians as they exist in the US today. It would be the worst nightmare imaginable economically, next to moving to actual Socialism (ie direct, literal corrupt control of the economy by bureaucrats).
Every layer of bureaucrat control and vagueness that is applied, dramatically harms the economy and brings it down toward stagnation of zero growth. We got 30+ years of that demonstration from France, where their GDP growth and wage growth has averaged 1/4th to 1/5th that of the US over the last several decades. Similarly Japan has a hyper regulated and rigid economy, with predictably bad growth as a consequence. As the US has grown more regulated over the last 40 years, its GDP growth has dramatically slowed (while the global economy has routinely grown far faster, and the US share of the global economy has not fundamentally changed).
Instead of considering these political concepts in an idealized fantasy scenario, you have to actually apply them to things as they are. You have to apply them with politicians as they exist in the US today. It would be the worst nightmare imaginable economically, next to moving to actual Socialism (ie direct, literal corrupt control of the economy by bureaucrats).
I just searched the gdp per capita of both the us and and France since 1960 to 2016 and you could not be more wrong.
Amazon is a creature of Wall St. Unlike any other public company, they seem to be able to somehow make investors think about the long term and not care about surprises.
If Walmart tried and failed the Amazon did with Amazon Fresh, the stock would be savaged, for example.
We’re in an era where we are slowly rebuilding the trusts of the 19th century. It’s all about personal relationships and deliberately incompetent regulatory enforcement.
If Walmart tried and failed the Amazon did with Amazon Fresh, the stock would be savaged, for example.
We’re in an era where we are slowly rebuilding the trusts of the 19th century. It’s all about personal relationships and deliberately incompetent regulatory enforcement.
> Unlike any other public company
Tesla. A 15 year old business, run by an enigmatic (plausibly genius) leader, worth $56 billion, that has never earned a meaningful profit in its entire history. Currently bleeding immense red ink. Trading for about four times sales. Amazon trades for a reasonably similar, if slightly lower, sales to market cap ratio.
Tesla. A 15 year old business, run by an enigmatic (plausibly genius) leader, worth $56 billion, that has never earned a meaningful profit in its entire history. Currently bleeding immense red ink. Trading for about four times sales. Amazon trades for a reasonably similar, if slightly lower, sales to market cap ratio.
Trying to define an industry or segment is way too difficult for this. Then trying to define all these bright lines (revenue, market size, length of time, etc).
This sounds like a terrible idea that will be used mostly by politicians to extra money from companies.
And after every election these lines would likely be redrawn. The chaos this would introduce.
This sounds like a terrible idea that will be used mostly by politicians to extra money from companies.
And after every election these lines would likely be redrawn. The chaos this would introduce.
I agree that it would be a chaotic process to begin with. But since it reflects real life which is itself chaotic and messy, I won't be surprised (just like, say, tax laws).
What I object to is the behavior of private entities to use their resources to subsidize their products/services and capture new markets.
What I object to is the behavior of private entities to use their resources to subsidize their products/services and capture new markets.
> I believe we do need a law / regulation which disallows companies to use profits from one business to subsidize completely unrelated business while undercutting economics of the second one.
How would we distinguish _unrelated_ businesses? Would all media be forced to charge a subscription? It looks like an advertising business that subsidizes a journalism business.
How would we distinguish _unrelated_ businesses? Would all media be forced to charge a subscription? It looks like an advertising business that subsidizes a journalism business.
This would be really hard to enforce. A big company could just invest in a startup, and have that startup spend money to earn market share while not being profitable.
I covered that as well - startups should be allowed to subsidize their operations only for a reasonable length of time and/or until their market share is below a certain threshold. (So Uber should be allowed to operate in a market without profits until they serve, say, less than 8% of taxi rides).
Hmmm... so under your plan would a bricks and mortar retailer be allowed to offer (say) free air conditioning or heat for customers who come in the store, or would they be required to charge for that? How about lighting? If so, how is offering free air conditioning to attract customers different from Google offering free search to attract customers?
But offering heat / AC / lights is not unrelated - it is a related feature of existing B&M businesses. As I said in a reply to your sibling comment, related businesses or legit accessories to your business should be okay (so an airline offering free luggage is fine; search engine subsidizing browser or mobile OS is not).
