They sell products at a loss to gain income in other places. For example, if you are a content producer you are competing with a company that sells "ad-free" video (Prime Video) attached to a low-cost service (Prime) so that they can sell more goods online.
Amazon is killing content producers by running a negative margin content business to do sell-through on e-commerce.
Amazon is killing video encoding business by selling a negative margin video encoder to sell through AWS compute.
This is extremely common in every "field" Amazon is in. They run at negative margins in one huge sector of business because it drives massive income in another.
That is a strategy only available to... monopolies. You can't afford to compete with them, because they are not _even trying_ to make a profit in your sector.
What product are you referring to? I'm in this industry and based on my experience their video encoding+storage+streaming offerings are actually higher priced than their competitors. The reason their services are popular is the integration with the rest of AWS (which is true for most of their offerings).
The only cheap thing that Amazon offers is fast shipping for low-cost products, e.g. buying a $3 cable and getting it shipped for free the next day (assuming you have Prime). But for anything above $50-$100, Amazon is almost always the more expensive option.
https://slate.com/technology/2013/10/amazon-book-how-jeff-be...
The whole point of predatory pricing is that you jack the price up if you don't currently face any competition and use the threat of plunging prices to scare off competitors, so of course they're going to be more expensive by default.
Take the encoding example above, you might pay a competitive price for the compute time required to encode, but you'll be paying some of the highest bandwidth fees in the industry if you were to stream out your encoded video to multiple viewers.
Where electronics are concerned, for years I would go to Best Buy to look at merchandise first-hand, then go home and buy it from Amazon, because Amazon was almost always significantly cheaper (especially before they started collecting sales tax).
Now it's the opposite.
I use Amazon to find products, read reviews, etc., and then I go to Best Buy's website to order it. It's almost always the same price or lower at Best Buy, and since I happen to have a Best Buy store only five minutes from my house, I can order it and pick it up in under an hour.
I don't think this is the case. The strategy is called a "loss leader", and it's a very common business strategy.
https://www.investopedia.com/terms/l/lossleader.asp
> Loss leading can be a successful strategy if executed properly. A classic example is razor blades. Gillette, for example, gives their razor units away for free knowing that customers must buy their replacement blades, which is where the company makes its profit.
It's true that big companies can find profitable loss-leaders where small companies can't -- though this isn't always true; my startup uses a loss-leader B2B product to unlock a more attractive B2B2C offering.
I think what you're observing is that monopolists tend to be more able to use loss-leaders, since their monopoly power gives them the ability to charge a premium on their monopolized good(s), which would increase the scope of profitable loss-leaders. However loss-leading is certainly not a monopoly-only strategy.
It's certainly a scale thing. What's notable about Amazon is they can run a losslead for an entire sector of industry, not just a single product. Note a grocery store could loss lead toilet paper so much no one can afford to produce toilet paper (maybe); but, could you imagine one which could afford to loss lead _all paper products_ to sell more coffee for long enough to wipe out all other paper retailers?
Because amazon can, and is, doing this systematically. And after that we no longer have fair-market prices, because there is no market but amazons for these goods.
Both exhibit the same behaviors with the same explicit goal.
You are debating semantics when the intent in both cases is the same.
In new markets we tolerate monopolies because we want to reward entrepreneurs.
The question to ask is whether the cost of rewarding Amazon with monopolies is beginning to outweigh the benefits.
That being said, their ecommerce org was still a complete mess. They were spending a ton of money operating a homemade ecommerce platform based on 2007 technology. They even had a mainframe running some critical features that they couldn't manage to deprecate. They ran everything focused on costs and didn't even do it right because they never considered the long-term benefits of investments. The architecture was multiple balls of mud. Teams were all aligned horizontally. Meeting customer needs wasn't never a factor in any decision making that I saw (and I spoke regularly to the CTO).
What does this mean?
Wait. And this is 100% not meant to be snide, it's a real question.
Isn't that the actual strategy for tech startups? Work with investor capital long enough to get established and own the market by selling at negative margins, then increase the price once you own the market?
