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Wal-Mart is telling some vendors they can’t run applications on AWS (foxbusiness.com)
371 points by JakeWesorick on June 21, 2017 | hide | past | web | favorite | 389 comments



I sold to Walmart for 4 years. In the beginning we believed we were lucky to become vendors. Then we realized how much stress they created. Every single year they would short pay our invoices. We would have to submit a claim with Walmart accounting. This process was completely and utterly time consuming. But the worst of it, they wouldn't pay the invoices owed until a year later. It's hard to float a $100,000 short pay as a small business.

They did much more and I was surprised that they existed this way in business


This kind of abuse is apparently common enough that there's an EU directive that limits this abuse in the EU: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2...

In the UK, for example, even before the EU directive, unpaid commercial debts accrue interest and late payment penalties and can be claimed retrospectively for up to six years. This means that you can quite legally wait until you've stopped doing business with a particular customer before then claiming late payment penalties and interest.

These rights cannot be waived by contract.


This is the first concrete example I've read of the EU being drastically more pro-business than the USA. Very interesting.

And for someone who wants to point out the lack of that regulation in the USA is still "pro-business" I'd say it's pro-monopoly, and against the 'culture of business' that was traditionally a large part of the US.


It seems to me that the US's attitude of being pro-business is to have as little regulation as possible and allow many forms of anticompetitive behaviour, whereas the EU is actively involved in regulating the market to keep it free and accessible for everybody.


I've seen Game Publishers do this with milestone payments but for a different effect. One of the common clauses is that the publisher gets all assets(source code, art, etc) in the case of a studio folding.

They then intentionally delay milestone payments about 3/4 of the way though the project, watch the company fold(since that's the highest-burn part of the project) and then re-hire 2/3rds of the existing staff who are now out of a job to finish the title.

It doesn't produce the highest quality games but I'm sure it earns them a bit more money.


These types of practices make me sad for humanity.


I mean, the two parties have a diametrically opposed view of how the world works and what their own moral obligations are.

One party thinks they're trying to make good games, and getting paid in the process.

The other party views the rest of the world as a potential money machine, and they're just optimizing around which lever to pull to maximize their return.

Matt Levine had a fun article[1] about this happening in a different context. 'FERC built a terrible box, and the box had some buttons that were labeled “push here for money,” and JPMorgan pushed them and got money.'

One approach isn't necessarily 'wrong' and the other 'right', but bad things obviously happen if you thought you were working with a business partner, but instead you got a shark.

[1] http://dealbreaker.com/2013/07/electricity-market-rules-were...


> I mean, the two parties have a diametrically opposed view of how the world works and what their own moral obligations are.

> One approach isn't necessarily 'wrong' and the other 'right', ...

No. The truth is that one approach is, in fact, unambiguously morally inferior to the other. That morality may not match the financial implications of a contract, which should be able to assume "good faith" and "fair dealings" in their contracts.

I can understand that some people care more about the money than the morals, and will exploit contracts and the law in unexpected ways to try to make more money or gain more power. But I refuse to accept that this behavior is morally ambiguous. And furthermore, I refuse to act immorally.

Perhaps that means I will miss out on some money or power. Perhaps I will be competed out of business because of this conviction. And yeah, I'll reluctantly play the stupid game where I must by offering discounts for on-time payment instead of attempting to write in appropriate penalties and interest for late payments that I can't enforce against an army of corporate lawyers.

But I can say with conviction that acting in bad faith is morally wrong.


Recently? I could see that happening a decade ago but I think it would be harder to do now, especially at the (A)AA level. Still, the video game industry remains volatile and a lot of independent developers are one missed milestone payment away from layoffs if not shutdown.


Yup, last story I heard was ~3 years ago. With the game industry there's always a new set of fresh blood that has idealistic views and hasn't seen what publishers(or exploitative dev studios) can pull.


I've recently had such an experience though not in gaming.


I've never worked with Walmart directly, but to be fair, I experienced this kind of thing all the time as a contractor. It seems to be sort of an unspoken thing in accounting departments that you allow vendors to complain before you pay too much attention to the particularities of any given invoice.

It doesn't excuse the practice and I always appreciated the clients who paid correctly and promptly, but I don't think it's limited to a specific company, and small businesses in general should be prepared for this type of short or delayed payment, from both financial and legal perspectives (credible legal backing can go a long way to establishing yourself as a vendor whose invoices are to be respected).

The problem with behemoths like Walmart is that they know you're not going to be able to stand up for yourself in a meaningful way. The relationship means a lot more to the non-behemoth, for whom it may well be life and death, whereas the behemoth can probably get a replacement vendor set up within a couple of weeks.

Lots of huge companies exploit such advantages aggressively; in many cases, it crosses the line between aggressive business and cost savings to outright bullying.


I work in the IT division of a Fortune 100 pharma. About four years ago I was astonished as a senior business director proudly bragged to us about the company's successful accounts payable strategy of paying all vendor bills as late as possible. This allowed the company to earn a higher yield on overnight investments, despite the continuing outcry from business partners.

I imagine most giant corporations now behave this way, with only the little guys playing by the rules, and paying the price.


I see most firms start with NET30 now, but many have begun pushing NET90. We started putting terms in our contract that show bill due prior to work commencement, most don't pay attention and expect you'll just fall in line. Those are usually customers we don't want. The smart ones that actually pay attention will usually counter with a tiered approach. 50/50 or 40,30,30 with milestones. It can easily make or break a firm. Nothing more frustrating than a small business that has issues with finances not because of money, but because of erratic clients.


Doesn't work all the time, but my approach to this is to pad rates 10% beforehand, then offer a 10% discount on any invoice that follows one that was paid NET10. Whatever bean counter is pushing for NET45 or worse usually sees the benefit of going to NET10.

Discounting only the single invoice that follows one paid on time keeps them honest. Short or late pay me, and the next invoice gets no discount.


If ever there were a use case for a lawsuit punitive damages, some poor company that is driven out of business by a well-documented case of this would be it. I know I'm being naive here but I feel that it should be clear to anyone with a sense of propriety that the big company should have to pay the liquidation cost for the small one!


Yes, suing your biggest distributor is a great way to succeed in business.


That's exactly my point! That and the fact that lawmakers are too weak willed (or have too little leverage) to take a stand against stuff like this is why big businesses are able to get away with this blatantly unethical behavior. Anyway, my example was an already-failed business for a reason!


If you're liquidating the business, as the OP describes, I doubt that's your biggest concern.


Lawsuits are expensive and utterly pointless if you can't see them through to completion.


I don't see what one objection has to do with the other.


I remember in an accounting class long ago discussing Walmart's relationships with their vendors. They would defer payment to vendors as long as possible while earning the cash from selling in their stores. So effectively they would have an interest-free loan on their balance sheet...

What you're describing obviously sounds different - but somewhat an extension of holding off payment for as long as possible, to the point were it becomes onerous to the vendors.

edit: for clarity, typos


From what I have read: Large businesses routinely do this to small businesses. It is standard operating procedure.

If you have a small business, you need to be very leery of having a large customer.


Walmart will have increasing competition in its role as buyer. Being a better buyer was and I guess still is one way Aldi is able break into saturated markets.


Don't think this is unique to Walmart. Being big players, it's always very hard to play hard ball them for small business.


Its amazing how many times Net 30 turns into Net 120 when dealing with a larger company. I noticed (in the 90s when I cared about such things) that companies that paid from banks at the end of the chain (like, oh say, a Montana bank) were more likely to pull that crud.


Just to be clear, there is nothing new here.

I did retail data analytics on behalf of large CPG companies with their Walmart, Target, Costco data for a few years. Walmart made it very, very clear for several years now that their sales/inventory data, and any apps the vendors build using it, couldn't be on AWS.

It made things very challenging for us, because Azure is too expensive and Google Cloud (especially at the time) lacked support that wasn't absolute shit.


Googler here. I apologize if you had a bad experience with Google support. We've had various tiers of support, all the way up to dedicated engineers. Can you please share your viewpoint here, or your experiences?


The article is about vendors selling Saas to Walmart. Having the ability to turn off the service makes it easier to get invoices paid.


In the 90s I had this problem with Sun Microsystems (it's called "aging payables"). If you give a discount for prompt payment they take the discount and pay when they want. If you charge a penalty they pay when they want and ignore the penalty.

I needed to make payroll so drove over to HQ to try to get payment. They wouldn't even let me in past the lobby. Finally I just asked everyone who walked in, "Oh, are you here to try to get them to pay their overdue bill as well?"

Eventually a confused looking guy came out and handed me a check.


This is... Not the best? That Wal-Mart is powerful enough to dictate the internal business practice and tech decisions of it's vendor.

On the other hand, Amazon is a massive immoral monster devouring the US economy and replacing it with something vaguely worse, year by year. It's rapidly approaching a "too big to be allowed to fail" status, and that's awful for Americans. Since anti-trust laws weren't written by a generation able to envison entities like this and the current political climate is that they'd rather die than appear anti-business... I guess the only entities with the power to push back against Amazon are in fact the other major corporate vendors.


Wal-Mart have always been pure bastards to their supply chain.