So I pay more to save brick and morter retail investors.
For some interesting context on "Amazon's dominance", in 2017 they managed a total marketshare of 4% of retail. Surprisingly even if we restrict it to e-commerce only, they 'only' achieved 44%. [1]
[1] - http://www.businessinsider.com/amazon-captured-4-of-us-retai...
[1] - http://www.businessinsider.com/amazon-captured-4-of-us-retai...
Sorry, it'll never happen. Not having to pay taxes and being the best of the tiny group of first movers in the online catalog shopping space space has allowed it to eliminate both brick and mortar and online retail competition. It's even confident enough in its institutionalization that it's been gradually lowering the quality of its service while making wildly successful investor fueled infrastructure plays for both the basic fabric of the internet and the logistics of all physical world home-deliveries.
A government whose elements nearly-unanimously insist that a company isn't a monopoly until it both controls 100% of all possible industries that can be substitute products for its own industry and owns all of its suppliers, could "ironically" never muster the power to break up a theoretical business that met that standard. At that point, that business has become an inseparable part of the government, itself.
Sorry for the scare quotes around "ironically," but I can't help believing that this mistake is intentional, not accidental. People who insist that a company has to be all-powerful before it's necessary to break that company up (in order to protect the improvements from competition that free markets use to justify themselves) can't possibly fail to see that all-powerful companies can't be broken up, because they are all-powerful. It's like having a law against dictators that only kicks in once someone has completely taken over the government.
A government whose elements nearly-unanimously insist that a company isn't a monopoly until it both controls 100% of all possible industries that can be substitute products for its own industry and owns all of its suppliers, could "ironically" never muster the power to break up a theoretical business that met that standard. At that point, that business has become an inseparable part of the government, itself.
Sorry for the scare quotes around "ironically," but I can't help believing that this mistake is intentional, not accidental. People who insist that a company has to be all-powerful before it's necessary to break that company up (in order to protect the improvements from competition that free markets use to justify themselves) can't possibly fail to see that all-powerful companies can't be broken up, because they are all-powerful. It's like having a law against dictators that only kicks in once someone has completely taken over the government.
> Not having to pay taxes
Amazon pays (collects) taxes nationwide: https://www.theverge.com/2017/3/24/15055662/amazon-us-sales-...
Amazon pays (collects) taxes nationwide: https://www.theverge.com/2017/3/24/15055662/amazon-us-sales-...
So you want Amazon to provide incredible products and selection at the lowest reasonable prices, fast delivery, with the absolute best customer service.
But you don't want them to become giant and or dominant in the process of providing such an extraordinary service.
No no no, we should have two of them instead. Why? Because! Dominance! What would two of them do better than one is already doing in terms of providing service? No answer. Maybe the twins would lower prices further in a competitive death spiral and both could go bankrupt thanks to their currently barely existent profit margin.
How could anyone fail to miss the absurdity inherent in the premise? We want you to be incredible for the consumer, but not too incredible such that everyone uses you and you get big and dominant by doing it.
So Amazon should provide ok but not great products, ok but not great delivery, ok but not great customer service (or some combination of good and mediocrity). Maybe they should regularly mistreat customers like Comcast and charge far higher prices or provide really shit customer service. Really overall just bring their business game down to a lower level, so other mediocre companies can keep up with them. That'll show the consumer.
But you don't want them to become giant and or dominant in the process of providing such an extraordinary service.
No no no, we should have two of them instead. Why? Because! Dominance! What would two of them do better than one is already doing in terms of providing service? No answer. Maybe the twins would lower prices further in a competitive death spiral and both could go bankrupt thanks to their currently barely existent profit margin.
How could anyone fail to miss the absurdity inherent in the premise? We want you to be incredible for the consumer, but not too incredible such that everyone uses you and you get big and dominant by doing it.
So Amazon should provide ok but not great products, ok but not great delivery, ok but not great customer service (or some combination of good and mediocrity). Maybe they should regularly mistreat customers like Comcast and charge far higher prices or provide really shit customer service. Really overall just bring their business game down to a lower level, so other mediocre companies can keep up with them. That'll show the consumer.
