About 10 years ago I met the head of IT for B&H cameras in NYC. Among many things, he was in charge of the hosting for their online store. After he complained about dealing with physical servers, I asked him if he had ever considered using AWS ec2 for the website, and he replied that his boss refused because he believed that Amazon would pull data on B&H products and use it to compete more effectively.
I'm not sure that Amazon would be able to pierce the veil of the hypervisor like that, but his instincts were in the correct direction.
> The is absolutely no veil between the hypervisor and the guest virtual machines. Not in the EBS either.
This is 100% true. To do any useful computation on your data (read, what you're using all AWS for) they have to have 100% visibility into your data.
> If they say they won't read your data, better trust them. If you don't, stay away from their datacenters.
That's it, right there. All of this is based on Trust in Amazon, not some technology that provides any assurances, much less proof, they're not looking at your data.
They can pull the curtain off anything you're running in their cloud, at any time they feel like it. It has to work this way for AWS to be of any use, and by using AWS you're implicitly trusting Amazon with your data.
This is a similar level of trust that you give to banks not to seize your money, or to your bodyguard not to do you physical harm. Stealing data from a customer paying for hosting would be _very_ different, and much more scandalous, than identifying trends on a competitive marketplace and taking advantage of them by launching competing products.
If a bank were to seize your money, you'd notice, because you wouldn't have that money anymore. And it would be very well documented, leaving a clear paper trail to a criminal conviction and a civil suit. If your bodyguard did you physical harm, you'd notice, because your knees would hurt. And there would be ample evidence for a criminal case. If amazon copied all your proprietary data, you would almost certainly never notice, no criminal law would apply, and you'd have a hell of a time proving it in a civil suit.
It's the difference between breaking into a Walmart with a ski mask and assault rifle and stealing a bunch of blu rays vs recording the HDMI out from whatever device you stream Netflix from. They're not the same thing at all, either in terms of harm done, applicable criminal law, or ability to build a compelling civil lawsuit.
> If amazon copied all your proprietary data, you would almost certainly never notice, no criminal law would apply, and you'd have a hell of a time proving it in a civil suit.
For a thought exercise, let's play this out.
Amazon copies data running through VMs (or grabs it from storage).
Let's assume it isn't on hardware certified for capital-letter processing [1], most of which require regular third party audits.
So they have your illegally-obtained data [2], which presumably they want to use to make money.
Except they can't leave any record of its source, in any documented form. This includes server logs, data transfers, emails about data, meeting minutes about data.
So they create some isolated network, run by a third party contractor, that transfers encrypted data from the taps to a store, then decrypts. All of which brings us to the most difficult part.
Who does... what with it?
The source data itself is radioactive. Who knows when "pricing strategy for company X" or obvious equivalent might pop up in the stream?
So you... what? Exclusively touch it via algorithm that outputs only aggregate information? How do you possibly code and maintain that pipeline, sight unseen?
All while risking an incredibly profitable business.
Or, you know, you just operate as an honest IaaS provider and make $10B in revenue / quarter with a 25% growth rate...
Sometimes you can learn a lot from the metadata without actually looking into the actual data stream. For example, if B&H was hosted on AWS, Amazon could deduce the effectiveness of their holiday sale tactics by looking at the overall page traffic, DB writes, etc. These metrics are already recorded by Amazon for billing purposes and someone stealing a glance at them would likely leave zero evidence.
I thought Amazon was already organizationally constructed in very small functional units which each are encouraged to export their units "interface" in an formal way. Is the source data traceable if it becomes anonymized product sales samples exported to apis that mix into a pile of legit data and all fed into some sales analysis engine?
The unit could be the "open sales modeling unit" that just supplies one data feed among thousands.
You overestimate the competency of short-sighted individuals anxiously striving for a seat closer to Bezos, ie thinking for themselves versus the organization. Ironically, I wonder if such news actually motivates some PMs to ask around...
> Except they can't leave any record of its source, in any documented form. This includes server logs, data transfers, emails about data, meeting minutes about data.
They can certainly take the risk. If crimes only happened when there was a 0% change of getting caught there would be no crime.
You're right that they are different, but maybe not as different as you think they are.
> If amazon copied all your proprietary data, you would almost certainly never notice, no criminal law would apply, and you'd have a hell of a time proving it in a civil suit.
If Amazon were doing this and profiting from it, that would essentially be a criminal conspiracy that reaches to the leadership of the company. Is it possible? Sure. Is it likely? I tend to think conspiracy theories are rarely true. Would it be caught? I believe it would likely be caught.