My family had a small manufacturing business that went bankrupt years ago. At one point we were making a part that ultimately ended up on a WM product. Periodically WM's folks would come around and do a strong arm routine trying to renegotiate the contract. It got bad enough my dad adopted the habit of bringing a couple of the very burly folks that worked in the fabrication shop to sit in on meetings and reduce the intimidation BS.

They are a ruthlessly scummy business and have been for a very long time.


Someone close to me related the story of when they almost put one of their products in Wal-Mart's stores in Canada about 2 decades ago. One big showstopper was that they were asking for the quality to be reduced so that the price could be lower. The vendor I know refused, saying that their product lasts a long time and they are proud of it and they wouldn't sign unless that stipulation was removed. A few months later the head of Wal-Mart Canada visited the vendor and asked when they were going to close the deal and he was shocked when the vendor said they wouldn't sign unless that provision was changed! He wasn't used to hearing no from potential vendors! The deal never happened and to this day the vendor is really glad they didn't go down that road.


There's a great writeup on a company that experience similar:

https://www.fastcompany.com/54763/man-who-said-no-wal-mart


That story, by Charles Fishman, is part of his book The Wal-Mart Effect: How the World's Most Powerful Company Really Works--and How It's Transforming the American Economy :

https://smile.amazon.com/dp/0143038788

It's worth reading.


"Buy it from Amazon!" Oh, how fitting.


As I understand it he later gave in and now they sell the lawnmowers. https://www.walmart.com/browse/patio-garden/lawn-mowers/snap...


Did Wal-Mart get another company to make a cheaper version of that product that's similar but sufficiently different that it's not infringing? That's their trademark move.

"Make it cheaper or we'll make it cheaper for you."


This is very common among big box stores as far as I know–often companies will make a special cheaper version just to get the deal done so they can sell in these big chain stores.

I often keep an eye on the product number if I'm every buying electronics or tools at a big box store to see if it's different than what I find online for what is ostensibly the same exact product, as that can be an indication that you're buying a cheapened version.


This is how Wal-Mart maintains its position, and grows to where it is today. Thats Business at their level.

I sympathize however. Strong Arming small and middle sized businesses, which are the bedrock of American Capitalist Power is just egregiously scummy. This is also what I think is currently gone wrong with the American Capitalism, but thats another comment, somewhere, sometime I guess :)


I'm not sure small and medium businesses are really the "bedrock of American capitalist power." Maybe you could argue they're the bedrock of American values or something like that.


Just to see if we were right or wrong, I found this article. https://www.entrepreneur.com/article/77398

Here are stand out ones from the article. For just small business alone. I actually thought middle size business would have had figures like this.

* Small businesses create 75 percent of the net new jobs in our economy. * Small businesses pay more than 44 percent of the nation's private payroll. * More than 50 percent of the U.S. private gross domestic product is generated by small businesses. * Almost 97 percent of exporters are small businesses.


Those numbers are certainly much better than I expected, but "capitalist power" is kind of abstract and I was thinking such a thing was better represented by GM, Lockheed Martin, Apple, etc. -- i.e., companies with resources and influence to rival some sovereign powers.


yea, I hear ya! I can live with that :)


But Amazon doesn't do this to their vendors.


They most certainly do and have.

Take Books and Ebooks for a good example.

http://www.newyorker.com/magazine/2014/02/17/cheap-words


I was referring to these smaller firms as was addressed in the comment.

Regarding the major book selling firms, Amazon are the good guys because a relatively few book firms control the market. Amazon is helping to improve the customer experience by lowering the price of books.


> Amazon are the good guys because a relatively few book firms control the market. Amazon is helping to improve the customer experience by lowering the price of books.

they're replacing an oligopoly that is exploiting their customers with a monopoly though.

amazon hasn't really started exploiting its monopoly status yet (to my knowledge) toward the consumers, but a lot of authors have already started to complain about it.


I looked into this issue awhile ago and may have even written about it in HN. The publishers are trying to take a larger share of the income from Amazon for eBooks over traditional publishing leaving the authors with less than before even though production costs for publishers are far lower for eBooks. Amazon was trying to work to get authors at least the same proportion of the money they get for eBooks as for hardcopy traditional books.


They are also a very large, non-homogenous business which has had some great people work for them as well as some very shitty people.

The best managers there are the ones who largely disregard the incentives placed before them and respect the complexities of working at such a large scale. It sounds like the people who would show up at your dad's were enabled by management who cared more about bottom line sales than understanding how to appropriately treat a supplier with limited volume.

I'm sorry this was the experience you had, but there are just as many talented, respectful, and generally honorable people that work there and I wouldn't want them to get lumped in with the scum. (Source, have worked at WM home office)


> That Wal-Mart is powerful enough to dictate the internal business practice and tech decisions of it's vendor.

Wal-Mart is pretty infamous for squeezing suppliers & vendors on price and operating procedures. Hard.


"It also is not unheard of for Wal-Mart to demand to examine the private financial records of a supplier, and to insist that its margins are too high and must be cut."

https://www.fastcompany.com/47593/wal-mart-you-dont-know


Sorry if this gets too tangential, but ... you ever notice how people are horrified by that, but at the same time actively advocate that the government use its "bargaining" (monopsony) power to force down drug prices, and believe the only downsides will be to drug company profits?


Probably because people consider small businesses (within a certain scale) to be indistinguishable from individuals. So, in both cases its the 'giant corporation' screwing over individuals. However with regards to healthcare, gouging people on prices is immoral. So its a different situation to a random retail product.


This is an incredibly facetious example. You have to remember that the drug companies have effective monopolies for many expensive drugs. Do you actually believe that the government should be forced (by legislation) to accept unilaterally decreed prices by drug companies? These prices are not set by any market, so they have no relation to the cost of the drug or the research & development that went into discovering it.


> You have to remember that the drug companies have effective monopolies for many expensive drugs.

I think it is funny that the people demand the government force companies to lower prices caused by the government granting a monopoly to said companies why way of the patent system....

How about we just end patents.


I mean there are plenty of reasons not to do that


The receiver of the surplus (Walmart vs consumers) is kinda important...


First of all, consumers get lower prices at Walmart, it doesn't just have the effect of higher profits.

Second, the real danger in both cases (though people only see it in one, hence my point) is that you're killing off the OEMs this way. No one wants to bring innovative new products to market if some monopsonist will just force them down to the mandated n% profits.


Nope.

1) Walmart doesn't pass savings to consumers, it passes them to shareholders, as they have a fiduciary obligation to do. The "lower prices" thing is just marketing; WM's prices aren't particularly low once they've driven away their competition.

2) If drug companies want to charge a R&D premium for bleeding-edge innovative products, that's fine. What's not fine is price gouging consumers for drugs they depend on to live, that are not innovative in 2017, and that are cheaply available in other countries, like the EpiPen.


Post-patent drugs usually have insane prices due to reasons outside of what can be effectively combatted by the bargaining power of universal healthcare (e.g. regulatory capture in the case of EpiPen). That tactic is rarely necessary once generics enter the mix, as long as nothing is artificially preventing them from getting to market.


Walmart does not in any way, shape, or form have an obligation to pass savings directly onto shareholders instead of reinvesting it in customer satisfaction.


As a publicly traded company, yes they do. Customer satisfaction only matters to the extent that it increases shareholder value.


> Customer satisfaction only matters to the extent that it increases shareholder value.

Which it does, so it is a completely valid option.

There is absolutely nothing forcing them to pick any particular use for the money. Both uses benefit the company in some way. Both uses are fine. It's not like they're burning it.


It may, it may not. If not lowering prices benefits shareholders more, then that is what they have to do.

>There is absolutely nothing forcing them to pick any particular use for the money.

Except this legal precedent right here:

https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.


Walmart sells cheap stuff, it doesn't sell stuff cheaply. There is a very important distinction.

It works hard to lower supplier and employee costs not to benefit consumers but to prop up their own margins.


Fair enough on the passthrough to consumers.


Good grace, these "business practices" are nasty. Thanks for the read.


Amazon does exactly the same thing though: http://www.newyorker.com/magazine/2014/02/17/cheap-words (focusing specifically on books, but they do it across all sectors)


When companies are able to do this, they should be broken up, period. Unfortunately we are in a system that's essentially the worst of capitalism with none of the good (and especially not with regulations), so there is no hope left and more jobs will migrate to China.

That's what Trump should tackle if he wants to stop job migration, but it seems like he's focused on anything but regulating BigCos.


Amazon has been forcing cheaper books back when it was mainly a book store. What do you do about something like that?

Back when Barnes and Noble was the big book store, same thing, they pressured better prices. What do you do, split up the book store into two companies, who still control the same market share and will both still put pressure on the book companies?

Last I read, Amazon mainly fights for cheaper kindle prices, because it's considerably cheaper to sell a 12 meg file than a 200 page physical book. Which I agree with publishers, only benefits Amazon and not entirely fair, but for the most part, not much ahs changed, most kindle copies are MAYBE a dollar less.


> Amazon has been forcing cheaper books back when it was mainly a book store. What do you do about something like that?

In Germany, book prices are regulated: the printer sets the price, and the price the customer pays must be this price. Only exception are damaged (e.g. books with CD-ROM, but the CD is missing) or used books.