“Yet for all this, I am deeply uneasy about Amazon’s apparently unassailable position in online retail.”
I have found online ordering at both Costco and Walmart to be easier and much more efficient than Amazon. NewEgg, Lowe’s, Home Depot are all websites I visit more than Amazon. Part of this is I am not much of a media consumer. But all, I do not have time for distractions and “suggestions” when online purchasing.
Thinking about it if anything other services are finally catching up. I've ordered as much stuff in the last 2 months from walmart and best buy as I have from Amazon despite being a prime member.
There isn't really as much of a network effect to Amazon they can abuse. For a lot of people, the day they jack up prices to exploit their position is the day a lot of people tab over to walmart or target.com and buy the thing from there instead.
There isn't really as much of a network effect to Amazon they can abuse. For a lot of people, the day they jack up prices to exploit their position is the day a lot of people tab over to walmart or target.com and buy the thing from there instead.
It's a tough one.
I've been an Amazon Prime customer for a few years now and notice my buying habits centralise further and further on Amazon.
The main "selling point" for me, and this is where Amazon's dominance probably doesn't help things, is they own every facet of their distribution chain. So when they say on the website "guaranteed delivery tomorrow!" I can be certain that the item will arrive tomorrow. Before Christmas last year I needed to get a thunderbolt to HDMI adapter for my Mac so my family could play a game, Amazon got that to me on Christmas Eve. All turned around within the space of about 18 hours.
Additionally the Amazon lockers make it simple for me to pick things up on the way home from work (there's one just outside my tube station).
I'm not sure what other businesses can do to compete really, Amazon isn't necessarily always the cheapest place anymore, but they offer the convienience - and I haven't seen another business be able to match, or even beat that
I've been an Amazon Prime customer for a few years now and notice my buying habits centralise further and further on Amazon.
The main "selling point" for me, and this is where Amazon's dominance probably doesn't help things, is they own every facet of their distribution chain. So when they say on the website "guaranteed delivery tomorrow!" I can be certain that the item will arrive tomorrow. Before Christmas last year I needed to get a thunderbolt to HDMI adapter for my Mac so my family could play a game, Amazon got that to me on Christmas Eve. All turned around within the space of about 18 hours.
Additionally the Amazon lockers make it simple for me to pick things up on the way home from work (there's one just outside my tube station).
I'm not sure what other businesses can do to compete really, Amazon isn't necessarily always the cheapest place anymore, but they offer the convienience - and I haven't seen another business be able to match, or even beat that
Would there really be any benefit from splitting up Amazon right now though? Assuming there were two symmetrical Amazons, both focusing on consumers, innovation, and growth, the only way I can see either being competitive is to cut corners.
In my opinion, there would be a much more compelling reasons to split up Amazon if they ever begin to focus on profits.
In my opinion, there would be a much more compelling reasons to split up Amazon if they ever begin to focus on profits.
I'm not convinced, I stopped buying from Amazon and haven't had any problems finding other suppliers.
I agree with Peter Thiel’s observations about allowing monopolists to reap the rewards of their innovation. And almost no-one (ok, Elon, I heard that cough) has innovated as much as Amazon in the last decade.
That said, banning chromecast etc is a dangerous precedent and I’d like to see Bezos apologise for that. It’s an unusually shortsighted move that does not fit at all for me.
If you’re going to attack a tech giant for being rubbish and monopolistic, Facebook is right there doing very little other than milking ads, acting irresponsibly, and burning a whole lot of time out of the economy.
That said, banning chromecast etc is a dangerous precedent and I’d like to see Bezos apologise for that. It’s an unusually shortsighted move that does not fit at all for me.
If you’re going to attack a tech giant for being rubbish and monopolistic, Facebook is right there doing very little other than milking ads, acting irresponsibly, and burning a whole lot of time out of the economy.
I remember a little bit of debate and a lot of consternation in 2002/2003 on whether a preemptive strike on Iraq was justified given their likelihood of having/using WMD. And in Minority Report how the theme was about how convicting on precrime was a right violation.
But has society really shifted thinking that acting based Amazon’s potential future dominance is a substantial discussion? Our predictive ability is not very accurate to be able to act preemptively (eg, no WMDs in Iraq).