Companies get things done by having meetings, informing their hierarchy, and following executive decisions. In what meeting do you imagine this being discussed? Who floats this idea, and who signs off on it? I just don't see it happening. And if it does, I expect whistleblowers to put a stop to it.
Criminal conspiracies by corporate execs are not all uncommon in the history of business and presuming that you can't possibly run into one because you personally haven't is taking an unnecessary risk. One thing due diligence is supposed to look for is criminal behavior. This is not because they never find it.
This is even more fallacious- the only thing that unsourced opinion proves is that certain types of criminal conspiracies that are uncovered are deemed sensational enough to sell news services. It says nothing about the commonality of successfully covert conspiracies nor about the frequency of uncovered ones that are hard for the general public to understand/care about.
Oh what else can I think of off the top of my head? Uhhh...
That's all I can think of for right now. I mean we can hit the history books or case law to get a solid count I suppose, but to be frank, once a company hits a certain revenue point, it is pretty much guaranteed they've had to do something to get dirty/avoid getting outed as dirty.
So it really isn't that unusual. Throw in stuff that happened back before the rise of the Unions of the last century, and since their decline, and you also end up with so.e decent stories of workforce abuse. Though admittedly there's slant depending on who is telling it.
I know of a case of fraud in oil well lease payouts, someone was stealing a small from a large number of leases and had been doing so for years.
A company auditor caught it. Did they go to the police? No. They paid the guy to leave the company and never talk about it again. The guy might have stolen hundreds of thousands in the process, but the company knew they'd lose millions, just from clients demanding audits going decades back. It was easier and cheaper to cover up and never mention again.
Much like typical crimes, only a subsection of company malpractice comes into public view. There's a few major scandals per year from the largest and most publicly known companies.
The very least we can say is that company malpractice is more common than it appears, unless 100% of it is reported on.
You misunderstand. That is just what I keep in my head and have been accurately tracking and commiting to remembering in the last 5 or so years.
As has been mentioned as well is that governmental/regulatory apparata are typically starved of funding, so must limit their investigation/scrutiny to likely the most obvious cases.
Furthermore, if you've just entered into white collar circles these last few years, you may have been surprised at a tendency to not write things down. This isn't just people not realizing it is a good idea to do so, but a conscious decision in many cases due to eDiscovery, and the effects it has on provability in a court of law.
Pay attention on HN, and you'll get little snippets of other cases of "tribal skeletons" every now and again.
Anyway, by all means, I'm not necessarily arguing against your point; merely stating that given the sample size, and keeping in mind that regulators/the media can only dig up so much muck given limited manpower; it is not prudent to assume there isn't wrongdoing where no one has looked yet. I used to hold the same view you espouse; then I started A)cataloging things and B) noticed how often settlements seem to be applied with no admission of wrong doing.
Absence of evidence does not imply evidence of the non-existence thereof. You just haven't found it yet.
Can't believe I forgot about Wells Fargo, btw. That whole mess.
Mind that that's only the ones. I assume CFPB and other commissions have similar, but do keep in mind they can't be everywhere or investigate everyone. So without stats on how many actions are dropped by prosecutorial/investigator's discretion, it is actually difficult to make really solid claims as to the actual frequency of malfeasance. Further, from my social circle's anecdata, it seems to be a safe bet that just about every organization at least has something in the the way of "muck they've cleaned up after" without getting authorities involved.
as sibling comment author mentioned, look at dieselgate. it was huge conspiracy against emissikns regulations and they did it relatively well for multiple years. and it’s not like it’s simple hack in software. this solution required manufacturing additional special purpoce devices, adjusting assembly line, engineering and so on. definitely it must have some design stages, testing, actual implementaion done.
main thing here is that in big corps you can divide big (evil) task into smaller steps which could be defined as non-evil in isolation, and nobody in actual implementation people crowd would understand big picture.
For one, banks are far more regulated than Amazon is. If governments funded departments with 10s or 100s of thousands of employees monitoring and regulating cloud computing services, then it might be similar.
But the most significant difference is that if the bank seizes my money, I'll know about it pretty quickly and can respond. If Amazon sniffs through my commercial data, I'm unlikely to ever know. Most people are far more tempted to do wrong if they know if the chances of getting caught are miniscule.
Banks mightn't seize your money. They certainly take the data from your bank accounts and monetize/resell it. This is a dirty secret, and pervasive.
How else do you think "closed-loop" measurement of marketing effectiveness, and retargeting based on purchase behavior are done? How else do you think suppliers can pull a D&B report on your company showing your bank account balances?