The prices the retailers have to pay at the printer are of course different and may well be based on the # of books the retailer has purchased, but the system right now successfully prevents price wars. And yes, I am happy with that, because it ensures that authors get proper funding instead of having to fight for the scraps.

> Last I read, Amazon mainly fights for cheaper kindle prices, because it's considerably cheaper to sell a 12 meg file than a 200 page physical book

The printing and distribution costs of a book are not that high, once you have a significant enough mass of books. What Amazon wants to do here is squeeze the authors off their profit, and this must be prevented.

Books are culture, and culture must not be bowing to the demands of predatory capitalism or else we'll sooner or later live in a Idiocracy world with a movie called "*ss" the sole Oscar winner... (okay, that was an exaggeration, but still, it's a danger to culture!)


Copyright is the much larger "danger to culture". We invented it to try to keep artistic recompense safe, but like most idealistic propositions, the sharks have moved in and gamed it and now we are all worse off. Allowing anyone to make any type of contribution without fear of a crackdown from Big Legal leads to a much more prosperous culture.

This is already becoming reality as the internet has made traditional copyright completely unenforceable on the general population. For example, Adobe no longer sells Photoshop as a standalone unit, but as an ongoing subscription, which gives the impression that the vendor is an active participant in usage.


I've heard that the golden post-copyright era ushered in by the internet is coming for a long time, but all I've seen is indie game companies going out of business, games/applications including online features no matter how unnecessary, and much of Hollywood switching to a spitfire methodology. Not exactly advances for culture.


I don't mean that the internet will create unbounded prosperity for authors or creators. We can see that its effect is in fact the opposite (large companies are only somewhat isolated from this by their massive legal war chests and latent political clout, derived from employing a significant portion of a representative's constituency).

I mean that culture prospers more by allowing people to create and publish whatever iteration, derivation, or alteration they want than by ensuring a small group of well-moneyed "idea owners" can utilize the force of the state to monopolize significant cultural icons and stop people from going "too far" in their cultural iterations (that is, too likely to win the favor of the public as compared to the "owner's" offering; being too desirable and competitive).

The viability of establishing a revenue stream from this cultural lather is separate from the value or existence of a fertile culture itself. Creation will always occur. Copyright is just a matter of how far those creations are allowed to grow and/or spread before they get crushed by someone else's bank account (which can have chilling effects on the back-end, preventing the incubation of certain ideas due to uncomfortable legal risk, but it won't stop the ideas from germinating).

Culture is in a bad state when disseminating the wrong ideas in the wrong medium can result in the complete forfeiture of all earthly freedoms. If you sell T-shirts bearing Mickey Mouse's image without the permission of the "owner" of that cultural icon, you may very well find yourself not only deprived of your possessions through a costly legal battle (which you have lost before you begin), but potentially also deprived of your liberty when you're jailed for criminal copyright infringement. All because our concern for an active "culture" somehow translates into preventing derivatives, iterations, or improvements, blocking normal feedback and optimization processes and hopelessly distorting the market.

Fanfic authors have been sued for getting too close to the "owner's" trademarks. It's an entirely unnatural state of affairs and it stifles our cultural maturity.

Personally, I would suggest that people stop expecting passive IP-based revenue streams to cover them, because I don't think there is a lot of money in that down the road (because the internet makes it impossible to practically enforce copyright). You'll have to create a need for an ongoing service, paid for in small units, to get people to part with their money. Software vendors like Adobe have already accepted this.


I'm highly skeptical of the claim that printing and distribution costs are not that high. I get that they are not a high part of most publishers margins, but isn't that mainly because they have already invested in the infrastructure necessary to do these things. I would guess at a long timeline for deprecation write offs. This does not make them cheap, by any measure. (Indeed, just try printing a few thousand copies of a book personally, and see how small of a part of your margins this would be.)

Same is similarly true for ebook distribution. It isn't like the infrastructure to do that at scale is free, either. Both in technical of copying the bits around, and in the physical of authors/editors/etc.

However, I fail to see any way in which the advantages do not weigh in on the ebook side heavily.


> What Amazon wants to do here is squeeze the authors off their profit, and this must be prevented.

Authors typically get a 10-15% cut of print books. Amazon wants to squeeze the publishers off their profit. While they can be heavy-handed and exploitative, they are much less so than traditional publishing. It's not abnormal for an author to make more money of a $9.99 kindle sale than a $25 print sale.


While it seems ideal, I don't like the idea of consumer goods being regulated outside of groceries and other necessities.

My Raptor romance novel should not be 'regulated'.


I suspect the author of a successful novel hopes for some form of regulation to help guarantee revenue from the effort.


Can't that be said for every goods manufacturer? That would be like saying their needs to be regulation on the price of DVDs. Should we eliminate the 1 dollar DVD bin at WalMart now?


I've long wondered, with the rise of the internet, is prosecution really necessary to address unsavory business practices like these? Why not force the company into the light, posting this information in a useful form that informs the public and shames the malefactor?

I'm a strong proponent of open <EVERYTHING>. If shady behavior arises in business, government, public services, and even public discourse, I'd love to see a moderated form of public disclosure become the standard way to reveal and address such 'discrepancies'. Now that the 'net is ubiquitous, I don't see why age-old small town arbitration principles can't be applied to redress virtually all forms of grievance, as long as the public exchange is conducted decorously, as a judge or strict moderator rules could ensure.

IMO, the state of AI is getting pretty close to enabling this sort of moderator service, making it impossible for 'conduct unbecoming' to persist out of the public eye. What cellphone videos are doing to police/perp misbehavior ought to be possible for general business practices too.


> I'm a strong proponent of open <EVERYTHING>. If shady behavior arises in business, government, public services, and even public discourse, I'd love to see a moderated form of public disclosure become the standard way to reveal and address such 'discrepancies'. Now that the 'net is ubiquitous, I don't see why age-old small town arbitration principles can't be applied to redress virtually all forms of grievance, as long as the public exchange is conducted decorously, as a judge or strict moderator rules could ensure.

The problem is, there is no such thing as a moderated public exchange. Everything can be bought off, be it a journalist, a policeman or a judge. Mass media outside of countries with well-funded public media stations (think BBC or the German TV/radio stations) is always aligned to corporate interest, not to public/journalistic interest. And for what it's worth, state-funded journalism is often enough also subject to meddling by politicians.

> IMO, the state of AI is getting pretty close to enabling this sort of moderator service

lol even Facebook's content AI, which may very well be the strongest in moderating (Google's strength is lying more in content comprehension!) is not able to distinguish between an iconic Vietnam picture and child porn or remotely good at detecting propaganda. I certainly would not want the Facebook AI as a political moderator.


Because ultimately most people won't care enough to stop going with the cheaper option, especially when all you can point to is negative effects for vendors. It's not like Amazon is going around creating spurious libel lawsuits against people for publishing criticism of their business practices, or paying for people to muddy the waters with counter-articles. It's just that the information largely fall on deaf ears. I'm not sure what a judge or moderator would do when there's no real back and forth.

A lot of conduct unbecoming like this becomes public (Intel is a good example). How many people stopped buying their products even with literal judges finding them guilty of some particularly nasty anti-competitive practices?


> Because ultimately most people won't care enough to stop going with the cheaper option, especially when all you can point to is negative effects for vendors.

Indeed. If people could get cheaper clothing if slavery was made legal again, they'd do it in a heartbeat. Witness to a lesser extent the general sentiment on HN that Uber is "helping drivers", when they're indentured servants.

I wouldn't call it consumer excess when you're exploiting someone with limited options.


Honest question. How do companies in the US go about assessing the solvency and financial status of suppliers. In Sweden annual reports are public records for all limited companies, not only public companuee. How would US company determine that a supplier is solvent and not at risk of bankruptcy, which would be a risk to build into supply chains etc?


In the US, Dun & Bradstreet [1] is a company that attempts to provide a sort of "credit report" for both public and private companies of all sizes. Companies are required to have a DUNS number to do business with the government and it can act as a sort of unique ID.

However, like other credit agencies, it isn't infallible and is only as good as the information it is able to gather through information sharing agreements. They have also branched into the "Improve/Monitor your D&B score" business which is pretty shady. [2]

[Edit: We also have vendors require references if we are looking to establish a line of credit. We also provide references saying how much credit they have and how often they pay on time. It is a manual process.]

[1] http://www.dnb.com/ [2] https://www.dandb.com/ (See, their credit services are totally different! They use "and" instead of "&"!)


20 years ago my father ran a small business and routinely relied on D&B reports to provide insight into the creditworthiness of unknown suppliers or customers.

Of course investors and larger institutions use Standard & Poors and Moody's to provide credit ratings and background histories on public companies and their stocks and bonds.


A lot like this, as I understand it. Publicly traded companies have a fair bit of information generally available, but for a private supplier you might well demand some financials to establish enough confidence to pair with them.

What's distinctive here, I guess, is that Walmart has the weight to get that info and then start making demands instead of just deciding whether to trust the partner.


It's not like you are required to sell to Walmart. You can always refuse. Plenty of successful companies don't sell anything to Walmart.