So ending Amazon’s pre-dominance seems rather inefficient and bad for society.
But has society really shifted thinking that acting based Amazon’s potential future dominance is a substantial discussion? Our predictive ability is not very accurate to be able to act preemptively (eg, no WMDs in Iraq).
So ending Amazon’s pre-dominance seems rather inefficient and bad for society.
Related: Scott Galloway's take on breaking up Amazon.
https://www.youtube.com/watch?v=1ebKI4x_k8A
https://www.youtube.com/watch?v=1ebKI4x_k8A
Amazon is the literal expression of pied piper consumption. You know what would mess with Amazons dominance? Consumers having critical thinking skills enough to make long term decisions. Everyone here knows what the game is, which is kind of disgusting/amusing/predictable. Carry on :) Particularly you, Bezo/Freud/Bernays, you lovable sociopaths. Here for the comedy not for the crowd.
From the article:
> Punish it for success and you send a strange message to entrepreneurs and investors.
Bezos is one of the wealthiest people on the planet. Do they think breaking up Amazon at this point is going to discourage anybody? Like maybe the fact that you can become a billionaire but probably not a trillionaire means I'm probably not going to launch my idea.
> Punish it for success and you send a strange message to entrepreneurs and investors.
Bezos is one of the wealthiest people on the planet. Do they think breaking up Amazon at this point is going to discourage anybody? Like maybe the fact that you can become a billionaire but probably not a trillionaire means I'm probably not going to launch my idea.
Amazon and other large companies and even institutions should eventually lose most of their business to distributed applications running on peer-to-peer protocols or light-weight companies built on those types of public protocols taking small cuts.
This includes Amazon, Google, Uber, Waymo, Instacart, the US dollar, banking and government in general.
This includes Amazon, Google, Uber, Waymo, Instacart, the US dollar, banking and government in general.
Amazon is a convenience not a monopoly, not even close. They have 4% of the retail market share.
Any other country would love to have a company like Amazon. But the US wants to tear it apart.
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I've tried supporting the little guy with my online purchaces, and been ripped off several times, whereas Amazon has always put things right.
Do we really want to go back to the wild-west days of online retail?
Do we really want to go back to the wild-west days of online retail?
Unless the little guys were the original creators of whatever wares you were purchasing from them, their role in the value chain was merely that of a middle man. In that case, what moral, economic or societal benefit would come from purchasing from the little guy vs a giant retailer?
The author laments the rarity, excellence and thus dominance of companies like Amazon, although this article could have been about Apple or Google too.
Rather than ponder to what extent if any government regulation is the answer, it'd be better to ask why Amazon is so dominant and why competitors have such a difficult time competing.
This isn't specific to Amazon. "Disruption" is a word that has come to mean tech firms, which we can roughly define as firms founded by computer programmers that make heavy use of computers, entering a new market and rapidly out competing the incumbents. These firms start with no particular competitive advantage and frequently have major disadvantages. When Bezos started selling books he had no knowledge of the books business, no warehouses, no logistics operation, no business relationships and no capital beyond his own savings and $300k his parents invested in the business. His only edge was that Bezos had a computer science education and knew programming. Despite starting with literally nothing, Amazon now controls most of the entire book sales market. There was a story on HN recently about how Barnes and Noble is basically giving up and laying off employees.
Same thing for Steve Jobs and phones or Google and mapping. All relatively mature industries, all obliterated the incumbents (well, in phones the incumbents only survived by adopting Android wholesale). But Amazon is the best example because retail is such an old and established industry.
I've come to think that a big part of this is down to the different way programmers think, vs regular 'business people'. Any of the existing retail giants could have built an Amazon. Bezos didn't have any unique eureka-moment patent or other moat. And they all started way ahead of him in having warehouses and distribution networks. But they didn't, they never successfully did that, I don't think they ever could, because they were run by people who weren't software developers.
There are two big parts to this:
1. Understanding software projects and software developers.
2. Clarity, precision and energy of thought.
(1) is obvious enough, people with a business background can't judge the skill of developers or quality of software directly so they have to rely heavily on proxies that aren't very good - things like "is this project hitting its projected deadlines" which projects never do, or "what are other companies doing" which creates herd behaviour and eliminates edge, or "is this solution backed by IBM or Microsoft". They tend to make basic errors like saying, well this company over in India says they'll write the software we need for 1/10th the cost of our own development team, and software is software so that's a great saving! And they don't understand the vast gulf in skills and quality of the possible outcomes, or how critical quality tech is to their business.