Banks definitely seize your money. When I was a young teenager my parents encouraged me to put my lawn mowing money in a bank account. I had a total of $100.00! We went over to Bank of America and I opened up an account and deposited my hard earned cash. A month or two later I tried to withdraw some cash and was told I had no money. My full $100.00 had been consumed by insufficient balance fees.
A valuable if painful lesson to learn. I still do all my personal banking with a credit union and consider my relationship with banks to be adversarial. They only own my debt, never my cash.
Actually it's not _that_ uncommon for guards to be involved into the business of braking in into high profit buildings. At least in countries with partially undermined police/law systems. Which sadly applies to most countries of the world even first world countries where people normally don't think about it.
Or your commercial landlord to not send the cleaning staff to rummage around in your filing cabinets. Which, while it could happen, is something that people don't really seem to get concerned about.
Don’t let anyone chastise you for this. Most desk locks are easy to pick. Also, there are like 3 keys to have on your keychain to open like 80% of all manufactured locks like the ones in furniture. Deviant Ulam, a pen tester, gives a lot of talks on this topic.
I pick my battles, I’m not going to complain about a policy unless I think it could really hurt people. If I complained about everything i think is dumb, I’d never be able to keep a job, because most of it seems dumb to me.
No the reason for these types of structures is simply to prevent passive leaks of information which is a far more common occurrence. Any large business is frequently visited by vendors and agencies who also work with others in the industry.
Similarly, if you're presenting externally, it's a good idea to close open applications that are not relevant to prevent info leaks from Alt-Tabbing.
Actually having a competitor pay someone to come into your office to pick locks etc. is rare, comes with criminal liability and is easily detectable on security cameras.
Most "crimes" of this sort would be stopped by simply locking the drawer. Nobody believes that a simple desk lock would keep out a determined attacker.
> This is a similar level of trust that you give to banks not to seize your money, or to your bodyguard not to do you physical harm.
That's not true. I surely don't trust banks, but at least they're regulated to the point that they have to come up with some legal pretense for seizing my funds. A bodyguard is ostensibly a person who I've incentivized more than the competition to not harm me, and who I probably form a relationship with over time. None of these things are true of Amazon.
> Stealing data from a customer paying for hosting would be _very_ different, and much more scandalous, than identifying trends on a competitive marketplace and taking advantage of them by launching competing products.
What part of using data that you have on your competitors but they don't have on you, to sell competing products on a platform where you don't have to pay fees but they do, sounds like a competitive marketplace?
I don't disagree with any of what you've said. I just think that many people are ignorant of that being the case with Amazon, Facebook, Google, etc because they assume 'Well Technology must have solved that'.
Then again, compared to the average bear, maybe I'm unusually circumspect when it comes to all of those things.
If for example I'm fully on amazon AWS for everything, DNS/DB/Web then no matter how encrypted your data is Amazon still has a very good idea of the effectiveness of your campaign. You can't hide the number of DNS queries. You can't hide the number of TCP SYNs. Hell, there is just a huge amount of things that encryption does not cover up, especially involving time for particular transactions to occur.
Don’t be obtuse. Observing some encrypted traffic going in and out gives away some info, but it’s nothing like the email addresses, addresses, names, and order history of all of your customers.
Amazon, if they wanted, could read stats from Netflix’s database about which movies drive the most engagement and use that to determine what to license for Prime video.
It’s the difference between root on the server and capturing encrypted packets on a network.
How about snooping the traffic through a load balancer service managed by AWS? That's exactly 'identifying trends on a competitive marketplace and taking advantage of them by launching competing product', except that instead of looking at sales data of products on your shelves, you look at URL access patterns for sites hosted on your platform.
If AWS used Intel SGX, then it would be possible for them to offer VMs that ran inside of a secure enclave that AWS could not peer into as long as Intel didn't give them a backdoor.
(Well, it seems like SGX is insecure right now with all of the CPU vulnerabilities, but in principle it may be fixed in a future generation and be well-suited for this.)
The fact that you wouldn't have to trust your host specifically could have a real decentralizing effect for cloud hosting: people would be able to run stuff on any cloud host without needing to trust them much. If you just wanted compute power and didn't care about strong uptime/connectivity, you could even safely rent cheap VMs on computers of random individuals.
I'm aware, but thanks for posting nevertheless. I've actually read Gentry's thesis. Last I looked into FHE though it was something like 14 times to 100 times as inefficient (either in time or space depending on the scheme) as operating on unencrypted data.
