
Amazon Is Trying to Control the Underlying Infrastructure of Our Economy - dsr12
https://motherboard.vice.com/en_us/article/7xpgvx/amazons-is-trying-to-control-the-underlying-infrastructure-of-our-economy
======
LyalinDotCom
"Last year, Amazon captured nearly $1 of every $2 Americans spent online. As
recently as 2015, most people looking to buy something online started at a
search engine. Today, a majority go straight to Amazon."

You know all those scifi movies where corporations in the future are the
government in space and have giant armies and space ships? Well at this rate I
am betting one of those solar empires will have "Amazon" on its flag.

In all seriousness though, people need to take the rise of companies like
amazon and really think hard what we are loosing by enabling them to take over
our lives. This is not a rant against corporations though, or even Amazon or
the great people that work there, but its more about what we as a society
allow.

~~~
kjhlkjh
One fascinating niche are online retailers which fill market voids Amazon
deliberately creates out of corporate policy. For instance in the US one can
readily purchase firearms and ammunition through the internet. Due to various
legal formalities, Amazon won't touch that particular market segment. Visiting
sites like www.sgammo.com, www.palmettostatearmory.com, or www.midwayusa.com,
is like stepping into an uncanny PHP laden alternate reality where Amazon
never existed. This federation of specialized retailers offers a glimpse into
what the online shopping experience _could_ have become, if it weren't for
Amazon's hegemony.

~~~
kerbalspacepro
It doesn't sound that great, to be honest. None of those tiny institutions
could ever reach the same amount of consumer trust that Amazon has engendered
with its customer service/experience.

~~~
fweespeech
> It doesn't sound that great, to be honest. None of those tiny institutions
> could ever reach the same amount of consumer trust that Amazon has
> engendered with its customer service/experience.

You are paying for that trust.

For instance, right now, Amazon is charging $69.00 for a shoe we sell for
$62.25 (including the item we list on their site, including shipping, etc.)

This is universally true for every item Amazon has cut us out on. It defaults
to "Ships and Sold from Amazon.com" despite the fact they are the higher
price.

Personally, at this point, I'd rather buy from smaller retailers. If you ever
look outside of Amazon for "niche" items you'll start to notice Amazon stops
being cheaper. Try looking at some of the clothing brands, the Guns&Ammo
dystopia is unique to their industry. :P

To be honest, I'm surprised their valuation is what it is given I genuinely
don't see how they can raise prices more than they have. Charging an extra 10%
over your competitors is really already pushing the envelope as far as can be
done.

~~~
skinnymuch
I'm guessing over $200B of Amazon's $475B valuation is from AWS and Amazon's
subsidiaries. They have [small] stakes in some companies too. To be fair, the
subsidiaries are peanuts^ (let's be generous and give them a combined value of
$10B).

Amazon has their Kindle product line of e-readers (along with their ebooks
infrastructure and Kindle Unlimited), tablets, and smart tv sticks. Their
Alexa ecosystem is thriving for now and its products are at 5 now.

Amazon has around 70M prime members. That's over $6B in revenue alone. Reports
say these members spend more at Amazon too. They probably don't care about
prices being a bit higher on Amazon either. That last sentence is my own
hunch.

And who knows how the Whole Foods acquisition will shake out.

I'm not sure how much debt Amazon has, but their cash pile is over $20B.

^Like Audible, IMDB, Goodreads, Twitch, Zappos, Alexa, Kiva, and Souq. Woot
went to shit. And they shut down Quidsi's sites like soap.com so that didn't
matter anymore.

~~~
fweespeech
> I'm guessing over $200B of Amazon's $475B valuation is from AWS and Amazon's
> subsidiaries. They have [small] stakes in some companies too. To be fair,
> the subsidiaries are peanuts^ (let's be generous and give them a combined
> value of $10B).

I just believe (rightly or wrongly) that Amazon's customers are more price
sensitive that is commonly believed and the merry-go-round of constant
reinvestment isn't going to be something that can be stopped for that reason.
I always thought Amazon was fairly valued around $300-400/share and pretty
much dumped all my stock in Amazon accordingly.

Maybe I'm wrong but I have a suspicion I'm not.

Look at Alphabet's financials vs. Googles and I think you'll find one of these
seems just a much more reasonable valuation than the other at ~$1000/share.

~~~
skinnymuch
> I just believe (rightly or wrongly) that Amazon's customers are more price
> sensitive that is commonly believed and the merry-go-round of constant
> reinvestment isn't going to be something that can be stopped for that
> reason.

Maybe. But the 70M prime members whose numbers just keep going up and we will
see that number break 100M at some point. They don't account for a majority of
Amazon's revenue but Amazon is doing over $6B in subscription revenue alone on
them right now. Those members aren't as price conscious. And there's many
people who aren't willing to pay the $80-100 yearly fee but still use Amazon
as a default like Prime members. Those two groups combined most likely account
for a majority of Amazon's ecommerce revenue and profit.

