Krystal and Saagar discuss Amazon’s fight against the new FTC Chair Lina Khan
Step 1: Blatantly violate anti-trust laws
Step 2: Ask anyone who points out your blatant violations to recuse themselves from regulating you because they can’t be “impartial”
Step 3:Hire Thomas Barnett, a George W Bush appointee — who ran anti-trust and then joined Amazon afterwards — to request the recusal
Step 4: Profit
Having an opinion is a conflict of interest, but getting paid by the party is not.
Amazon pressures companies to give them warrants (become part owner).
Amazon will buy MGM. Cool. But why does the tech giant have a streaming video service at all?
Lots of people will write smart things about Amazon’s strategy with Metro-Goldwyn-Mayer, the movie studio that Amazon said it would purchase for $8.45 billion. But I want to ask a more basic question: Why?
Not why is Amazon buying MGM, which owns the rights to James Bond and “RoboCop.” Presumably, Amazon will use it to mine ideas for fresh series and movies for its Prime Video streaming entertainment service. No, I’m asking: Why does Amazon have a streaming video service at all?
Is video a valued perk for Prime members or a multibillion-dollar vanity project for Amazon?
On the rare occasions that Amazon executives have discussed their goals for Prime Video, they have focused on the power of loyalty. They say that including a video service in Prime is one more reason for people to stick with Amazon’s membership program and feel they’re getting good value from both package shipping at no added cost and “Bosch” on demand. My colleague Karen Weise reported that households with Prime memberships typically spend $3,000 a year on Amazon, more than twice as much as households without the membership, according to Morgan Stanley.
Amazon has said that people who use Prime Video are more likely to renew their memberships each year or pay up if they’re on free trial programs, and they buy more products from Amazon. But in his new book about Amazon, the journalist and author Brad Stone suggests this might not be entirely true.
He writes that some Amazon employees who worked in the entertainment division analyzed how many Prime members watched shows and then extended their Prime memberships or signed up. “There was little evidence of a connection between viewing and purchasing behavior,” Stone writes. “The truth was this: Bezos wanted Amazon to make TV shows and films.”
The divergence between the stated goals of Prime Video and the perhaps more pedestrian reality highlights a dichotomy of Amazon and other technology superpowers. They are so rich and successful in some areas that they can afford to flail in others.
Amazon’s success in online shopping and cloud computing — and, importantly, the belief among both fans and detractors that the company is a powerful and disruptive genius — has papered over Amazon’s questionable strategies in groceries and in streaming. And it has reduced the urgency to fix a clunky online shopping experience that we can’t always trust and that feels as if it hasn’t been updated since the 1990s.
Facebook’s and Google’s wildly profitable advertising businesses prop up their inability to figure out what to do with … well, almost everything else that those companies are involved in, including Facebook’s fumbles to turn WhatsApp into a business and Google’s years of struggles in online shopping. I don’t know whether to find it comforting or scary that these companies are simultaneously crazy smart and at times stumbling in the dark.
In Prime Video, we don’t hear Amazon executives justifying the expense or pitching its value to Prime members. The lure of fast and no-cost shipping might be enough. Or would Prime members be more loyal if the company offered different perks — say, free internet service, online fitness classes, access to personal shoppers or more Kindle books? Walmart’s version of Prime throws in discounts at some gas stations.
I don’t know if any of these are compelling alternatives, but I also don’t know that video is an alluring add-on to Prime. Only Amazon knows, really, and it isn’t telling.
There’s a chance Amazon is playing a very long game with Prime Video. I can envision a future in which Amazon uses ads on Prime Video and its other online video sites to get us interested in new products and then sells them to us, too. Amazon would encompass the entire life span of shopping from “Huh, that looks interesting” to clicking buy. (Stone suggested that possibility in a recent newsletter.)
Or maybe I’m falling into the trap of assuming that there must be a grand design behind what Amazon and other superstar companies do. Perhaps making movies is just kinda cool.
Before we go …
This year in India is a string of internet face-offs. On Wednesday, WhatsApp, which is owned by Facebook, sued the Indian government over new internet rules requiring “traceable” messages that WhatsApp says violate India’s constitution. The party of Prime Minister Narendra Modi also lashed out at Twitter for adding a warning label to party leaders’ tweets that included forged documents intended to smear opposition politicians.
Related: Russia is pressuring Google, Twitter and Facebook to quash posts that the government considers illegal or to restore pro-Kremlin material, Adam Satariano and Oleg Matsnev reported. As with India, Poland and Turkey, Russia’s campaign is an example of the way governments test how far they can go to control online speech.
Cybersecurity companies’ zeal to promote their services alerted criminals. A ProPublica investigation found that by publicizing flaws in criminal gangs’ software, cybersecurity firms might be unwittingly contributing to ransomware attacks, including the one that recently hit the East Coast’s largest fuel pipeline.