Of course you might price your product less, but from a certain point of view it's less predatory than it is just fair market price. When you are a startup with no customers, your first customer is taking a chance on you. They have no idea what the quality of your product is. They have no idea if you're going to be around to support it in 6 months. All that uncertainty should be factored into the price. If you are a more established startup then the fair market price for the exact same product all other things held equal, should be higher.
I think though we need to recognize that Amazon is succesful for a reason, and those reasons are why they are in a position to invent even deeper and more relentlessly...
The last 20 years of PC gaming has been one of theft and grand larceny by steam, valve, EA and co. We used to get dedicated servers and level editors in games.
The internet allows companies to steal software from the point of production, because 2 or more computers in a network act as a single machine. So that means the internet is one giant world sized computer that companies de-facto own and control because they now "issue commands" to other nodes in the network.
We now live in a digital authoritarian society where we must get permission to use our software and have no privacy if we want to participate in the culture.
AKA the internet has been the greatest force for software theft and dispossession in all human history.
Because of the criminal way in which IP law was coded the public never got any property rights and this has created the greatest human rights disaster in all of history.
DRM in the OS, apps or games is literally you living in an open air prison and CEO's and government orgs can literally spy on everything you do.
Windows 10 is a case in point. There's no reason for client-server software anything for a home user.
We used to have to deposit a quarter every time our character died, and with zero save points.
Steam would have never got off the ground in 2004 if we had portal technology, man would have gotten killed.
IMO, this is like asking "is it still a democracy if the people don't decide on every bill directly?" In a sense, the answer is no–but I still feel comfortable using the word democracy.
I'm going to keep going with this analogy—IMO, idolizing the idea of a completely unregulated market is akin to idolizing the governing structure of ancient Athens. Yes, the rules we've added over the past millennia make us less free in a way—but they also make for a more sustainable system. These refinements are a sign of maturity.
I think you're caught up in an is/ought conundrum though: "idolizing the idea of a completely unregulated market" is the discourse! That's the pro-side rhetoric in a nutshell, how bills and laws get passed, and how the (US) economic system is constructed. So don't blame my inference, it's just what I'm reading in the newspaper.
GIMP hasn't killed Photoshop. It's all about giving value for money, or at least the perception thereof.
A practice neither invented by nor exclusive to Amazon, but they tend to get called out on it often, anyway: https://en.wikipedia.org/wiki/Loss_leader
And retailers like Target who get consistent customers that compare products in-store just stop carrying their competition.
https://www.statista.com/chart/18819/worldwide-market-share-...
But even AWS admits that only 5% of Enterprise workloads are using any cloud provider.
Also that includes IAAS and PAAS and private cloud services not companies like Linode that offer just a VPS nor places like Rackspace.
If you want a simple group of VPS’s to setup your own website to sell goods and you’re hosting on AWS (outside of Lightsail), you’re doing it wrong.
I’m a cloud true believer, know the ins and outs of AWS well, etc and I wouldn’t use AWS - besides Lightsail maybe - if I just wanted a VPS.
x264 is good but not the benchmark. x265 is simply mediocre.
That aside, as others have pointed out, there is the whole "in the cloud" thing which has to do with global TCO.
Also the pricing you can get of the AWS site doesn't look a thing like what an actual content distributor with 100 of thousands of hours of content gets.
Also, “the others” that pointed out TCO - was me.
For instance it didn’t make sense for DropBox to stay on Amazon but it did make sense for Netflix.
Prime all together only made 14 billion. Considering that prime almost assuredly doesn't cover its 2day shipping we can be very sure, the video unit is _certainly_ not positive.
What's even more important is this quote from Bezos, which directly states it's their strategy:
"We get to monetize [our subscription video] in a very unusual way," Bezos said. "When we win a Golden Globe, it helps us sell more shoes. And it does that in a very direct way. Because if you look at Prime members, they buy more on Amazon than non-Prime members, and one of the reasons they do that is once they pay their annual fee, they're looking around to see, 'How can I get more value out of the program?' And so they look across more categories — they shop more. A lot of their behaviors change in ways that are very attractive to us as a business. And the customers utilize more of our services"
https://www.businessinsider.com/amazon-ceo-jeff-bezos-said-s...
It's a _publically stated strategy_.