(2) is more controversial, but I can't escape the feeling that programmers tend to think a lot more clearly and rigorously than many business people. Writing software demands intense focus and concentration for long periods, very precise thinking, and computers cannot tolerate internally inconsistent thinking. Way too many people simply cannot or will not actually think things through in detail. Their thinking is often vague, contradictory, shallow and they are constantly looking for clever ways to get out of thinking at all, like by outsourcing their thought to consultants or repeating buzzwords they don't really understand (IoT, AI etc).
I'm not arguing that programmers are incapable of self delusion, woolly thinking or anything like that - I've seen plenty of dumb behaviour from supposedly smart people. It's more like maybe they can do it, if they are reasonably free of biases and are given enough time and are motivated enough.
But if it's true that programming improves your general capacity for thought then we should expect to see tech firms systematically out-compete every firm in which the playing field is level and not radically tipped in favour of incumbents by regulators and governments. Retail is not very regulated so no surprise that Amazon is systematically taking over.
Edit: SpaceX is a better example of Amazon-style disruption than Apple. Musk went from knowing computer programming and nothing about space at all, to radically disrupting the existing aerospace industry with reusable rockets, in less than 20 years.
Rather than ponder to what extent if any government regulation is the answer, it'd be better to ask why Amazon is so dominant and why competitors have such a difficult time competing.
This isn't specific to Amazon. "Disruption" is a word that has come to mean tech firms, which we can roughly define as firms founded by computer programmers that make heavy use of computers, entering a new market and rapidly out competing the incumbents. These firms start with no particular competitive advantage and frequently have major disadvantages. When Bezos started selling books he had no knowledge of the books business, no warehouses, no logistics operation, no business relationships and no capital beyond his own savings and $300k his parents invested in the business. His only edge was that Bezos had a computer science education and knew programming. Despite starting with literally nothing, Amazon now controls most of the entire book sales market. There was a story on HN recently about how Barnes and Noble is basically giving up and laying off employees.
Same thing for Steve Jobs and phones or Google and mapping. All relatively mature industries, all obliterated the incumbents (well, in phones the incumbents only survived by adopting Android wholesale). But Amazon is the best example because retail is such an old and established industry.
I've come to think that a big part of this is down to the different way programmers think, vs regular 'business people'. Any of the existing retail giants could have built an Amazon. Bezos didn't have any unique eureka-moment patent or other moat. And they all started way ahead of him in having warehouses and distribution networks. But they didn't, they never successfully did that, I don't think they ever could, because they were run by people who weren't software developers.
There are two big parts to this:
1. Understanding software projects and software developers.
2. Clarity, precision and energy of thought.
(1) is obvious enough, people with a business background can't judge the skill of developers or quality of software directly so they have to rely heavily on proxies that aren't very good - things like "is this project hitting its projected deadlines" which projects never do, or "what are other companies doing" which creates herd behaviour and eliminates edge, or "is this solution backed by IBM or Microsoft". They tend to make basic errors like saying, well this company over in India says they'll write the software we need for 1/10th the cost of our own development team, and software is software so that's a great saving! And they don't understand the vast gulf in skills and quality of the possible outcomes, or how critical quality tech is to their business.
(2) is more controversial, but I can't escape the feeling that programmers tend to think a lot more clearly and rigorously than many business people. Writing software demands intense focus and concentration for long periods, very precise thinking, and computers cannot tolerate internally inconsistent thinking. Way too many people simply cannot or will not actually think things through in detail. Their thinking is often vague, contradictory, shallow and they are constantly looking for clever ways to get out of thinking at all, like by outsourcing their thought to consultants or repeating buzzwords they don't really understand (IoT, AI etc).
I'm not arguing that programmers are incapable of self delusion, woolly thinking or anything like that - I've seen plenty of dumb behaviour from supposedly smart people. It's more like maybe they can do it, if they are reasonably free of biases and are given enough time and are motivated enough.