Now things may have changed since then, but I'd imagine it's not yet gotten down to 1.X inefficiency multiplier regardless of the FHE scheme you're using.
That would increase their computation costs by a fair bit, it would be more expensive to run the same amount of computation on their cloud using fully homomorphic encryption, even without taking the engineering costs on your side into account.
Which is why a company operating cloud computing should just do that and nothing else. (And a company producing phones should also just do that and not start competing on the app marked. etc.)
Except huge tech companies are incentivized to vertically integrate into selling their extra datacenter capacity. From there it's just an economies of scale game that a pure cloud company will have difficulty keeping up with (not saying it's impossible).
As for talking to journalists, I didn't leave with any ill will and don't want to complicate my life. I personally know a friend who got involved with journalists... his past employer came to know about it, sued him... and he became almost unemployable in the valley.
> ... his past employer came to know about it, sued him... and he became almost unemployable in the valley.
You might have a family to protect. A home to maintain, etc. I understand. It's scary. But the world doesn't and cannot change for the better if we let corporations bully us into silence. The world will and does change when brave individuals, with the support of society, stand up and blow the whistle.
Lol exactly what support will you be providing? Will you contribute to paying this person's salary for the next 10 years? I wish people would quit with the empty platitudes and the rhetoric.
You should consider going to Project Veritas. They stand by their sources. Maybe it's not as likely to be published if you don't have video footage to back up your story, i don't know... but still it's worth trying. I understand wanting to play it safe though...
They poached because it was a lucrative business. AWS’ sales pitch was that their service was so much better integrated with the underlying infra. Also, they priced out the competition and offered generous discount for bundling with additional AWS services.
This amazes me it's so much easier at that scale to deal with 6-10 boxes vs all the crap that comes with AWS. Don't want to deal with managing them there are companies that will do it for you and you will have an actual on call people that are accountable to you. Unless you are doing 6+ figures a month in AWS spend have fun trying to have same level of service.
I’m a big believer in use cases that fit on-prem solutions like that. But you’re dreaming if you think a 6-10 box operation is going to come close to the same service levels as AWS, and if you want to replicate the developer experiences that you can achieve on AWS, you’re going to have to devote a lot of resource to it. Whether scaling works well on-prem depends entirely on your scaling requirements. If you have bursty loads, or sudden increases in utilization, then scaling is going to be painful, because it will require hardware procurement, which is a slow process. There’s situations where it makes sense, but there’s way more factors than you’re considering in this comment, and you’ve completely misrepresented what the trade offs are.
I am not only not dreaming I've being running workloads like that for a long time. Both in cloud and colo. If it's my money sanity or ass on the line colo is my strong pref. I def. do not want to replicate developer experience of AWS in Colo as AWS has s ton more moving pieces which are black boxes and have arbitrary limits. Scaling is a disingenuous point for most e-commerce apps as you generally have RDBMS that do not scale horizontally so cloud or no cloud your bottleneck is the same. The price point at which say Spanner would outperform a cluster of RDBMS on high end boxes is way south of 100K/month and no of the shelf e-commerce software would support it anyway.
Say you completely ignore scaling. The two things you simply cannot replicate at that scale are redundancy and operational resource. AWS has their entire operations team working at all hours of the day and night supporting their infrastructure. They also offer some of the most highly redundant services in the world. There is simply no way you could ever dream of replicating those service levels with such a small operation, and if you were to even attempt it, it would require an absurd level of over provisioning. As I said, you’re completely misrepresenting what the actual trade offs are, and there’s no possible way your claims about replicating AWS service levels is even remotely plausible.
> AWS has their entire operations team working at all hours of the day and night supporting their infrastructure. They also offer some of the most highly redundant services in the world.
And yet, a couple times a year perhaps, we have discussions right here on HN about the latest AWS outage that took down half the Internet.
No group is infallible. If I thought about a world where cloud providers didn't exist (AWS or otherwise), where every company had to build and maintain all of their infrastructure themselves, and had to make a guess, I'd wager the combined occurrences of issues around availability, durability, etc. would far outpace what we have had.
That's not even considering the potential impact to software development and innovation that we get with commodity cloud services. This is hand-wavy of course but I'd stick to it.
You mean the incident where a small percentage of EC2 instances were unavailable for 30 minutes in a single AZ in US East 1? I see your definition of major incident is pretty loose. I remember that incident. I had services running there. It was so minor that my auto-scaling picked it up and my service impact was nothing.