Maybe for subscription video specifically Amazon is more unusual, but it's certainly not because Bezos came up with some wild strategy. Movie and TV producers themselves aim for far more monetization than just the sticker; merchandizing, product placement, ancillary media (sountracks/interviews/tie-ins), etc are all things commonly aimed for. And even for subscriptions there are players like Apple, who clearly are interested in selling more Apple hardware.
I guess what bothers me about what you're saying is that I don't think it makes sense that every single unit in a company needs to "pay its own way", and on the contrary that sort of reasoning in management is the source of a lot of horrors many of us have experienced in IT. Security say gets cut to the bone because it's "not a revenue generator" and down the road systems get broken into causing tons of costly damage (infuriatingly often externalized too to add salt to the wound). Outsourcing sometimes can be an answer, but that sometimes creates its own major headaches as well. Amazon's size and weight certain give rise to concerns that might be lower elsewhere, but some of the bonuses they bring represent quite genuine economic value, and either way I don't think justify what seems to be a general argument against vertical integration.
My guess is that Prime Video exists as a "gateway drug"; you get it for the videos and then realize that extra $4/month or $11/year will get you free shipping, and then you're back to "if I order $120 worth of shipping, it'll pay itself back" thinking.
So, Costco? Or other member/buyer-club type things across many industries? It seems to have become somewhat less common, but it's still not remotely a unique idea. Psychologically, even expiring coupons and sales invoke some of that feeling of "use it or lose it".
>My guess is that Prime Video exists as a "gateway drug"; you get it for the videos and then realize that extra $4/month or $11/year will get you free shipping, and then you're back to "if I order $120 worth of shipping, it'll pay itself back" thinking.
It's interesting you have that perspective because I've always heard and experienced it as the opposite, though I haven't followed it for a while. Prime of course started based fully around shipping, and it has seemed fairly common for a lot of old Prime users at least to never use any other Amazon services at all despite them really, really pushing them. I never have either personally fwiw. If you're doing enough business with Amazon (~$5.1k+/year) it's also probably more direct to just use their dedicated card I guess.
And there's a reason upfront costing has faded in general, it's usually discouraging rather then encouraging. Causation seems more likely to flow the other way: somebody looks and sees they're doing quite a lot with Amazon already, and then decides to try to further leverage it. Of course, Amazon certainly wants to encourage this and support it so that customers don't "grow out of them", and being a full fat full service provider probably can aid them in retention. I'm not sure all this supports the original contention however.
Some retailers do this too, mainly warehouse clubs (e.g. Costco and Sam's Club).
nothing requires a monopoly. monopolies are manipulative (cross-)market distortions.
I'm not sure I agree with your characterization of that as a monopoly strategy, and I'm also genuinely curious how you know those are "negative margin" services. To the first, the strategy seems more about vertical integration than monopoly per se. Plenty of businesses aim to make a profit overall, but either have an outright strategy of loss leaders or more commonly have individual services that are absolutely necessary to the rest of the business yet are not profitable in and of themselves. And if the opportunity comes to leverage some of those internal divisions to some degree it can be completely reasonable.
To the first, the console market would be an example of a competitive sector (at least since the mid-90s) where players have quite fairly run one part at an initial loss (hardware in the first few years) with the plan to make it up on add-ons. They can further average break-even or profit over the product lifespan, because the hardware functionality is fixed but will be vastly cheaper to manufacture in Year 7 vs Year 1.
To the second, it's not uncommon at all for a business to require a certain amount of internal hardware or services for operations that is sitting idle a fair amount of the time, generates no direct revenue, or both. This is part of the whole logic behind cloud computing, or the constant tension of critical IT being seen as a "cost center". There isn't much minimal size for that to be the case either, even a small company may easily have a share of underutilized kit. In those cases, the marginal cost can be extremely low, even near-zero. If it can be turned into any sort of useful service or value-add at all with low enough overhead then it's still of value.