But if it's true that programming improves your general capacity for thought then we should expect to see tech firms systematically out-compete every firm in which the playing field is level and not radically tipped in favour of incumbents by regulators and governments. Retail is not very regulated so no surprise that Amazon is systematically taking over.
Edit: SpaceX is a better example of Amazon-style disruption than Apple. Musk went from knowing computer programming and nothing about space at all, to radically disrupting the existing aerospace industry with reusable rockets, in less than 20 years.
i wouldn't say that you're wrong per se, but maybe a bit too generous to the narrowly defined class of "software developer". plenty of other fields employ the same class of cognitively elite individuals.
off the top of my head:
* lawyers and accountants and some types of financial professionals * aerospace engineers, rocket scientists, defense engineers * physicists, chemical engineers, mechanical engineers etc.
many of these people also write software as part of their job, at a more-than-competent level, while i don't think your average software engineer could do their job in any capacity whatsoever after i.e. 10 years of experience of just writing code.
off the top of my head:
* lawyers and accountants and some types of financial professionals * aerospace engineers, rocket scientists, defense engineers * physicists, chemical engineers, mechanical engineers etc.
many of these people also write software as part of their job, at a more-than-competent level, while i don't think your average software engineer could do their job in any capacity whatsoever after i.e. 10 years of experience of just writing code.
But why do those people not found companies like Amazon? When was the last time the CEOs of existing companies feared disruption by a firm founded by an accountant? Why was the United Launch Alliance apparently so helpless in the face of SpaceX despite ULA being made of experienced industry old hands and Musk having to literally teach himself rocket science as a first step?
many of these people also write software as part of their job, at a more-than-competent level
Really? Have you ever seen code written by mechanical engineers or accountants? I have! My experience is that an experienced programmer working inside a large enterprise will have a much firmer grasp of the business than the business-side people will have of software development.
many of these people also write software as part of their job, at a more-than-competent level
Really? Have you ever seen code written by mechanical engineers or accountants? I have! My experience is that an experienced programmer working inside a large enterprise will have a much firmer grasp of the business than the business-side people will have of software development.
Occam's razor applies. I think there is a much simpler explanation of why your examples are able to "disrupt" the industries you cite -- those founders felt "with the advances made by mankind, this kind of business idea should exist" then they go out to build such a business and with some luck, they manage to succeed.
For every successful Steve Jobs, Jeff Bezos and Elon Musk, there are several competitors (e.g Jean-Louis Gassée/BeOS, Jonathan Bulkeley/B&N and Shai Agassi/Better Place respectively) who failed.
Building a successful business like Apple, Amazon or Tesla is much much harder than you are admitting. Programming ability will only get you so far before the unavoidable laws of economics strikes home.
For every successful Steve Jobs, Jeff Bezos and Elon Musk, there are several competitors (e.g Jean-Louis Gassée/BeOS, Jonathan Bulkeley/B&N and Shai Agassi/Better Place respectively) who failed.
Building a successful business like Apple, Amazon or Tesla is much much harder than you are admitting. Programming ability will only get you so far before the unavoidable laws of economics strikes home.
BeOS was trying to disrupt the operating system market, so he was up against other programmers on their home turf. That example doesn't refute my thesis.
I hadn't heard of Shai Agassi before. He seems a better counter-example, although from his Wikipedia page it sounds like he went from getting a BSc in CS directly into 'entrepreneurship' and holding executive positions at various firms. I don't see anything in the way of an actual career writing software first, like Bezos had, not even a few years.
Jonathan Bulkeley doesn't have a Wikipedia page but from what I found he has a BA from Yale and never really tried to disrupt anything? Maybe I am missing something about his story.
Of course building a business is hard. I'm doing it at the moment so I'm well aware of that! I am not suggesting that merely knowing programming magically grants guaranteed success. But when you look at the type of people who are disrupting whole industries, at least in the sense the word is used, it invariably seems to be entrepreneurs who had some grasp of software or hardware engineering first.
I hadn't heard of Shai Agassi before. He seems a better counter-example, although from his Wikipedia page it sounds like he went from getting a BSc in CS directly into 'entrepreneurship' and holding executive positions at various firms. I don't see anything in the way of an actual career writing software first, like Bezos had, not even a few years.