The FastCompany article linked in the comments is interesting on that, though. (https://www.fastcompany.com/47593/wal-mart-you-dont-know)

In 2002, Walmart did more business than its next 6 grocery and general-good competitors combined. Something like that is presumably still true if you restrict to brick-and-mortar spending. If you sell something mass-market (e.g. pickles), a huge portion of all shopping happens at Walmart - you can get beaten by a competitor just for not playing ball with one retailer. Similarly, struggling companies can be saved by Walmart (e.g. Levis), but only if they concede to whatever Walmart demands.

I'm not going to take the anti-capitalist tack, here. When Walmart tells Levis to fix their supply chain and introduce products at a lower price point, that's how markets should work. They demanded reform, and that's what saved Levis - they might not even have needed to sell at Walmart if those changes had come sooner.

But the larger pattern is troubling. Walmart has so much power over smaller suppliers that it's like informal ownership - they're vertically integrating with none of the legal conditions or risk. And that helps them drive pretty serious ethical issues without ever taking direct action. Everything from monopoly creation to violation of labor laws to environmental devastation (mostly overseas) stems from Walmart's pricing demands.

They may not ask for anything unethical, but asking for a 5% price cut every year means something has to give. With such enormous legislative influence, they can bend laws and trade agreements to favor their model. With the freedom to change suppliers and limited legal accountability for their suppliers' actions, they can work with whoever's willing to behave worst, and give them a market that cripples everyone better behaved. So you don't have to sell for Walmart, but in a lot of industries you can expect to suffer for those scruples.


Suppliers are free to tell Walmart to stuff it.


"Free" in the sense that they have the 1st Amendment right to do so. Not in the sense that they actually can, especially once Walmart gets to be a significant customer to them.


How is that any different than any business that has one large customer?

And if you're creating a valuable product at a good price, then you have leverage over Walmart. If you're selling a commodity, then be prepared to get squeezed. That's how it should work.


No, that's not how it should work at all.


Really? So if someone else charges a lower price for the same product, I should be protected from a loss of business?

That goes against our entire economic system. We'd still be driving shitty expensive cars if that were true.


I recall a story about one vendor deciding it would be more profitable to separate from Wal-Mart and take the declining sales hit versus the dictated profit margin. I believe it was a lawn mower company?



Interesting read, though it would appear that's no longer the case: https://www.walmart.com/search/?query=Snapper&cat_id=5428_11...


But what happens a lot of times is that the US company will produce a low-cost version in China and sell that exclusively in Wal-Mart.

Not sure if this is the case with Snapper (article doesn't say), but that's typically how they get back into the stores.


Threads like this give me hope for this website. Thanks' to everyone for excellent morning reading.


I think concerns about Amazon becoming a monopoly are greatly exaggerated. They are getting attacked from all sides, by Microsoft in the cloud and Wal-Mart in ecommerce. As Microsoft grabs share from them in web services it'll reduce Amazon's ability to cross-subsidize its ecommerce business. As Wal-Mart and Costco continue to catch up in ecommerce and free two-day shipping becomes table stakes in ecommerce, Amazon's value proposition for Prime is going to diminish.


A few points in refutation. I see Amazon as far ahead of Walmart in all ways that promise growth:

1) Walmart may be the biggest retailer in the US, but they don't have half of the US homes as subscribers. Amazon Prime does. I doubt Walmart.com attracts any where near as many e-tail visitors as Amazon, and I suspect the gap is widening.

2) Amazon is decades ahead of Walmart in the online shopper experience. I grit my teeth each time I visit Walmart's website. It's slow and ugly and very clumsy to navigate or search. And it hasn't gotten better after years of this.

3) Walmart's products are mostly middle-to-down-market, even online, and that doesn't seem to have changed all that much even as they've grown their e-tail efforts. Try buying a nice watch or high-end stereo equipment there. No such ceiling applies to Amazon, probably because Amazon welcomes re-sellers (which can span all market niches), while Walmart doesn't.

So I think Walmart has a long way to go to compete equally with Amazon, and isn't a comparable threat as an all 'round monopoly.

And personally, I don't hate Amazon enough to object to a monopoly threat from them the way I do Walmart. I think ill-will does matter when it comes to federal action on anti-competition. If Microsoft were as despised as AT&T was in 1984, they would be in pieces today.


Try buying a nice watch or high-end stereo equipment there. No such ceiling applies to Amazon, probably because Amazon welcomes re-sellers (which can span all market niches), while Walmart doesn't.

Ha- as it happens I just bought a nice watch, today, and after perusing the options on Amazon I found the same watch I was about to buy direct from the retailer. However after considering the number of knock-off items I've received from Amazon, I simply refused to trust that the watch was authentic, and ended up paying more for the peace of mind that I got from buying it direct from the manufacturer.

Amazon's lack of quality control makes it impossible to trust them for expensive items that can be knocked off. It's funny that you say that Wal-Mart is middle-to-down market, because Amazon is where I buy my household staples and some consumer electronic items and cheap crap that I'm not overly concerned with the quality. Clothing, watches- pretty much anything of quality I look elsewhere.

That said, I do buy clothing from Zappos, and I think Wal-Mart made a smart move to acquire Bonobos to make a serious move into high-end apparel.


> 3) Walmart's products are mostly middle-to-down-market, even online, and that doesn't seem to have changed all that much even as they've grown their e-tail efforts. Try buying a nice watch or high-end stereo equipment there. No such ceiling applies to Amazon, probably because Amazon welcomes re-sellers (which can span all market niches), while Walmart doesn't.

Yes but I'm quite sure when I order something from walmart I'm getting the genuine article, not a knockoff dumped into the SKU bin by some shitty counterfitter


>> Amazon welcomes re-sellers (which can span all market niches), while Walmart doesn't.

This is false, You can sell things on walmart.com as a reseller

https://marketplace.walmart.com/

There are not many resellers doing it, no where near as many as Amazon but many large online shops are embracing the Amazon Model, Newegg does it now, Walmart, and a few others.

Amazon is also getting more aggressive with their resellers, putting in more restrictions, heavily favoring the Fulfilled by program where Amazon gets a larger cut, increase the number of blackout catagories, and increasing the number of items sold by Amazon directly which puts huge pricing pressure on Resellers that can not get the pricing amazon can.

Several Niche and some larger brand have pulled out of Amazon completely in the last couple of years for these (and the counterfeiting problem) issues


Walmart also launched jet.com


Walmart bought jet.com


Valid point. I don't know why techies always like trying to fuck over (or over scrutinize) the tech companies they know/hear most about, while many offline-first companies never appear on our radar..


Valid point. I don't know why hacker neswies always like to try and extrapolate the entire universe of a poster's discourse from the focus of one specific post.


calling criticism "fucking over" is laughable.


where is that pressure represented in this chart? AWS total revenue is less than a year's growth. Wal-Mart showing signs of desperation does not imply amazon's defeat.

http://static2.businessinsider.com/image/56abe654c08a80431d8...


I agree. Conceptually Amazon has competitors in every field. They just don't seem to be denting Amazon's growing control.


Well, that chart only goes to 2015. But in any case, ecommerce and web services are growing businesses, so naturally the growth has been huge looking back. But looking forward, Azure is presenting itself as a greater challenge to AWS each day and all retailers are getting smarter about ecommerce, taking cues from Amazon. Amazon has a huge lead in ecommerce and web services, but it's going to diminish. Prime video is a sinkhole of money. I get that they're using that to attract people to Prime, but it's a massive investment and if profits in other businesses start shrinking, they will be screwed.


That is also why Amazon is playing hard. The game is heating up, they're taking proactive action to not be at the mercy of these companies


Actually don't requirements like this that constrain vendor dealings outside of the two parties risk running afoul of existing "restraint of trade" antitrust laws? Or perhaps Wal-Mart is taking a calculated risk that this adminstration isn't going to pursue much along these lines anyway. Still it seems like Amazon itself could pursue damages directly if it desired (I'm no lawyer though..).


>Amazon is a massive immoral monster devouring the US economy and replacing it with something vaguely worse, year by year

Hasn't the same thing been said about Walmart?


Yes. And I'd agree.

To wax metaphorical, I'd rather the monsters devour each other while we race for a super-weapon to defeat all monsters and protect real people.

This situation where corporations are effectively replacing the state is not exactly what I had in mind when I said the world would be a better place with a diminished role of the State in individual life.


I like the term empath75 uses to describe this situation - 'corporate feudalism', because it really does feel like lords battling for power and influence, while an increasingly impotent state looks on doing little more than wagging its finger.


Counterpoint: I like shopping at Amazon. I used to work there too, but I liked it prior to working there, and continued to like it after I quit.

And I think it would be very difficult for a company to offer the level of convenience and good UX that Amazon does at a much smaller scale. For example, part of why they can get very fast shipping down to a reasonable price is their huge network of distribution centers + their size giving them leverage in negotiations with UPS/Fedex/et al.

If you split Amazon into a dozen smaller companies, the overall customer experience would likely be worse.


Could you elaborate on what you did mean by 'diminished role of the state', and what you imagined?


The only way you can prevent feudalism is by preventing accretion of power. Otherwise, it's a positive feedback loop through and through - the rich get richer, the powerful get more powerful. How exactly to do that is up for debate, and I see socialist democracy plus regulated capitalism as the most practical current answer. Unfortunately it's not a stable position and is prone to failing if any one side can't be kept in check by the others.