AWS has amazing marketing the truth of the matter is AWS Region has worse downtime than a single top tier DC. Mainly due to nightmarish complexity of their control layer. They had outages that lasted many hours in a row multiple times. You need to carefully separate marketing claims from operational reality and actual track record. When US East has major issues there is not enough spare capacity to spin up everything that was running there in other regions.
with high availability you don’t wait for an outage to spin up new resources, at that point it’s too late. it’s by definition not highly available and if you build infrastructure this way then you can’t blame AWS for an outage
So you have say 3 Region deployment are you saying that you are running 50% more instances than you need in 2 regions that are not US East to make sure you will have capacity when US East goes down :) ? I somehow seriously doubt that.
so you’re suggesting entire regions go down at once or one of the AZs? An entire region doesn’t go down. So again, you are not building for high availability.
i don’t remember seeing us-east go down in its entirely. show me supporting evidence or this is FUD. multiple DCs physically separated, different flood planes make up a region. it’s not easy to down an entire region. the biggest event they had, the S3 one you’re talking about, effected only 2 AZs and didn’t allow new EC2 instances to start and iirc some EC2 instances failed as well. this is a far cry from the entirely of us-east having an outage.
Amazon has some of the best uptime in the world, especially for basic services like EC2, even if you’re only considering the least reliable regions like US East. Their last major event was in 2017. There are few providers in the world that can compete with them in that respect, and there’s nothing that you or I or anybody else could build with 6-10 servers that could come close. If you were planning to try exceed their service levels yourself, there is no conceivable use case where a small to medium sized company could justify the requisite expenses to provide the redundancy and operational coverage necessary. What you are actually talking about is that you can meet your own needs without AWS, which is entirely plausible, but completely different from the absurd claims that you can build a low budget infrastructure that exceeds their service levels. That claim is so ridiculous, you might as well be saying that you can make a car faster than Toyota can, or that you can run a two minute mile.
Our AWS monthly spend is deep 7 figures over the last 10 years our colo projects had better uptime than AWS US East. You keep living in the marketing bubble for AWS.
There’s a few confounding factors to address before you get to the believability of the claims (which are remarkably dubious). For starters they’ve only spoken about the AWS region which is least reliable by design (as it is the first to receive new features), and they’re talking about a 10 year time span (AWS in 2010 was much less reliable than it is today). It’s also not really clear what they’re talking about when they say AWS. If it’s just the core features you’d need to forklift an on-prem service into the cloud, then the claims are especially frivolous, but the SLA difference between EC2 and AWS Ground Station is more than an order of magnitude.
Even if their claims are true (which I certainly don’t believe they are), you’d be more likely to get better uptime than EC2 with a small on-prem setup through dumb luck rather than through deliberate planning. Something still has to go wrong for you to have an outage, and you’re more likely to get an incredible lucky streak than you are to outperform their entire AWS infrastructure capability with a few people and half a rack of servers.
There’s a terrible amount more information you’re missing here. What services were you using that went down? (not what services went down, how were you affected) What is your availability for your DC? it seems you’re being light in the details and perhaps there’s a reason why.
The CDN will be fronting most of the load, behind that 10 decently specced servers running sanely architected code can scale to millions, if not tens of millions of requests per second.
Drop the servers in HA sets of 2-3 nodes across 3-4 regions, anycast your service endpoint from each cluster. The hardest thing to replicate without AWS is the 6-7 figure bills.
What you’re describing is “good enough service levels for what I need” not “the same level of service as AWS” (or a superior level, as the parent comment implied).
If some sanely architected code was all you needed, then you’d expect at least other cloud/IaaS providers to be able to match AWS service levels. Which they can’t, and which some little software shop most certainly cannot either.
So what do you do when you are featured on CNN or whatever and you need to scale up massively in a matter of minutes? Do you just let all those sales go?
I think that’s less about being afraid that Amazon will steal their data, and more that they don’t want to give any money to an entity already steamrolling them
Some are legitimately afraid that AWS will deprive them of the ability to scale during peak times, like holiday shopping seasons. I've heard claims of this happening to more than one retailer.
Personally, I wonder if that isn't an emergent property of a lot of people trying to scale at once.
I'm honesty curious what crime this would be. If I rent time on someone else's server, and they look at what I'm doing on that server, what illegal thing has happened?
AWS terms do not assign their customers any rights to any physical computer. And the AWS customer agreement gives Amazon the authority to access your data for certain purposes.
I'm not sure I've ever heard of anyone prosecuted under the CFAA for accessing a computer that they physically own and physically control. AWS is a service, not a computer rental.