So I'm concerned your formulation is overly reductive of any company to its parts. The vertical strategy has real advantages as well as disadvantages, gains that are quite genuinely win-wins which is why they work. For AWS for example, that's a core business for Amazon and also something they require for their own activities. How much of the capacity is sitting idle at any given time so they can be prepared for when actual high priority customers need to spin things up? They certainly require significant margin to respond to variations in demand. Video encoding seems like a great way to fill troughs and average things out, since it can easily be run low priority, and the marginal cost is going to just be the electricity running chips at full vs power saving. Compared to all the cost of having the datacenter and hardware and staff supporting it at all, even just sitting around doing nothing, that's probably a pretty low fraction. Is video coding actually costing Amazon money vs what value they gain, or is it simply an area where they quite genuinely can do it for less, putting otherwise idle necessary capacity to use? And what about Azure or GCP, or even someone just running dedicated encoding hardware? How does Amazon have a monopoly on compute? If they're merely able to do it cheaper thanks to scale, what exactly is the problem? If they raised prices above what competitors or someone could do themselves where is the lock-in for video encoding?
Amazon has taught me to go out of my way to buy directly from manufacturer or a reputable retailer that doesn't offer third party sellers on their website.
I don't want to save 10%, 20%, even 50% to risk any chance of getting some counterfeit crap. Hopefully, there will be sufficient customers like me to make it economical to offer quality, vetted goods at whatever price it takes. Sadly, I see even target.com now allows third party sellers.
I wouldn't care about third party sellers if the retailer explicitly mentioned they don't commingle and allowed me to restrict all of my searches to items procured, shipped, and sold directly by the retailer.
https://www.newegg.com/promotions/marketplace/sbn/doc/Agreem...
>We will not be required to physically mark or segregate Units from other inventory units (e.g., products with the same standard identification number) owned by us, our affiliates or third parties in the applicable fulfillment center(s).
Isn't it hard to generalize like this? Consider Apple under Jobs: arguably Apple succeeded because of Jobs micromanagement because Jobs had (to quote Bill Gates) "great taste". Without that unifying sense of taste, you get something like Google, which is quite data-driven, and which doesn't have any unifying personality.
Although, in a way it feels funny drawing general conclusions from observations of unicorns which are, by definition, extremely rare and unique. It feels akin to cargo-culting.
From an outsider, it doesn't appear to me that Google is data driven, or at least they haven't ingrained it in their culture universally.
I can't imagine data lead them to believe they needed the 4 or 5 messaging apps they had at one point with the mix of hangouts, allo, duo, etc.
The quality of the companies products then stagnate or rot, as the product people are always in a rush to meet the requests of upper management - who of which have no idea what it takes to make a good product. So everyone's being micromanaged to meet stupid metrics - rather than the outcome - a good product.
As so it's not so much about micromanagement, as so much as having the best decision makers throughout the company. But none of this matters much when you're big, or have a monopoly...
For Jobs-era Apple, your incentive is to make something Jobs liked and the only reason that worked was because Jobs had great taste (subjective ofc) and a strong vision of what he wanted.
Amazon is very very focused on outcomes and that's what incentives a lot of decisions. Being data-driven is a tool to understand and measure the outcomes and inform decisions.
Google from the outside may be data-driven but data-driven to do what?
Jobs wanted to make a great phone, amazon wants to be your everything store, Google wanted to organize the world's information but the company has far exceeded that original goal and it's not clear what they want to do now.
That's what we keep seeing products that seem to exist for their own sake in many companies imo and those products struggle to find footing and die with no learnings.
Interesting point, particularly in light of their history of starting up products only to kill them off 2-5 years later. One could say they are data-driven to sell ads, but that's almost overly broad and makes it hard to explain niches like self-driving cars.
Sometimes they hit a big opportunity like Gmail and it grows like crazy, but a lot of the time there's actually no market for their product, or the technology is nowhere near ready to work at scale. This leads to a lot of canceled projects.
Apple products were visually-distinctive, but I wouldn't call them beautiful; they were relatively easy to use, though I wouldn't call them intuitive. But because they passed the bar in those two respects - in other words, because Apple products were not ugly nor difficult to use, and therefore not completely repellant on their face - the way was opened for Jobs to execute his coup de grace: positioning (through advertisement, third-party association, and pricing) the iMac, iPod, and eventually iPhone as markers of one's own affluence and taste. Everything else coalesces around that kernel of desirability, whether it's warranted or not. The "unifying sense of taste" of the products themselves is an illusion; what matters is that everyone agrees that Apple is the premium choice, in a society where premium (not necessarily fit) is of utmost importance.