> Hasn't the same thing been said about Walmart?

I completely agree with it.

My hometown's retail business all goes to the Walmart super store on the outskirts of town. It's weird to be living in a Bruce Springsteen song.


Walmart is also perfectly happy to run companies out of business by playing dirty by purposefully playing with orders and inventory. Which they have done to Field Crest when they refused to outsource to their chosen Chinese factories


That second paragraph I have read in almost the same form about Wal-mart in the past.


I actually thought he wrote "Walmart" at the start. The same paragraph certainly applies to both, funnily enough.


I don't disagree with that assertion about Wal-Mart either. The only bright spot in this mess is that these two titans are limiting each other's growth while less outrageously sized entities try to work out how to not have their economies completely rewired without a chance to react.


> On the other hand, Amazon is a massive immoral monster devouring the US economy and replacing it with something vaguely worse, year by year. It's rapidly approaching a "too big to be allowed to fail" status, and that's awful for Americans. Since anti-trust laws weren't written by a generation able to envison entities like this and the current political climate is that they'd rather die than appear anti-business... I guess the only entities with the power to push back against Amazon are in fact the other major corporate vendors.

Could say the same thing about WalMart w/r/t local retail in rural America and now cities for the past 40 or so years...


This encapsulates my feelings so well. I feel like I am watching King Kong and Godzilla fight it out and I don't really know who to root for since they are both going to destroy Hong Kong when they are done with each other.


Wal-Mart is "powerful" but Amazon is "immoral"? Can you elaborate on how moral you think Wal-Mart is?


Also immoral. I didn't think I would be accused of a pro-Walmart stance in a post that lead off with "It is bad WM can do this."


This kind of hyperbole is absolutely and demonstrably absurd. What a disgrace that this is the top comment.


Simon Head wrote "Worse than Wal-Mart: Amazon’s sick brutality and secret history of ruthlessly intimidating workers" back in 2014, and if anything, it's gotten worse since then.

http://www.salon.com/2014/02/23/worse_than_wal_mart_amazons_...

It's not limited to warehouse workers, either. In 2015 Jodi Kantor and David Streitfeld of the New York times published an expose of the hard-charging environment at Amazon, with stories about employees reduced to tears at their desks.

https://www.nytimes.com/2015/08/16/technology/inside-amazon-...

That was so untrue, that Jeff Bezos felt the need to send out a memo stating how much he has never seen that side of Amazon, which, as CEO, of course he's never been mistreated by middle management.


The whole "people crying at their desks" thing was exaggerated and it varies a lot by team. I've worked there and now at Google, Google is much nicer obviously, but Amazon wasn't some dystopian nightmare as sometimes portrayed.

I'm also a mod at /r/cscareerquestions, Amazonians would chime in back when this was big news, but the vast majority were always like "yeah it exists but not my team".


I'm glad someone else brought this up. I've been on mobile and walking from site to site all morning and haven't had a chance.

Thank you.


> demonstrably absurd

Please do demonstrate how it is absurd.


> Amazon is a massive immoral monster

this should be enough

> devouring the US economy and replacing it with something vaguely worse, year by year.

Luddites repeat: automation, price reduction and job shifting isn't bad for the economy and it isn't worse either

> It's rapidly approaching a "too big to be allowed to fail" status, and that's awful for Americans.

Completely unsubstantiated. Surely it's one of the larger employees, but compared to automotive there are few satellites that lives because of the induced workload - if Ford closes, all subsidiaries and most vendor will close with it; if Amazon closes, the impact will be more limited.

> Since anti-trust laws weren't written by a generation able to envison entities like this

This is incredibly short sighted, since those were written at Rockefeller peak. Entities larger than this and more looming where at the order of the day, while Amazon has a load competitors and alternatives to fend off.

> the current political climate is that they'd rather die than appear anti-business...

This political climate endured for most USA history, with shortly timed bouts into centrism, hardly something current, hardly something that slowed down the USA economic growth. cfr - Europe.

> I guess the only entities with the power to push back against Amazon are in fact the other major corporate vendors.

That's ok tho, as in not a bad thing

All in all the whole claim is conflated hyperbole that's filtered by an unhistorical view of the current situation


"Luddites repeat: automation, price reduction and job shifting isn't bad for the economy and it isn't worse either"

You haven't proven that. And its entirely possible that it's not worse for the economy in general, but it's quite awful for segments of it. And given the current attitude toward the safety net in the US, once those jobs are gone, that's it for those people.


> quite awful for segments of it

I wish this would see wider acknowledgement.

Lump of Labor is a fallacy, people do find new jobs, and productivity does improve the economy. But none of that implies that the displaced people will be better off in the end!

Similarly, free trade agreements are economically efficient, and boost per-capita GDP. But even aside from implementation issues (i.e. agreements that go far beyond lowering tariffs), there's no particular reason that the extra money ends up benefiting the same people who get hit by outsourcing.

If anything, the studies I've seen say that being displaced by automation or outsourcing causes a permanent wage decline. The original Luddites were right - they probably saw lower wages for their entire lives thanks to automation.

Pretending that overall growth inherently means an economy which works better for the majority of people is frankly dishonest, especially (as you say) in a country so opposed to helping the displaced.


you haven't proven your point either, so it remains that the original claim was unsubstantiated, which is what I was trying to asses here


You weren't trying to assess it, you were trying to assert it.


ah thanks, those always give me trouble


I can see where your coming from. You essentially want to end a guaranteed participatory role in civil governance.

I think that's awful. You think you should have to fight and use substantial resources to have a say in how your life is lived. I do not share this belief.

But it's worth pulling at one string of your argument. Work is effectively mandatory for US citizens. You cannot handle any health crisis, or even eat and drink reliably, if you do not work. There is no notion of job retraining or security, and over half the citizens of the US make so little money that they effectively get subsidies from the government and don't pay taxes.

Removing these people's livelihoods without any opportunity for retraining is effectively ruining their lives. Automation threatens to do this without sharing the returns on automation with the work force it's displacing. That is an unacceptable outcome.


> I can see where your coming from. You essentially want to end a guaranteed participatory role in civil governance.

nope, but I see that's not stopping you to go ahead and make up things about me just to hijack a high post for your tirade about social security, to which I agree in principle, but furthers nothing the argument at hand


You love freedom of speech and an open marketplace except when you're on the sharp end of it, I see.


and again jumping to conclusion seems the national sport wherever you live.


Good luck in the marketplace of ideas.


Because it used words like "immoral monster" and "devour the economy" without actually backing any of it up with evidence.


Those statements are obviously opinions. The evidence that I think they are such is before you. You're welcome to disagree, but don't demand I prove a moral judgement has been made, that's just silly.


I welcome the discussion.


I don't attempt to reason with people who are unreasonable.


Can you expand a bit on your suggestion that Amazon is approaching a "too big to be allowed to fail" status? Are you speaking specifically about AWS?


AWS is definitely a worry, as increasingly it's the fabric american business is woven from. Shutting that down or raising its prices suddenly would severely disrupt US business.

But secondary effects of lost sales from vendors would almost certainly upend the vendor table and make goods very difficult to get ahold of. Amazon as a delivery service (and its smile boxes, ads for its own products on said boxes, and specialized delivery frameworks) is as much of an American institution as the post office now, and growing as it takes over its own delivery and logistics.


Amazon accounts for 43% of online sales currently.

But accounts for less than 5% of retail sales overall. Until they start hitting a bigger chunk of total sales, I would not consider them too big to fall. Walmart is too big to fall, as it litterally controls a bunch of local economies. If Amazon closed tomorrow, there would be a shitty time in Seattle, but people would just go to Ebay, Walmart, Etsy, and Alibaba.

If WalMart closed tomorrow, a good chunk of the southern states would run into a state of emergency because the unemployment rate would skyrocket, and there would be no companies to pick up the slack locally, so local economies all across the US would crash.

Many towns would lack groceries or supplies because WalMart is all they have after WalMart ran everyone else out of business. How many businesses has Amazon shut down across the entire US?


I've never heard of conglomerates being broken up, as long as they didn't have too much share of any single market.

Amazon may end up like Uber: forcing competitors to upgrade their technology, but not succeeding in stamping the competitors out entirely.


> I've never heard of conglomerates being broken up, as long as they didn't have too much share of any single market.

Maybe that should change. But... even if we take it at face value...

Name a company in the world that is competing at scale and cost with AWS.

In the US, Amazon is definitely nowhere near suffering a loss of customers from Google and Microsoft's offerings. and they're securing massive contracts with key institutions in the US.

There's 1 in China, I guess. That market isn't freely accessible.

Cloud services providers are a New Thing but a Thing which is absolutely critical to the world market. It's utterly unregulated right now, and that's pretty crazy given how much power it has. The only thing holding AWS rates in check is the threat of competition from 2 other American companies, and the hope of securing more critical telcom and bank contracts.


There are more than two competitors to AWS when you look at "cloud" in the broader sense. First, of the "major", in addition to Microsoft and Google, you have IBM. There is also Red Hat.

And beyond that, in terms of "simple VPS's" there are a TON of competitors and some of them are already starting to move "up the stack" by adding new features and services like object storage.