Jonathan Bulkeley doesn't have a Wikipedia page but from what I found he has a BA from Yale and never really tried to disrupt anything? Maybe I am missing something about his story.
Of course building a business is hard. I'm doing it at the moment so I'm well aware of that! I am not suggesting that merely knowing programming magically grants guaranteed success. But when you look at the type of people who are disrupting whole industries, at least in the sense the word is used, it invariably seems to be entrepreneurs who had some grasp of software or hardware engineering first.
Some links on Jonathan Bulkeley's time at B&N:
Joined: https://www.cnet.com/news/short-take-barnes-noble-names-new-...
IPO: https://nypost.com/1999/05/26/not-one-for-the-books-bn-com-h...
Resigned: https://www.ourmidland.com/news/amp/Barnes-Noble-com-Names-N...
Joined: https://www.cnet.com/news/short-take-barnes-noble-names-new-...
IPO: https://nypost.com/1999/05/26/not-one-for-the-books-bn-com-h...
Resigned: https://www.ourmidland.com/news/amp/Barnes-Noble-com-Names-N...
I really hope Costco steps up and saves itself from Amazon.
If they do, probably by reducing costs, it will likely be at the cost of manufactures, farmers producing the goods, and employees.
I mean they've completely underinvested in technology and new experiences. The in-store experience and the website feel like they haven't changed in 20 years. Maybe that is part of the Costco charm, but the "if it ain't broke don't fix it" attitude is going to haunt them if they don't change.
Lots of headwinds in the next decade or so: younger consumers aren't driving as much (i.e. to big box stores with giant parking lots in the middle of suburbia), they are moving from suburban to urban centers, they're having fewer kids, buying anything online including perishables has become easy, etc etc.
Lots of headwinds in the next decade or so: younger consumers aren't driving as much (i.e. to big box stores with giant parking lots in the middle of suburbia), they are moving from suburban to urban centers, they're having fewer kids, buying anything online including perishables has become easy, etc etc.
Not a chance. Costco is actually heading toward failure, not success.
People want to shop online, people want to at the very minimum look up prices online.
People want to just go in the store, get what they need, and get out.
But Costco keeps moving things because of their "treasure hunt" atmosphere" (to force people to go searching) and "store experience" that they are trying to cultivate.
It works - for now. Until it won't. Low prices won't save them forever.
Costco is on the record saying they refuse to have online shopping because they want people in their stores having a "treasure hunt".
Costco has a record of every item a member bought - it would so very very very easy for them to make an online "reorder this" shopping list. And a "you might like" section by data mining and correlating with other shoppers.
They have so much potential, but they are going to be like Sears, and they are going to blow it.
People want to shop online, people want to at the very minimum look up prices online.
People want to just go in the store, get what they need, and get out.
But Costco keeps moving things because of their "treasure hunt" atmosphere" (to force people to go searching) and "store experience" that they are trying to cultivate.
It works - for now. Until it won't. Low prices won't save them forever.
Costco is on the record saying they refuse to have online shopping because they want people in their stores having a "treasure hunt".
Costco has a record of every item a member bought - it would so very very very easy for them to make an online "reorder this" shopping list. And a "you might like" section by data mining and correlating with other shoppers.
They have so much potential, but they are going to be like Sears, and they are going to blow it.
Before you go after Amazon, I think there's far more egregious fish to fry: like the big ISP cartel and the pharmaceuticals
just an anecdote but a Chinese person I met told me how crap Amazon is for buying clothing vs taobao. she said taobao has models for most clothing and showed us some examples.
seems like there is plenty of room compete with Amazon and that's just one example.
seems like there is plenty of room compete with Amazon and that's just one example.
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please no, amazon makes life better, saving me so much time to focus on other things.. i do NOT want to go back to the time before that
Should we really seek to regulate away hard-earned (and valuable!) advantages because they make it possible to abuse the position? Surely we should wait until they’re actually abusing it?
As an aside, I can’t think of any advantage Amazon has that wouldn’t open up opportunities for a competitor should they start to abuse them. That’s the goal of capitalism, in a sense; you have to be great or people just go elsewhere. Seems odd to fight against that.