This is why Apple stores and support are so crucial. Every generation of Apple product has a competitor that's more elegant, better-performing, more durable and reliable, better integrated within its own ecosystem, etc. But, again, what Jobs understood was that humanity always trumps engineering in the way our social and cultural hierarchies are constructed. Concierge and community are more desirable - more premium - when problems inevitably arise or UX inevitably fails. They maintain the illusion of usability when usability itself breaks down.
Jobs was just really good at playing people.
Just the fact that Apple actually provides software updates for devices for years longer than their competitors seems to disprove at least part of this statement. Their investment in retail stores and customer service is laudable, but to say the iPad has any competition in any of the metrics mentioned above is not true.
>Apple actually provides software updates for devices for years longer than their competitors
This is also debatable. The nature of Apple's sandbox means that it's much harder to find third-party support. A nominal official upgrade that effectively bricks your older device doesn't compare favorably to a PC or phone that can have FOSS replacements installed that actually increase performance.
Apple is the only company that has nailed the premium computer. Why?
I think you're right that platform lock-in is one factor. I think the other factor is that Apple uses their own proprietary operating system. They have control all the way down to the hardware level and that gives them an advantage. When I close a MacBook it goes to sleep. When I close a premium Windows laptop there is a fairly high chance it's going to overheat in my bag. This is of course an issue that can be fixed but its only one of many smaller things that make up the whole product. Because Apple consistently gets enough of them right people look past the smaller flaws and see a polished product in a way that is not often seen in consumer electronics.
Not quite. In fact, the premium media player space is essentially the only one that still exists. They're mostly Android-based devices with high-quality DACs for the playback of lossless, high-bitrate music files.
>Secondly just because Samsung Andriod phones or Dell XPS laptops are nominally premium doesn't mean they are on par with Apple in terms of how they are perceived by consumers.
I disagree. Microsoft's Surface line is also seen as premium, and Lenovo's Thinkpad line is still considered to offer top performance for business and enterprise customers. In phones, Apple is not unassailable in the US, and outside it, deals with heavy competition from Samsung and Chinese brands.
>I think the other factor is that Apple uses their own proprietary operating system.
You sound like a fanboy.
I'm not a fanboy, I have plenty of qualms with Apple. For example they run their new MacBooks so hot that they are constantly throttling. The lack of 32 bit support on Catalina is a pain in the ass and Apple won't let anyone else repair their machines which is BS. I personally use an Android because iPhones are way overpriced but I have a MacBook because I need it for work (React Native). I'm not arguing that Apple is the best I'm arguing that they have a brand image that is well above the competition in a way that you don't see in other markets.
I think there are real, deterministic reasons why Amazon is successful (other than its unscrupulous practices) but I'm not sure your comment adequately covers them. It's hard to make these determinations post hoc because they are not easily falsifiable.
* They ship super fast
* They sell almost everything at reasonable prices
* They have more user-provided content (reviews, photos) than anyone
To think Amazon doesn't have internal politics doesn't sound too believable.
I think Amazon had a very good business strategy and that has foremost been expansion at any cost, extending reach even at a loss by having multiple revenue streams. They leveraged the tendency for convenience in a fast world where everyone works hard, not just at Amazon. Solid business strategy, but the factors about incentives sound exotic to me.
> Not just dismiss them as some relentless and heartless evil empire.
This sentence could be straight from the middle of the last century and probably the cradle of literature. I am sure you will find many comparable quotes.
<Some "relentless and heartless" decisions need to be made, John>.
Market forces can make up for having a dysfunctional culture.
This is roughly analogous to the role of luck in personal success- people say “I must have done something right!” when in reality you have far less control than you imagine
But the core engineering stuff is high quality there. The build system that the whole company uses seems extremely well made. And I doubt that such a core thing can be done so well by a company with an overall poor engineering culture.
And the inverse seems to ring true as well. Even in large companies with overall poor engineering culture, you can find a few small pockets of teams that produce great small stuff. But they are fighting against the overall inefficiency of the company, while with Amazon, the opposite is happening, as poorly performing teams are being boosted by the core things (such as build systems) being done really well.