> We will not access or use Your Content except as necessary to maintain or provide the Service Offerings, or as necessary to comply with the law or a binding order of a governmental body.
The CFAA uses wording like "exceeds authorized access", which Amazon would absolutely be guilty of if they went into your database to spy on your product listings.
If they could go after Aaron Swartz for using authorized access in an unauthorized way, it seems likely it could be applied here.
"One reason we could charge the price we did for the service is that we were treating the data we had access to as an investment. Thus the data we accessed was done so to ensure the service could be maintained."
Would a judge accept that argument? From me? No. From the lawyers Amazon can afford? I wouldn't be comfortable betting either way.
A reminder that the legal system is designed to serve the wealthy, and few are wealthier than Amazon. It's not absolute, but the little guy isn't going to walk away with Bezo's fortune in damages.
> In practice, any ordinary computer has come under the jurisdiction of the law, including cellphones, due to the interstate nature of most Internet communication.
If I buy my spouse a phone, and secretly bug it, I'm still violating wiretap laws, even if it's technically mine.
If I'm renting an apartment, my landlord can't install a camera in the bathroom, even if they're the owner of the building.
Ownership doesn't change the fact that the law says "exceeds authorized access". Amazon agrees to only access the computer I'm renting from them in very specific scenarios. If they violate that, it looks like a pretty clear CFAA violation.
Huh, WTF?! Your FBI used to railroad random kiddies for messing around with poorly programmed dynamic pages and now you’re arguing there’s nothing wrong if a hosting provider trespasses and mines your private property?!
The rules the FBI/DoJ applies to kids on irc are not the same rules the FBI/DoJ applies to multibilliondollar infrastructure companies and/or trusted military defense contractors (Amazon is both).
Equal protection or application of computer crime law (perhaps, any law) in the USA is a fiction. It would be practically illegal to invent and run a web spider today, for instance, if they didn’t already exist as a concept. (France recently decided this was true for news link aggregation; Google must pay the newspapers for reproducing their headlines. I’m glad hosted RSS readers aren’t outlawed so far, but under these sorts of restrictive legal interpretations you could see how they might be. Google doing AMP, of course, gets a free pass.)
If you don’t believe me about the web spider thing, try making a complete download of Twitter for the purpose of making a tweet search index and see if you get to continue owning your house. (My theory is that Clearview is allowed to do it for Instagram because they’re using the database to provide services to law enforcement/military, so those groups want it to continue to exist free of prosecution.)
Bummer that actively collaborating with violent types like pigs and military seems to be the only way to avoid jail if you want to build large novel data systems with interesting public datasets today. This sort of freedom to experiment with new/neat algorithms over published documents got us Google; today these same companies will get you raided if you dare download/index their data. (Facebook’s idea famously started out scraping public yearbook photos. Try scraping Facebook now.)
Amazon owns the computer and grants you limited rights to use it, in exchange for the money you pay them. It's basically the opposite of a script kiddie hacking into someone else's web server.
Now, indiscriminate access to your content might violate whatever commitments Amazon made to you in their terms of service; I have not read them for a long time and can't remember what the language is specifically. But that would not be a matter for the FBI.
Assuming that the information would be behind at least a password entrance that a user had setup, Amazon breaking through that would be considered illegal unless they had a court order or something. They can peer into metadata that your machine creates but I think looking at private information on a server that they lease out would be illegal. Maybe I'm just hopeful?
I love B&H, we planned family holidays from the UK specifically around buying from this shop. When the $/£ exchange was healthier we got some real bargains!
At the very least, they own your IP traffic. From there, every single value-add service you use gives them an opportunity to eavesdrop your data. Take, for example, https://aws.amazon.com/elasticloadbalancing. All of the sudden your URL traffic is 'fair' game.
Hold up one second. Is this something that they're actually open to doing? Surely part of their ToS isn't about stealing data on their physical infrastructure to enable other aspects of their business. Right? Has any data centre ever done this?
Imagine if amazon has as much ad presence as google or fb. If they're able to identify you as a business of interest and identify your key employees you're pretty much f'd unless they have adblockers and even that might not be enough
Christ, this thought is terrifying. If any company would be this shady it would be Amazon, and they have the greatest market share. And other commenters here make it sound like it's not even clearly illegal.
The one point of solace is that there's a lot of competition out there for web hosting.
Just did a tracert to their website. After hitting b-h-photo-v.ear1.newark1.level3.net it goes through a couple routers on an IP block they own before hitting their IP.