That's not to say that AWS isn't fairly dominant at the moment, but there is enough competition to keep them honest. See, for example, how they've had to continue to lower prices on a regular basis.


You may be interested in some history related to United Airlines [itself an agglomeration of many airlines], Pratt & Whitney, Boeing, Sikorsky Helicopters, and others, which all used to be part of the same organization. They were broken up.

https://en.wikipedia.org/wiki/United_Aircraft_and_Transport_...


Name a company in the world that is competing at scale and cost with AWS.

Azure has more locations, and is better than AWS is several areas.


Azure is a better service imho, but is it actually succeeding? I'd argue it is not, yet.


Better service? That is highly arguable.

What Azure and GCE both have over AWS is better performance and better cost. AWS on the other hand has more services that just work together. So you either choose ease of integration or better performance. My company chose ease of integration.

Example, Amazon owns its CDN, Amazon owns all its services. Everything is in house, developed to work together, and just works out of the box, and you are dependent only on AWS.

Azure CDN uses Akamai. So it's not entirely in house designed and built. So we are now reliant on two companies working smoothly together rather than just one keeping it together. Not a huge issue, but something my company also had to factor in on reliablity.

Same with SLA. AWS has a better up time than Azure and GCE.

Again, not to say these services are inferior, but to say Azure is a better service is a lie. Does it have better performance on networking and HDD side? Yes, but I will take slower performance over a better up time, every time.


> Better service? That is highly arguable.

You shouldn't ding me on voicing a clearly labeled opinion as an opinion.

> but to say Azure is a better service is a lie.

Like you did here. This is ridiculous. You have your value judgement, I have mine. They're different.


> Same with SLA. AWS has a better up time than Azure and GCE.

That's not necessarily true: https://www.theinformation.com/how-aws-stacks-up-against-riv...



It's not even in the same order of magnitude as the sales of AWS.


>"It shouldn't be a big surprise that there are cases in which we'd prefer our most sensitive data isn't sitting on a competitor's platform, " he said, adding that it's a "small number."

what is unreasonable about this? do you trust amazon?


It's not their data.


   Amazon is a massive immoral monster devouring the US economy and replacing it with something vaguely worse, year by year.
Not so long ago, people were saying exactly the same thing about Walmart.


And it's still true, at least in some parts of the country. There are places in the Midwest where Walmart is the only place a lot of people shop. There are towns in the southeast going broke in part because they're paying police to act as Walmart internal security.

But I suppose two battling monsters beat one rampaging monster, at least.


Because there was no Amazon to compare to at the time. Walmart's reach never once approached modern AZ's.


It just seems kind of petty to me. One senses a bit of bitterness on the part of Wal*Mart over this decision.


Read "immoral" as "immortal". Maybe that's more accurate.


vendor is free to enter in a relationship with WalMart. WalMart is free to dictate their terms, vendor too. No agreement, no deal, part ways.

Explain how this is wrong.


The "freedom" is purely notional if your other option is to go out of business.


Seems as if this is a reasonable request, which is being framed as an unreasonable one.

WalMart has asked a Data-Warehousing service (via its customer) to please not do what it does - data-warehouse internal information about sales, revenue, etc - on their retail-competitor's servers. Data which could give Amazon sensitive inside information on WalMart's operations and financials..

I dono if they've made other less-reasonable requests, but the example provided in the article is completely reasonable.

I always find it a ironic when I've interacted with startups which have a plan to bring some disruptive thing to market that potentially competes with Amazon or Google, and yet route all their data and communication through these platforms. :)


I don't use AWS, but it's not against their ToS to encrypt data at all stages, right? How does that not that solve this problem? I would hope that anyone using a cloud provider follows that practice.


Honest question, I apologize if it's stupid...

But how do you guarantee encryption at all stages such that Amazon cannot snoop it when you have to do final mile encryption on hardware controlled by Amazon?

I mean encryption for messenger services where each end is not controlled by a third-party is one thing...but how do you guarantee the third-party in control of the hardware responsible for performing the encryption isn't snooping?

The only thing I can think of (and again this isn't my strongest area) is to not handle any data on an Amazon server that isn't already encrypted...but how does that work if you are using a service like RDS or Redshift?

And even if you could work out a super complicated security-conscious solution...is it unreasonable for Walmart to not trust all it's vendors to take such extreme measures and therefore just create a general policy against the use of AWS?


You can't (and they don't promise) encryption such that AWS can't see everything, if they were in fact malicious. This is true of every cloud.

That said, it's not illegal for them to see that xxx vendor increased their storage costs/bandwidth costs by $yyy every month, and that you could look into it - without using one piece of encrypted data.

Disclosure: Former AWS


Thanks for the reply! Pretty much what I thought...just wasn't sure if the original comment knew of some process I wasn't familiar with that obviated my belief.


> This is true of every cloud.

It's true of anyone selling bare metal servers too, it is just harder to snoop but the technology exists to do so.


I was thinking client-side encryption and decryption, and if you need to run operations on the server, utilizing homomorphic encryption practices. Is this not feasible or just naive?


How do you stop the cloud provider from accessing ram or cpu cache. At some point the data has to be decrypted for it to be used. And if decrypted on Amazon equipment, then Amazon could in theory gain access to it.


They were saying all decryption would happen client side and the only operations done by the server would be ones where the server can operate on encrypted data and yield encrypted results. I suspect that the main sticking point in that plan would be that the current state of homomorphic encryption is fairly limited/slow, so if you need AWS for computation as opposed to storage, it's not a practical plan.


Yeah. AWS isn't the best for just plain old storage so I guess this just isn't quite feasible yet. I'm hopeful we'll figure out the fully-encrypted cloud within the decade.


I did some googling and came to the conclusion that homomorphic encryption is not quite as supported in consumer hardware as I had believed. I didn't even think about the CPU cache. I guess this remains an unsolved problem. If Walmart's motivations are truly that Amazon might peek into vendor data, then it's a reasonable request after all.


Is this because they actively want to discourage any revenue going Amazon's way from Wal-Mart related business activities, or because they don't trust Amazon not to look at the data hosted on their platform?

If the latter, then I think that's just extreme paranoia. If there was ANY evidence of Amazon doing that it would destroy everyones trust in AWS and I suspect people wouldn't be able to move away fast enough (Which actually long term would be good for Wal-Mart).


I think it's harsh to call it extreme paranoia. I've heard that one of the reasons Amazon won't use Slack for its chat is because it isn't self-hosted. I'm sure many major companies won't use Gmail. I don't think Slack or Google have done anything that suggests they'd mine their platforms for corporate espionage. Slack isn't even in the same industry as Amazon. Is Amazon paranoid?

According to the article, Walmart seems hesitant to support so much profit running to Amazon. While Amazon's retail business runs on razor thin margins, their cloud business reaps enormous profits. That means that the cloud business is helping Amazon put a lot of pressure on Walmart. Without it, would they be able to eat such thin to negative margins in the retail business or would they need to raise prices and make Walmart's offerings look better for consumers?

In the article, they note that AWS was 89% of Amazon's operating income. It's likely that Amazon's thin retail margins would bother investors if AWS wasn't raking in money. It's also likely that AWS margins are helping Amazon be more aggressive in retail.

Still, I don't think it would be more paranoid than most companies to avoid using a competitor's infrastructure at that size. Amazon will prefer self-hosing email rather than using Gmail regardless of assurances.

It's not even just about trusting that the competitor wouldn't actively decide to peek into your data. It's trusting that no one in that company would take a peek even though that the competitive data could give them a huge career boost. Let's say Amazon hosts their email with Gmail. You're a struggling middle-manager at Google Cloud who has seen some failures. Maybe peek at Amazon's email and see what their cloud plans might be and when you're able to get out in front of Amazon you amaze your colleagues - maybe you have to bribe someone with access.* It's not just trusting that Google doesn't want to do this.

*Now, I'm sure that Google has safeguards to make sure that employees can't do this (or it's at least hard), but the point is that you have to trust 1) the company, 2) the employees, and 3) procedures the company has put in place to prevent nefarious data access.


The story there is more complicated, and security plays a large part of it.

1) Slack uses AWS. While it's perfectly possible to operate without slack, chat services are valuable during outages. The kind of incident where it would be most valuable is precisely the kind of incident that would take it down. Communication services must be completely independent of the AWS infrastructure. Likewise, something like PagerDuty is effectively off limits. Though they've done a good job building resilience, PagerDuty have been affected by AWS outages.

2) Slack communication isn't encrypted end to end. While it may be stored encrypted at rest, it is stored in a method they can decrypt, read and analyse (inherent in the features they provide). Chat is filled with critical operational information, and (no matter how well you train people) passwords and other critically sensitive information. There's always an extremely slim chance that a rogue actor could choose to access information they shouldn't. That information is, also, potentially accessible to someone who might hack in and compromise the service. We've already seen Atlassian's hosted HipChat service compromised and some chats leaked. Slack has, arguably, an even bigger bullseye painted on it. (fun thought exercise: what damage could a malicious actor with access to yours slack channel do with your chat ops bots? How long would it take to stop them?)