Hugs to this
Otters in a hot tub. (OK, it’s actually more like a cold pool, but this webcast of otters is included in Twitch’s “hot tub” category.) Read more from Polygon about this Vancouver marine mammal rescue center and its livestream on Twitch.
Will you finally let your workers unionize?
As this was unfolding, most of Big Tech, including Amazon, sent white-collar workers home to “flatten the curve” and fight the pandemic. Tim saw company leadership go to great lengths to make sure this new system was working and actively seek feedback from the remote workers. Christy heard from a warehouse employee who said productivity targets made it difficult for workers to take a break even for hand washing without a mark on their record. Pay for warehouse workers starts at $15 an hour with minimal access to time off; in May Amazon ended the unpaid leave policy that for a few weeks allowed them to stay home if they had Covid-19 symptoms.The contrast in the treatment of knowledge and warehouse workers couldn’t be starker. Equally clear is the cause: One group has power, the other doesn’t.
Amazon’s decision to fire the activists was easy to make in the United States, where Amazon workers have no union and are left to fend for themselves. With no right to paid sick leave or protection from unfair dismissal, American workers are among the most vulnerable in the world to pressure from any employer, not just Amazon.
Union-represented Amazon workers in Spain, Italy, France and Germany initially failed to resolve their concerns through negotiation, but with court action, regulatory intervention and strikes, they got their needs addressed.
Let’s look at France: Unions there brought a civil case arguing that Amazon had taken inadequate steps to protect workers from infection risk and that it had sidestepped the unions’ statutory role. The court ordered Amazon to limit its sales to only “essential” items, or face harsh penalties until it could reach a safety agreement with the unions. Rather than negotiate, Amazon closed its French operations and appealed. But the appellate court also sided with the workers, who ultimately negotiated a settlement including mandatory union consultation over safety measures, union hiring of external experts to assess the measures’ effectiveness and a continued increase in workers’ hourly pay. The news from Europe shows that Amazon can work with unions and get good results.
Both of us want Amazon to share the wealth with workers and stop putting the relentless pursuit of revenue growth ahead of all other concerns. One way or another, this requires putting more power in the hands of workers. Regulation and legislation are part of the solution. But there’s no need to wait; power can be taken, not just given. That’s what unions are for.
Amazon is a data-driven company. It should recognize the evidence showing that countries with more collective bargaining have a stronger social fabric and better growth, and are more able to weather economic ups and downs. Businesses with collective bargaining relationships, including Auchan Retail and Carrefour, navigated the Covid-19 crisis with less disruption to their businesses and emerged with their reputations intact and even enhanced.
For its own future and the future of the global economy, Amazon should become more responsive to the women and men who’ve enriched shareholders and be willing to recognize and bargain with their representatives. When it comes to the rights of its workers, it should be a leader, not a laggard.
It’s not just Amazon: The need for more unionization is urgent across Big Tech. Amazon stands out because it combines the extraordinary profit margins of these companies with employing hundreds of thousands of front-line workers. There are fewer of these workers at the other iconic tech companies, but nevertheless their employees also deserve a voice over the issues that matter to them.
The question for Mr. Bezos and the billionaires of the world is: Are they ready to rise to the occasion? Will Big Tech listen to and work with its employees to help the world overcome the worst economic and social crisis in recent history?
There are lots of stories about the formation of AWS, but this much we know: 10 years ago, Amazon Web Services, the cloud Infrastructure as a Service arm of Amazon.com, was launched with little fanfare as a side business for Amazon.com. Today, it’s a highly successful company in its own right, riding a remarkable $10 billion run rate.
In fact, according to data from Synergy Research, in the decade since its launch, AWS has grown into the most successful cloud infrastructure company on the planet, garnering more than 30 percent of the market. That’s more than its three closest rivals — Microsoft, IBM and Google — combined (and by a fair margin).
What you may not know is that the roots for the idea of AWS go back to the 2000 timeframe when Amazon was a far different company than it is today — simply an e-commerce company struggling with scale problems. Those issues forced the company to build some solid internal systems to deal with the hyper growth it was experiencing — and that laid the foundation for what would become AWS.
Speaking recently at an event in Washington, DC, AWS CEO Andy Jassy, who has been there from the beginning, explained how these core systems developed out of need over a three-year period beginning in 2000, and, before they knew it, without any real planning, they had the makings of a business that would become AWS.
Creating internal systems
It began way back in the 2000 timeframe when the company wanted to launch an e-commerce service called Merchant.com to help third-party merchants like Target or Marks & Spencer build online shopping sites on top of Amazon’s e-commerce engine. It turned out to be a lot harder than they thought to build an external development platform, because, like many startups, when it launched in 1994, it didn’t really plan well for future requirements. Instead of an organized development environment, they had unknowingly created a jumbled mess. That made it a huge challenge to separate the various services to make a centralized development platform that would be useful for third parties.