> I always thought Amazon was fairly valued around $300-400/share

But you quoted my part saying AWS itself (and technically I included the
subsidiaries) is worth that much in share value itself/themselves. At
$300/share you're talking about just a $150B market cap. At that point, whose
values are you killing off? Amazon retail, value of all the prime members,
AWS, Alexa/Kindle/Fire ecosystem, subsidiaries?

Their PE would be at 60 at that point. People once balked at FB's PE for being
in the hundreds. Now it's at a cool 40. PE of 60 is about double Google's. Who
coincidentally have been going harder in recent years on cutting spending with
their latest CFO and continue with trying to raise profits of their golden
goose.

Putting that into context, your thinking of $300-400 a share is too low. AWS
has a lot of competition. But it's currently still growing and profit margins
are huge. Most business don't seem to mind AWS's high prices.

Amazon is still growing too. They bought Souq, the Amazon of Saudi/ME. They
are investing billions to fight for India. Google I believe has already won
south east Asia.

Their retail/ecommerce revenue alone is around $100B. Overall, they are going
to top $150B this year. Without AWS which is their primary profit machine
right now, they are still at $135B+ in revenue. Don't you think if they wanted
to, they'd be able to eek out a few billion in profit from that remaining
$100B+ in revenue if they decided to go that way? That would get their PE
below 100. I will note I don't think PE matters that much for Amazon right
now. Just look at Netflix's or Salesforce's PE ratios now and in recent years.

I agree, Google's profitability much like Facebook is extraordinary. But they
are the two main internet advertising companies. Apple is even more insane,
but they only intersect in certain aspects. Finally, Google and Amazon had
around the same revenue at the beginning of this decade. By the end of it,
Amazon will be double (or just about) Google's revenue. Comparing them isn't
as simple as apples to apples.

~~~
fweespeech
> Their retail/ecommerce revenue alone is around $100B. Overall, they are
> going to top $150B this year. Without AWS which is their primary profit
> machine right now, they are still at $135B+ in revenue. Don't you think if
> they wanted to, they'd be able to eek out a few billion in profit from that
> remaining $100B+ in revenue if they decided to go that way? That would get
> their PE below 100.

Amazon can't actually compete with us on price without selling below their
costs. That is the reason we are still alive despite Amazon moving into our
market. They can't raise prices _at all_.

Their ability to do so _entirely depends_ on them becoming more efficient. I
suspect they can't become substantially more efficient on the retail side than
they already are.

~~~
skinnymuch
Can they really not? I guess it really comes down to if people will shop at
Amazon much less or at all if they raise prices by a few percent or don't
decrease prices over the next few years (just an example). Both achieving the
same thing. Not saying for all products, just some potentially.

I personally don't think they'd take that much of a hit. But i could be
convinced by otherwise.

------
gokubi
I agree with the article, but Amazon is more monopsony than monopoly. AMZN is
like Walmart--they're the buyer producers must sell to in order to get to the
consumer. They control access to the market. And as we've seen with Walmart,
monopsony power can be very destructive to producers.

Great fast company article on Walmart's monopsony power:
[https://www.fastcompany.com/54763/man-who-said-no-wal-
mart](https://www.fastcompany.com/54763/man-who-said-no-wal-mart)

~~~
maxharris
So why not make a competing company? Just tell people that if they shop from
you, they won't get the excellent speed, service and low prices they've come
to expect from Amazon, but that they will benefit in other ways, somehow.

If you can't explain what those benefits are well enough to convince people to
freely choose to buy from your company instead, you are not helping to make
the world a better place. If you advocate running to the government to get
them to smack down others who are more successful, you're just limiting
choice, and that makes you part of the problem. (Assuming that you agree that
the point of technology is to make lives easier, longer, more enjoyable, etc.)

Notice what Jobs did with regarding the Microsoft antitrust lawsuit stuff. He
was very careful not to let all that groupthink pile on and rule his mind.
Instead of joining in with all that sour grapes stuff, he focused on creating
the future instead.

~~~
chii
If the company achieved their success via externality of various costs that
their competitor is unable or unwilling to, then you'd have an unfair market.
This is where govt needs to step in.

~~~
stale2002
All that matters is the result. Does X cause prices to be low or prices to be
high.

I do not care about "unfair". What I care about is consumers. And consumer
welfare.

Unless what you are describing helps consumers in a specific, measurable way,
ex by lowering prices, then it is harmful.

~~~
chii
if walmart is allowed to pay such a low wage to their workers that they have
to be on food stamps, is it still "fair" to society? They surely gain more
customers that way, but at the cost of tax payers - mum and dad corner stores
or small groceries that don't pay such low wages can't compete.

------
nannal
[https://video-
images.vice.com/_uncategorized/1498341777756-s...](https://video-
images.vice.com/_uncategorized/1498341777756-shutterstock_445202842-copy.jpeg?resize=1050:*)

What the ever loving christ is this image?

"Jason Koebler" ought to be formally introduced to photoshop as at the minute
he is a danger to the eye.

~~~
Animats
Maybe they have a program which generates vaguely relevant images
automatically.

Further down, in an article about pythons, the snake, the publishing system
inserts a plug for an article about Python, the language.