Amazon has figured out how to appeal to the typical consumer and keep them real happy.
Exploiting workers, suppliers, distributors, the country it's founded in are some of they way they deliver that promise.
Jeff Bezos is not the monster here - he's just responding to market forces.
Until the fundamental consumer model changes, competing with Amazon is not very logical or effective. It might make people feel good, but not effective.
Are they big, small? What kinds of firepower could they compete with?
Just wondering about the efficacy for these companies of trying to compete against a behemoth like Amazon versus carving out their own niche or redefining their market.
Meh. I definitely know of teams that slack off for multiple years.
At this stage, I could write a book about the idiocy of executives in tech.
- Because Amazon has extreme market power and engages in predatory anti-competitive behavior
Sure it does.
The American consumer continues to empower it to behave that way because no one other than Amazon gives them what they need.
Kind of like how people continue to complain about their cable provider being evil but they don't do anything about it except complain.
Want to solve your cable provider being evil? Start a cheap WISP. Anyone can do it, yet no one does.
Complaining is cheap. It takes a lot of work to actually do something.
> Want to solve your cable provider being evil? Start a cheap WISP. Anyone can do it, yet no one does.
> Complaining is cheap. It takes a lot of work to actually do something.
That "answer" elides so many problems that it smells strongly of BS:
* Most people who complain about their cable company barely have the technical capability to set up their own router, let alone run an ISP.
* Even a small ISP would require thousands to tens-of-thousands of dollars of equipment, very few people have that kind of money laying around to fund a quixotic endeavor like that.
* The person who runs such an ISP will probably have to deal with a significant administrative burden, including things like child porn investigations. The smaller the ISP the more likely the police are to treat the operator as a suspect himself.
* Even if someone's willing to deal with all of the above, they'd still have to sign up their neighbors. It's unlikely many of them are Sancho Panzas.
* etc.
The solution to most monopolies and other over-concentrations of market power isn't small-fry consumers attempting to compete with them directly; that idea doesn't even pass the smell test. The actual solution is some kind of government regulatory action, and the complaining you deride is part of the process to (possibly) make that happen.
You do realize that all the problems you listed exist because of regulation or can also be solved with regulation? Maybe instead of regulating how Comcast does business we should regulate things so it's easy to have many ISPs. That has a lot more benefits than trying to baby sit the one ISP:
* more jobs (many small companies are less efficient than one large company, economy of scale in reverse, leading to more jobs to do the same amount of work)
* better local community impact (decisions that impact the community aren't being made by people living somewhere far)
* more competition (better services, better prices, see some of the places where there's a lot of ISP competition are also the places that have the best cheap Internet and also overlaps with places with not very strong regulation, or enforcement, that directly affects running an ISP)
When I talk about relaxed regulation that affects ISPs I don't mean relaxed labor regulation (minimum wages, benefits), the bulk of the labor costs for an ISP comes from people that are payed much over minimum wage and get good benefits. But I do mean things like copyright strikes/enforcement and other Internet regulations, I mean things that control who and how can install wires, a fair market to rent existing wires and interconnect with existing ISPs.
I was mainly just responding to the weird idea that "anyone" who doesn't like Comcast should start their own ISP.
More competition would be great, but I think it'd only occur within some kind of regulatory framework that explicitly encourages it, which I think is along the lines you're thinkging. ISPs are basically natural monopolies that require significant amounts of expensive physical plant to operate. The unregulated free market handles such situations poorly, so some kind of regulation is a necessity even if it's not the current regulatory regime.
The fact that ours is for sale to the highest bidder is problematic, clearly, but the whole point of antitrust as a concept is you can't just start a competitor, because of the predatory anti-competitive actions of the monopolist.
Ah the "government" playbook.
Life does not work that way. If I want to affect change, I have to get the job done.
The "government" is you and I. There's no group of people up in the sky listening to our complaints.
How many of the people here complaining about Amazon being evil have even written a grievance letter to this "government" that is supposed to step in and stop Amazon from being evil?