They have 100% hypervisor access. To give them zero knowledge, you need full homomorphic encryption which is impractical at this point (and likely for a while).
You may trust them not to abuse hypervisor access, but they still have network “meta” data - it could tell them how many transactions clear against credit processors (though not the actual amounts if encrypted), a good idea general distribution of page views With respect to time and user ip (though not the exact pages), times of day, demographics of users (Geo locations and ISPs, for example)
If you don’t trust them not to peek at what they can, don’t use them. He is perfectly right.
There are other cloud providers who aren’t competing with B&H and would be a better choice. But amazon is a direct competitor to B&H, even if they do have an IT barrier - they cross subsidize; any $ paid to Amazon helps it against B&H.
If any decryption of your data occurs on AWS hardware (i.e. if your software in AWS has access to your unencrypted data), then wouldn't AWS also have access to it if they wanted? Even with encrypted volumes, etc, the decrypted data is present in memory, AWS controls the box with the memory in it.
Yep, this is how computers work. Not saying this to be snarky, just... it's surprising how many people don't know this. And when I say 'people' I mean 'Professional Software Engineers with Years of Experience in the Industry'
This is the exact reason why Shopify grew rapidly. Sellers knew they needed a platform where they own the data and could abstract the operations outside of Amazon seller dashboard.
People also forget that Amazon doesn't have to pay to advertise its own products, but 3rd party sellers do. This immediately puts you at a disadvantage if you want your product at the top since you pay seller commission and advertising fees to Amazon. Next time you want to buy something from Amazon, I would encourage you to find the seller's website directly or find them on eBay. eBay charges less seller fees and is not in the business of selling products directly.
With Shopify you don't pay ~20% sales commission to Amazon per se, but you sure as heck will end up paying for that if not more to Facebook.
Where by FB has no direct incentive, yet. It could be a FB Marketplace PM team someone has already copied Shopify outright and is just waiting for the right time to roll that out to all FB user worldwide.
With Amazon Marketplace the strategy has always been to convert customers off that platform into your own.
Most top listings in most niches/categories are priced for break even inclusive of the multitudes of keyword PPC campaigns they're running with the hope that you leave a review and that you actually pay attention to the little postcard that comes inside the package asking you to register your email address.
I think Shopify should experiment with a centralized market place where stores can opt in. If you opt in, your store items are listed in a central location searchable in at single point, just like Amazon. Your item listing in the central market place merely directs you to YOUR branded store, allowing you to check out, and see your other products. That solves a huge problem of visibility that Amazon has mastered.
The reason they don't do this is a legal one. As a platform, they are not liable for what their sellers sell (copyright/trademark/counterfeit), but as a marketplace they would have deeper liability. A central marketplace also gives brands the ability to search through all Shopify stores, basically giving them a search engine to find infringement.
How do I know this? 10 years in ecommerce with a different ecomm platform.
I’m not sure it would be easy. Large hosting platforms like GoDaddy, Wix or Squarespace could try this too, but it puts you inherently at odds with your own customers.
If I pay you to host my site where I sell my products, but you index me into the central sales portal in a bad way, I’ll be pissed. Kind of like restaurants on Seamless.
It comes off as deep rent seeking - instead of helping me succeed, which is the real mission of most of these types of companies, you’re creating an artificially scarce resource (visibility within your central sales index) where now I have to pay you an arbitrary tax just to compete.
But I propose it as opt-in. If you don't want in, you aren't. It would also be entirely free, Shopify makes money on the transactions, so there are no ads but they have incentive to make you visible. I don't see how this is a negative in any way for anyone. Your store still exists in its own container, and the portal is just to drive sales to you by increasing your visibility. You could theoretically carry on your business as if this never existed within Shopify. It is basically just a giant search engine that only works across the Shopify network. If Shopify won't do it, I am near willing to bet this business model is eventually put together by someone. Wordpress.com kind of does it...but it's only with content and they don't make money on transactions. They key is that there are no ads, it's a pure search engine, the money is made from the new transaction/hosting.
GoDaddy, Wix and Squarespace couldn't really afford to do it because they aren't e-commerce focused.
This can’t be true, since no matter how you create the central sales channel, some sellers will get preferential treatment in terms of screen placement, appearance in search results, etc. Shopify could not pay the costs of operating and advertising that central channel unless the most successful businesses are placed more prominently and lead to higher conversions of some kind (sellers converting, leading to less churn or more subscribers, etc.). But every Shopify customer will want that - so who gets it? If you do nothing and “the rich get richer” and there’s no way for an outsider to break into the better display rankings of the sales channel, you’ll just alienate customers and see a huge drop in new subscribers. This is often a big problem for ecommerce companies that facilitate online sales portals like Amazon, eBay, Etsy, and even more niche things like Shutterstock.