~~~
wildrhythms
I don't think so; the image is captioned:

>Image: Shutterstock/remix Jason Koebler

Jason Koebler is a VICE contributor:
[https://motherboard.vice.com/es/contributor/jason-
koebler](https://motherboard.vice.com/es/contributor/jason-koebler)

------
adventured
Wait, I thought Microsoft already took over the US economy, creating a toll-
road by dominating the Internet?

[http://i.imgur.com/CfaOAxF.jpg](http://i.imgur.com/CfaOAxF.jpg)

[http://i.imgur.com/ZEMkiPk.jpg](http://i.imgur.com/ZEMkiPk.jpg)

Oh right, this isn't 1997, Amazon is the new new fear monster click-bait
machine. Bezos is the new new world's richest (soon to be). And Amazon is
going to rule everything!

You know, or, it turns out the US economy is so massive that it takes so long
to conquer any given big corner of it, that long before that happens the all-
critical founder retires or dies, and whatever big conglomerate one happens to
be speaking of at that time (whether Sears or Walmart or Alcoa or IBM or
American Tobacco or GM) then goes into erosion or stagnation as
competitors/government/technology change attacks it.

------
martin1975
I comparison shop - and while Amazon often beats other retailers in price due
to Prime, it's not not always the case. Most times, unless Amazon stocks the
item, the price of shipping is padded into the Prime cost compared to another
retailer.

I smell an opportunity for google here to eject some kind of a price search
engine that maes it eas/y/ier for us to find products ... That's usually what
it comes down to anyway, once you know what you want to get.

~~~
sogen
It's already in there, in the Shop tab.

~~~
calvano915
Yes, known in the good ol' days as [http://froogle.com](http://froogle.com)
which I still use :)

------
WalterBright
The irony is I don't hear much anymore about the unstoppable Walmart
juggernaut destroying the retail businesses of America.

~~~
wmeredith
Then you haven't been listening. It's old news. Wal-Mart utterly destroyed the
majority of main streets across rural America decades ago.

------
intopieces
FTA

>Ask Alexa to send you batteries and you won't get the option of Duracell or
Energizer; you'll be shipped Amazon-branded batteries.

Amazon favors its own in-house products the same way Wal-Mart, Target and
Costco put their private label brands in more effective places than their
competitors.

In any case, if you tell her you don't want those, she will list competitors
after.

~~~
abrkn
I don't care which battery brand I use. The Amazon Basics brand is cheap. The
packaging is subtle and minimal. Oh, and I can have them delivered in an hour!

Duracell on the other hand... They've been showing me ads on Twitter for
months, probably because I googled "2032 vs 2025 battery"

------
0xFFC
I am very curious how Walmart will fight back. As we all know Walmart is the
biggest company in the world. Their board is consist of famous politicians who
have powers.

They will fight back with Amazon as hard as they can.

~~~
maxharris
_Their board is consist of famous politicians who have powers._

This is exactly what a just government should stop. The winner should rise up
via their _economic_ prowess (i.e., their ability to provide a
better/cheaper/lighter/denser good or service that improves human life). NOT
their _political_ power (i.e., lobbying for regulations to kneecap an
innovative competitor).

What hangs in the balance is your access to a better life. Words cannot
describe how much better life is when you don't have to babysit physical
servers, drive to the mall to buy a pair of jeans, drive to the grocery store
to get things like food and soap, etc. If you don't speak up and root for the
innovators - those that make long bets when everyone else is against them -
you are doing nothing more than shutting down your own future. (It is not an
inevitability that achievement is rewarded. There are periods in history and
in other cultures where this does not occur! Thus it is a mistake to take
wealth and technology for granted - it didn't always exist, and it may not
exist in the future. Especially if those that take great risks to drive
humanity forward are mercilessly swatted down by lesser minds.)

Amazon is a company that made several such long bets.

Exhibit A: an article, entitled "Can Amazon Survive?" from 1999:
[http://knowledge.wharton.upenn.edu/article/can-amazon-
surviv...](http://knowledge.wharton.upenn.edu/article/can-amazon-survive/)

Exhibit B: "Jeff Bezos' Risky Bet," wherein Bloomberg heaped nothing but doubt
on AWS when it first came out:
[https://www.bloomberg.com/news/articles/2006-11-12/jeff-
bezo...](https://www.bloomberg.com/news/articles/2006-11-12/jeff-bezos-risky-
bet)

------
madez
I don't think amazon has an interest in that, because it will lead governments
to make amazons life uneasy, and they are capable of making it very uneasy.

------
warmfuzzykitten
"Last year, Amazon captured nearly $1 of every $2 Americans spent online."
Actually, 43%. Online sales were 11.7% of US retail. So Amazon is taking over
the country with a whopping 5% of total retail. Buy hey, got you to click on
it and upvote it.

------
chrismealy
The centrally-planned rational economy of the future is emerging from a few
blocks in downtown Seattle.

------
shmerl
Shouldn't anti-trust address this?

~~~
Finnucane
Yeah, Jeff Sessions is gonna get right on that.

------
TimSchumann
*succeeding at controlling FTFY