3) feeding on from 2, to some degree, you don't control the security of hosted solutions. Audit compliance is a checklist game, it is perfectly possible to check every point on those checklists and still be inherently insecure. If you're even remotely paranoid, you've got to assume that anything you don't host will be compromised, and weigh up the risks associated, against the value and necessity of the service. Leaking operational information is a big, big risk. Amazon's security sets a high bar for paranoia. They are determined to never have a New York Times front page article "Amazon hack, credit card information stolen", or similar.

There's just no strong value in them switching to Slack, just a whole mass of unnecessary risks.


Isn't Slack on AWS? So effectively it is self-hosted for them :)

https://aws.amazon.com/solutions/case-studies/slack/


But AWS can't control Slacks security practices.

AWS also has many compliance certifications (HIPAA, FedRAMP etc), sending data outside your organisation may be a no-go from a compliance perspective.


I wouldn't call it extreme paranoia. Amazon has a pretty well established history of undermining business partners on the merchant side... why not competitors on the cloud side?

Competitive intelligence is a thing. For all you know, Proctor and Gamble has Amazon consultants in house, and those folks may well have access to information sensitive to WalMart.

Be careful about assuming rationality from the actors here. Lots of egos and competive people are at play here, and people will do incredibly dumb things to win.


> If there was ANY evidence of Amazon doing that it would destroy everyones trust in AWS and I suspect people wouldn't be able to move away fast enough

The major telecoms were all revealed to be giving American users' data, traffic, and communications directly to the NSA a few years ago. Did you move away from them? Did anybody you know?

As a historical reminder, those revelations were considered to be shocking at the time.


The latter. Amazon doesn't have to look at the data directly but only passively monitor their own server logs to get an idea of what is happening.


My guess is that they know that Amazon is using AWS profits to fund losses in the ecommerce business. If they can get some large retailers off AWS, that might reduce Amazon's ability to pour cash into ecommerce and hurt their margins.

It seems that a lot of people forget that Wal-Mart dwarfs Amazon in sales volume for companies like Procter and Gamble so probably have more leverage over them than most think.


But retail-oriented companies are just a percentage of the global market. I don't think Walmart really has the power it thinks it has. As a distributor, I'm sure they know very well how to bully their supply chain, they are used to being the biggest fish in their pond; but in the grand scheme of things, from an AWS perspective, that supply chain is not that massive. Every company doing business with Walmart could drop AWS tomorrow (if they even use it today, which is not a given, considering that their core businesses are likely not internet-first) and AWS would probably survive. Retail and manufacturing are just two sectors, there are plenty more.


Yeah, I don't disagree that AWS can survive without Procter and PepsiCo, but the point is that Wal-Mart is just trying to take a cut out of Amazon's bottom line (however large or small). This is becoming an all-out war between Wal-Mart and Amazon and I think Amazon feels more threatened by Wal-Mart than a lot of people think. For example, Amazon recently cut the minimum order size to $25 from $35 for free shipping in direct response to Wal-Mart reducing it's minimum to $35.

My guess has been that Amazon wants to continue to add value to the Prime program in the hopes that they can start to ratchet up the cost or create different classes of Prime to try and extract more profit. The more steps that competitors like Wal-Mart take to pressure Amazon's ability to cross-subsidize and raise the price of Prime, the harder it's going to be for Amazon to extend its lead in ecommerce.


It's not paranoia. An ex-Amazon manager told me fairly recently that they look at customer performance data (trends etc) when evaluating future business opportunities.

So once you start getting traction and customers, there's some internal product manager evaluating whether it's worth entering your market.


I highly doubt this. It would be extremely careless by Amazon to jeopardize their insanely-successful, industry-leading profit-machine with something so reckless.


I didn't even think this was debateable any longer. It absolutely happens on their retail side.

I don't think anyone will have a confirmed example of it happening to AWS customers - but if they are completely willing to destroy smaller vendors on the retail side with their own branded products, I can't imagine them saying AWS is where they draw the ethics line in the sand.

You could make a case for Netflix being an example on the AWS side, but I'd bet more on coincidence.

Amazon would be amazingly and utterly stupid if they were not analyzing their AWS service usage/traffic/spends by market vertical, and I'd imagine must more granular than that. That's simply to sell to people. It's not much of a leap to start using that data to direct internal development and identify unexpected areas of growth.


You are correct. They ABSOLUTELY monitor customer spend usage, without using one iota of personally identifiable information.


Just like it would be careless if the telecoms started sending your web traffic to governments. Or how careless it would be if Google started snooping into your email. Or how careless it would be if phone companies let someone else listen in on your calls and texts.

It's a good thing those never happened either.


Is this for real? Thats terrible.


It is undeniably terrible, But welcome to fortune 500 business practices. In this world you are seen as weak if you DONT do these things.


I worked on a WM project - they insisted on GCP instead of AWS so I think it's the former, unless they have some trust partnership with Google.


We have a WM project on azure, so I don't think it's the later.

But we also had issues with Amazon not wanting to run an appliance on vmware, so apparently it works both ways.


It's the first option. They are pretty intent on making sure their spending doesn't make its way back to their biggest competitor.


They certainly aren't the only major retailer to have an embargo against AWS because of Amazon's retail business.


Don't discount the latter option, corporate espionage is a very real thing that goes on far more often than people realize.

Of course im about to be shouted down by a bunch of posts with [citation needed], well guess what, the goal of business like this is to ensure that nobody can ever make such a citation.

There is a reason Google, Intel and Apple are extremely paranoid about their internal data, and Walmart too. Its no coincidence this goes hand in hand with being very successful and leaders in their field.


It doesn't even have to be anything nefarious. For example just tracking network traffic (amount, not content) would be a good signal for a competitor (like Amazon) to monitor. If supplier A started getting a lot more network traffic from Walmart IP addresses and supplier B less, then that's a tell that someone could be interested in.


The digital version of using satellites to count lorries in warehouse yards and cars in supermarket car parks.

Which also happens and is fascinating.


Apple, Google, Facebook, Microsoft, Walmart, and Amazon are all our clients, and Apple had strictest requirements of all of them. They want to guarantee that nobody is looking at their data.


  If there was ANY evidence of Amazon doing that
  it would destroy everyones trust in AWS
So if one insider with stock options notices another bending the rules, they're incentivised to cover it up rather than raise the alarm?


By the same token, if I were in Amazon's position, if I were to use the data, I'd make sure nobody knew about it. However, I'd then be in the unenviable position of the Enigma codebreakers, attempting to use information without the enemy knowing I had it.


Why would they take the risk to find out information about a competitor that they are destroying?


Because knowing when and where a trainload of toilet paper is showing up at Walmart gives Amazon stronger bargaining power and ability to hurt Walmart.

If they can add a penny to the earnings or take one away from Walmart, that means bonus and stock $$$.


And also puts them in the impossible position of having enough top-notch Xen developers that can code a Xen data interception module that runs in the hypervisor to snoop traffic in real-time from instances, while at the same time, expecting this team to keep quiet about it while also making sure that no other team members who aren't "in the know" don't stumble upon the spying code and reveal it.

They have to snoop the data from the hypervisor since the only place it's available decrypted is on the virtual machine processing the data.


Forgive me as I don't know xen that well, but...

Couldn't they just make a copy of the vm, isolate it, and then break into that one? sure the data will be "old", but not by a lot, and it would theoretically be undetectable.


That only gives them the data that's in-flight and already decrypted for processing, but any security conscious company will have their data segmented into many sections that are broken up into smaller pieces with their contents encrypted separately with a decryption key that's stored in a hardware HSM.

If they want to capture the entire data stream, they'll need to capture it in real-time.


A) I think you way overestimate the security practices of most companies. I have no knowledge of WM's practices.

B) That's likely still going to be a large amount of very usable data


Having worked at a bank that was moving some workloads to the cloud, I don't think I'm underestimating the security practices of companies that consider their company data to be valuable.

In the application I was working on, they had over a TB of data, broken up into 32MB blocks, each with a unique key that had to be unwrapped by the HSM. If you stole the VM you'd get only a few blocks of readable data with it.

I assume that if Walmart values this data, they'll take similar precautions in the cloud.


I'm not saying that there aren't companies that are responsible with their data. I'm saying I really disbelieve that the majority of companies treat their data this way. There's too many fly-by-night shops.

My point though, is that the attack is definitely feasible. I think WM has every right to be concerned.


> If the latter, then I think that's just extreme paranoia.

Why? Everyone knows that metadata count these days. Which AWS/Amazon has plenty of.


why not both?


>>or because they don't trust Amazon not to look at the data hosted on their platform?

It's been known before:

Battle of the Airlines: King 'backed dirty tricks': BA staff hacked into Virgin computers and poached passengers

http://www.independent.co.uk/news/battle-of-the-airlines-kin...


If it's the former, it's classic anti-competitive practices that merits anti-trust charges.


If Wal-Mart decrees this, put up or shut up. Welcome to business.

CEO Diktats about using not using competitor services for anything whatsoever, are as old as Microsoft. Wal-mart is not in the cloud business, so I can only wonder if, as others have commented, it is about data security in AWS domain, since Wal-Mart's main competitor is Amazon.