People are voting with their wallets and they want cheap consumer products with a great return policy made by sweat shops delivered by people urinating into bottles barely making minimum wage after accounting for overhead.
Every single Amazon customer knows this and they don't care.
Do you not believe the government exists? Regulatory agencies aren't mythic gods, they're law enforcing bodies constructed by the people we vote for in every single election. You don't have to pray to them, you can just write them letters or call them.
Life does work that way, and has always worked that way since the beginning of the US. We have always regulated the market, even from the very first day that this country was founded.
> People are voting with their wallets
Yeah. And they're also voting by actually voting in the real elections that phrase is based on.
It's normal and realistic for government to break up monopolies and force regulations that help the market overall, especially in cases where market forces overall can't be trusted to enforce the same outcomes. We do this all the time; see pollution, price fixing, privacy violation, false advertising, and so on.
Arguably, Amazon itself only exists because of broad Title 2 classifications on the early Internet. No online business can in good faith argue that market regulation is unrealistic or impossible or inherently immoral, when the entire Internet ecosystem is built on top of the exact kinds of market regulation they're protesting: a forced level playing field that was forced by the government even though no individual consumer would have turned down zero-rated, prioritized, or access bundles through their ISPs.
Yeah, no. They're at 950 Pennsylvania Avenue, on the Blue & Orange line: https://www.justice.gov/atr/about-division
Problem is they've mostly decided not to do their job since about 1997 or so.
But that's a longer conversation. Ignoring all of that, the ISP argument is really weird to me.
> Start a cheap WISP. Anyone can do it, yet no one does.
Google started their own ISP, and then almost got forced out of the market by crony regulations that made it impossible for them to compete, despite offering a product that across the board was better priced and had higher customer satisfaction. And this is Google, who else in the US market was better positioned to start an ISP?
A big part of capitalist theory is the idea that markets trend towards efficiency. If you believe that ISPs are ruthlessly incompetent, and that the only thing blocking consumers from jumping ship to a better alternative is that nobody else has built one yet, then an efficient market should have solved that problem at some point in the last two decades.
If you're a Capitalist, and you believe there's an obviously underserved market where customers are constantly complaining about their current options, and nobody is stepping into that market even though anybody could -- well, there are two possibilities there:
A) Either the market doesn't actually trend towards efficiency, and all of Capitalism is wrong.
or
B) There's some kind of regulation, monopoly, or other barrier of entry that means ordinary people can't actually step in and easily compete.
Believing in Capitalism means believing that people follow money. You're telling me there's a massive underserved ISP market, everybody already knows that it exists, and that the only reason nobody has stolen every Comcast customer over the past decade is because people today are lazy? That's not how a free market works.
But of course, Capitalism does (at least mostly) work. So once you do the research on ISPs to figure out why they don't have competitors, you start to discover how many states ban community wifi efforts. You discover how many states still don't have decent one-touch-make-ready laws surrounding telephone poles. You find out how much money ISPs are willing to spend to sue and bully competitors out of the market, and how much government money ISPs rely on to keep their services running. You figure out that a lot of the free market businesses you're championing are basically publicly funded utilities that convert taxpayer money into private profits via exclusive government-funded contracts.
And once you discover all of that stuff, you realize that solving those problem requires serious legislative intervention, and it's not actually trivial to just vote with your wallet, and it's not actually that people are lazy or that they just want to complain. Some of the people you think are just complaining are actually working really hard to try and build (through legislative solutions) the type of market you think is going to magically solve the problem.
ISPs are a really good example of how sometimes if you want a legitimately free market, you have to work for it in government, and not just complain that other people haven't started their own business yet.
- They are ego driven, with legacy execs & others relentlessly protecting their status - whereas Amazon is relentlessly data-driven
- They have poor incentive structures and are feature factories. They value velocity over outcomes. Amazon, by being more data driven, is focused on being extremely outcome oriented
- Because of the first 2, Amazon can give people and groups a tremendous amount of autonomy, whereas other orgs heavily micromanage or have structures that create more politics than value
- There's little place to hide at Amazon (which means you might work your ass off!)
To compete with Amazon, you have to learn from them, and be prepared to adopt their practices as the new industry norm. Not just dismiss them as some relentless and heartless evil empire.