So very quietly around 2000, we became a services company with really no fanfare.Andy Jassy, AWS CEO
At that point, the company took its first step toward building the AWS business by untangling that mess into a set of well-documented APIs. While it drove the smoother development of Merchant.com, it also served the internal developer audience well, too, and it set the stage for a much more organized and disciplined way of developing tools internally going forward.
“We expected all the teams internally from that point on to build in a decoupled, API-access fashion, and then all of the internal teams inside of Amazon expected to be able to consume their peer internal development team services in that way. So very quietly around 2000, we became a services company with really no fanfare,” Jassy said.
At about the same time, the company was growing quickly and hiring new software engineers, yet they were still finding, in spite of the additional people, they weren’t building applications any faster. When Jassy, who was Amazon CEO Jeff Bezos’ chief of staff at the time, dug into the problem, he found a running complaint. The executive team expected a project to take three months, but it was taking three months just to build the database, compute or storage component. Everyone was building their own resources for an individual project, with no thought to scale or reuse. (I think you can guess where this is going.)
The internal teams at Amazon required a set of common infrastructure services everyone could access without reinventing the wheel every time, and that’s precisely what Amazon set out to build — and that’s when they began to realize they might have something bigger.
A perfectly wonderful awful idea
Jassy tells of an executive retreat at Jeff Bezos’ house in 2003. It was there that the executive team conducted an exercise identifying the company’s core competencies — an exercise they expected to last 30 minutes, but ended up going on a fair bit longer. Of course, they knew they had skills to offer a broad selection of products, and they were good at fulfilling and shipping orders, but when they started to dig they realized they had these other skills they hadn’t considered.
In retrospect it seems fairly obvious, but at the time I don’t think we had ever really internalized that.Andy Jassy, AWS CEO
As the team worked, Jassy recalled, they realized they had also become quite good at running infrastructure services like compute, storage and database (due to those previously articulated internal requirements). What’s more, they had become highly skilled at running reliable, scalable, cost-effective data centers out of need. As a low-margin business like Amazon, they had to be as lean and efficient as possible.
It was at that point, without even fully articulating it, that they started to formulate the idea of what AWS could be, and they began to wonder if they had an additional business providing infrastructure services to developers.
“In retrospect it seems fairly obvious, but at the time I don’t think we had ever really internalized that,” Jassy explained.
The operating system for the internet
They didn’t exactly have an “aha” moment, but they did begin to build on the initial nugget of an idea that began at the retreat — and in the Summer of 2003, they started to think of this set of services as an operating system of sorts for the internet. Remember, this is still three years before they launched AWS, so it was an idea that would take time to bake.
I don’t think any of us had the audacity to predict it would grow as big or as fast as it has.Andy Jassy, AWS CEO
“If you believe companies will build applications from scratch on top of the infrastructure services if the right selection [of services] existed, and we believed they would if the right selection existed, then the operating system becomes the internet, which is really different from what had been the case for the [previous] 30 years,” Jassy said.
That led to a new discussion about the components of this operating system, and how Amazon could help build them. As they explored further, by the Fall of 2003 they concluded that this was a green field where all the components required to run the internet OS had yet to be built — at which point I’m imagining their eyes lit up.
“We realized we could contribute all of those key components of that internet operating system, and with that we went to pursue this much broader mission, which is AWS today, which is really to allow any organization or company or any developer to run their technology applications on top of our technology infrastructure platform.”
Then they set out to do just that — and the rest, as they say, is history. A few years later the company launched their Infrastructure as a Service (a term that probably didn’t exist until later). It took time for the idea to take hold, but today it’s a highly lucrative business.
AWS was first to market with a modern cloud infrastructure service when it launched Amazon Elastic Compute Cloud in August, 2006. Surprisingly, it took several years before a competitor responded. As such, they control a vast amount of market share, at least for now. Rest assured, some very well-heeled competitors like Microsoft, Google, IBM and others are gunning for them.
When asked if he ever foresaw the success they’ve achieved, Jassy was humble, saying, “I don’t think any of us had the audacity to predict it would grow as big or as fast as it has.”
But given how the company carefully laid the groundwork for what would become AWS, you have to think that they saw something here that nobody else did, an idea that they believed could be huge. As it turned out, what they saw was nothing less than the future of computing.
Politicians want to rein in the retail giant. But Jeff Bezos, the master of cutthroat capitalism, is ready to fight back.
The trucking industry is worth hundreds of billions of dollars per year. Uber is going after this market with Uber Freight, an online platform that matches truckers with shippers looking to move cargo from one place to another.
In 2018, about 3.5 million people in the United States were employed as truck drivers. With the explosion of Amazon and other e-commerce companies, the demand for truck drivers has been outpacing supply. In 2018, the United States trucking industry was short over 60,000 drivers. If the trend holds, experts predict there could be a 160,000 driver shortage by 2028.