We know what Google and Facebook get up to with peoples data, why would Amazon not analyze or try similar to their customers? To have all that technical capability and not be curious about stuff would be a waste.

Finally, I think it would be great for everyone (except Amazon), if wal-mart got in to the cloud. Using their leverage to create cheaper cloud would benefit us all.


Peeking at competitor data would be a short term great idea, long term terrible idea. You do it once, you'll do it again. You do it too many times, someone will rat you out and now your losing customers fast.

Amazon may not be the most ethical company, but they've never been accused of short term thinking. It's just completely outside of what if expect from them.


Amazon is a collection of individuals. It only takes a small number of employees to circumvent the best protocols.


I'm sorry but that's ridiculous to say. If you had enough knowledge about AWS security practices to assert that, you'd know not to say it.


What about Amazon, a company, a collection of individuals, makes them better than other people?

Even groups with extremely stringent security protocols has trouble with people skirting security procedure. Consider the US Air Force who has control over a large collection of nuclear weapons. They have some of the most stringent procedures like Chain of Custody (any time a weapon changes hands a verified ledger is written to by the recipients and deliverers and sent elsewhere for archiving and oversight), Two person control (There are always two people with every weapon and every launch code container) and about a dozen other extreme procedures they still occasionally "lose" a nuclear fucking bomb.

The last time they lost one they accidentally left it loaded on an airplane on a low security runway. Any construction worker (which are always on every Military base) could have walked up to the plane and hauled off with it. Thankfully this didn't happen and hopefully runway security would have intervened, but this goes to show that as long as people are involved there can and will be mistakes.

To drive this point just a little harder, the Air Force has strong motive to not lose weapons and Amazon might have financial incentive to look on occasion.

I re-iterate, what about Amazon, a company, a collection of individuals, makes them better than other people?


So they have better security protocols than say the CIA? and yet they have leaks and issues. Generally any system has a person doing something and someone looking over their shoulder. If you get to both your system is compromised.


If you want to address this to Wal-mart Corp it might be better. They made a decision about some vendors using AWS, and there might be a very good reason behind it in relation to the comment above this. There may also be be a snotty CEO decision behind it. Who really knows?


Except that culturally, Amazon has tens of thousands of individuals who would look at you like you had two heads if you asked them to help do it. The culture of the company would reject it. Plus, there are entire security software teams dedicated to making doing things like this harder, or practically impossible.

If someone actually authorized snooping on customer data to get a competitive advantage, you'd know. I spent five years at Amazon, and if there's one thing they instilled in you it was customer obsession. Someone would leak that it had been done just out of spite of the exec who ordered such a violation of the culture.


It only takes a small number of individuals to tell them that they shall never peak at customer data again, assuming they are not laid off right away.


> We know what Google and Facebook get up to with peoples data, why would Amazon not analyze or try similar to their customers? To have all that technical capability and not be curious about stuff would be a waste.

Do Google, Amazon or Microsoft look at the data of their cloud offer clients?

I bet that if they do and it is know their business would go to hell


Agree totally. I would find it hard to believe, that large well financed companies, with some of the most technically capable staff on the planet, would have the restraint to not peek.


It's not just a matter of restraint. Large, well-financed companies can also afford to put some of their most capable staff on internal security.


> It's not just a matter of restraint. Large, well-financed companies can also afford to put some of their most capable staff on internal security.

So how come the VW fiasco didn't get caught years ago?


Orders from the top and a lack of activist employees?

It's not inevitable; much depends on employee culture.

On the other hand, look at Uber.


Right, so one cannot assume that these cloud providers have a golden heart and won't peak into our data. I don't see what stops them from peeking into the data, ensuring that the business dies and later just pay some "fine". Basically what MS did killing many companies unscrupulously.


True, but also a fairly recent Yahoo/email access incident, is a case in point where people decided to circumvent the entire security staff.


So you think Google, Amazon, Microsoft, Apple, etc spy the confidential data of their customers?


So .. you think they ... don't?


Until proven wrong, yes, I think they don't do that, there is no proof and it would be very silly to do that on EC2, Google Cloud or Azure.

Any hint that they could have been sneaking in confidential data of customers?


It's actually older than Microsoft. Just saying.


Sliced bread didn't seem appropriate. Especially not in these Gluten intolerant times. :p


Wal-mart has expected vendors to bow to its methods and policies for years, no matter how unreasonable or inconvenient. The carrot dangled in front of vendors: The possibility of massive nationwide sales.

Now they are dealing with a much more nimble and capable competitor. Yes, Amazon has its own unreasonable policies that squeeze vendors, but at least they have reasonable tech in place and they move fast when it comes to support and service. Case in point: Applying to be a third-party seller on Amazon takes days, Wal-mart Marketplace takes 6 weeks.

I am not sure if this latest Walmart policy reflects incompetence, misguided policy, dirty tricks, or a combination of the three, but it serves to push vendors away from Walmart and into Amazon's tight embrace.


Years ago I read The Wal-Mart Effect. Basically it was a whole slew of industries that Walmart had dramatically affected. Things like forcing vendors to manufacture in China and building a crazy infrastructure to get 'fresh' Salmon imported from Chile.

I got the impression they would turn the screws on industries to get cost savings via scale. This move seems odd.


FastCompany had an article back in 2003 about the Vlasic gallon jar of pickles. Sales to Walmart quickly eclipsed all their other channels. And then Walmart said "We want you to lower your price."

> For many suppliers, though, the only thing worse than doing business with Wal-Mart may be not doing business with Wal-Mart.

https://www.fastcompany.com/47593/wal-mart-you-dont-know


Great article. I wish they supported their thesis that shopping at Walmart is a self harming cycle that exports jobs. Maybe by focusing on small towns.


I know there's some complexity here, but let's just take a minute to marvel at the phenomena of Walmart complaining about another company's excessive dominance and potential to apply monopolistic power.


And then using its monopoly power to demand their suppliers take action against Amazon's monopoly power.

We really are slipping into the 1870s.


I dunno, sounds almost like competition when you put it that way.


Our economy is based on the idea that David can defeat Goliath. Seeing two Goliaths commanding armies of Davids into each other and calling it competition is a pretty strange corruption of that idea.


I don't think that's a very good analogy, but I'll bite. The economy doesn't really need David to have a good shot at defeating Goliath. It does need David and Goliath to compete on the same field, with the same rules, and for Goliath to not do things like corner the market on rocks. Of course, a pure market economy doesn't really have any rules like that, it's just that it can get pretty nasty if we don't have them (not to mention basic rules like 'no using babies as ammunition' and 'you're allowed to have an army, but you have to feed them').

We discovered this during the industrial revolution, and the modern liberal democracy and ideas around fair play, consumer protection, competition as an important mechanism in a market economy, etc. grew out of what we learned.

Unfortunately, for some bizarre reason, we seem to be systematically dismantling most of those protections, despite knowing exactly what's going to happen. (Hint: it rhymes with 'huge, uncontrollable corporate behemoths owning all the means of production, channels of communication, and legislative agendas').

Of course, every generation seems to have its insane economic ideas. My great-grandparents had Communism. We have whatever you call the squirming progeny of identity politics brutally inseminated by Reaganomics.


> Seeing two Goliaths commanding armies of Davids into each other and calling it competition is a pretty strange corruption of that idea.

But it is a better "military" tactic than an economy based on David defeating Goliath.


The idea that competition is some kind of holy grail which we must as a society aspire to maintain, I think, is very narrow minded and suffering from tunnel vision.


You don't have to see competition as some sort of "holy grail" in order to perceive it as almost invariably better than its absence (from a consumer perspective) in a market economy.


And to preempt a rejoinder, a market economy has proven invariably better than the alternative. Remember, the Soviet Union collapsed because nobody wanted to wear Bulgarian shoes.


There have been advances in economic planning since the time of the USSR, even during the time of the USSR research was being done on technocratic planning systems, however they were never realised, partially due to lack of sufficient hardware and Soviet bureaucracy. For a good read on modern methods, take a look at Paul Cockshott's Towards a New Socialism in which he proposes calculation in kind paired with linear programming methods.

It's worth noting that the USSR's model was also ridiculously inflexible, and the whole idea of a "5 year plan" probably sounded silly back then too.


It is my custom to use Amazon gift certificates at Coinstar machines to dispose of my extra coins, because in that case the coins are exchanged for free. (I have many extra coins, since I usually eschew credit cards.)

Wal-mart hosts many Coinstar machines, but I have yet to see one that will produce Amazon gift certificates. You have to go to Coinstars hosted at grocery stores for that. So, they have a contract with Coinstar that specifically mentions which firms may have gift certificates on Coinstar machines.

Who knows, this may be a boon for the grocery stores?


I think Amazon just stopped its collaboration with Coinstar, as it wasn't an option at the grocery store (HEB) machine I used last month.


I guess I haven't changed any coins in the last month, but I just looked at the Coinstar website listing for the kiosk I usually use, and "Amazon.com" is still listed as an "eGift" brand.


Some locations do, and some locations don't. Fortunately, you can check ahead of time by asking the Coinstar website which locations offer a specific gift card.

http://www.coinstar.com/KioskFinder?element=Partner&parmName...


Some banks will do this for free too. Maybe not as convenient, though.

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