You either “democratically” allow customers to pay for placement in your central product index, or you force customers to pay via lost business and lost opportunity, which they’ll be embittered by. But there’s no such thing as a “free” way to centrally index across all hosted subscribers.
> “GoDaddy, Wix and Squarespace couldn't really afford to do it because they aren't e-commerce focused.”
I think you are very unfamiliar with the hosting industry. All three of those businesses make the strong majority of revenue from subscribers of ecommerce plans and all three have huge platform offerings and nationwide advertising campaigns targeted specifically at ecommerce customers.
All three of them practically only exist (in terms of revenue) because they are a good hosting option for small businesses that sell online.
It's a very slippery slope. The portal is gonna cost money to create, and have a lot of brand value in itself. How could you ever trust that they were never gonna start charging for the portal? Or leaning on you to list in the portal.
Shopify already has sales channels that users can tap into like Amazon and eBay. If they themselves build a marketplace, I'm sure those channels will opt out.
Another advantage to eBay and independent shops is that shipping is typically much faster than Amazon since the pandemic has caused Amazon’s shipping times to explode.
It's linked to Catalog Manager, which is a third class citizen in the FB ecosystem that they're shoehorning into being a second class. It's similar to Facebook Messenger taking Facebook Page and trying to upgrade its citizenry within the ecosystem and proclaiming it to be chatbots. That in 3 yrs flamed out and no one speaks of it anymore.
Marketplace team can do more if they can build a second class product from the get go.
In my limited experience Amazon UK's prices are lower than the seller's/manufacturer's own website. I always check, it's always been significant when I've checked.
Per Amazon's policy - no, the seller can not have lower prices on their own website than on Amazon. In practice, for now, it is not enforced (at least in my experience).
most obvious alibaba or aliexpress goods on Amazon can be bought cheaper from one of the other places, and if it's a weird item (like a bicycle hub motor) it'll generally be from the same merchant group.
usually the copy/paste pictures and description are a good giveaway.
> Next time you want to buy something from Amazon, I would encourage you to find the seller's website directly or find them on eBay. eBay charges less seller fees and is not in the business of selling products directly.
Last time I bought an item off eBay, it arrived shipped via Amazon Prime. Pretty sure the seller just bought it off Amazon and shipped it to my house... it was a weird turn of events.
It wasn't a branded item, just a third-party battery replacement for a cordless phone, but still.
This is a common arbitrage tactic. Seller carries no inventory, lists multiple products on eBay for slightly higher than the Amazon price, and buys/ships from Amazon if anyone buys the eBay listing.
This happened to me, payed $110 for a ski jacket, get an amazon box and lookup the price on amazon - $80. I had to applaud the eBay seller for their hustle..
I stumbled across an anonymous payment processor that accepts all kinds of shady business, like online casinos and escorts. They accept payment via gift cards to Amazon and elsewhere. Maybe this is how they convert that into cash. I was puzzled about how that would work.
Sellers use Amazon FBA (Fulfilled By Amazon). Their inventory sits with Amazon and irrespective of platform where transaction happened, Amazon ships it in their own box.
Sure, another seller could take their spot and they are potentially losing that ad money, but with their strategy, they can price out anyone since they don't pay seller commissions either.
shopify is collecting a lot of data for all web interactions in their customer's websites. What it does with this info, is anyone's guess. There was a pretty explosive article a few days ago in HN.
Shopify may not be amazon yet, but it is certainly learning to be that way.
So many comments about, "doesn't everyone know they do this?", and "everyone does this!"
I say there should be an explicit difference between "running a platform", and "selling on a platform", and never should the two meet. By "platform" here, and in the context of selling stuff online or IRL, I mainly mean that the store should never compete with their suppliers ... it's madness and unethical. If everyone can get a piece of the pie, it makes for a healthier ecosystem. We should want the rising tide to lift more than one boat.
And yes, I believe this should be regulated at the policy level.
This of course has implications for other forms of "platforms", such as operating systems, APIs, and clouds; but I'll leave those discussions for another time ;)
The major question I don’t have a good answer to is, “Why is this different than brick and mortar store brands like Safeway signature?”
Surely a part of is is placement, but Safeway could put own brand ketchup at the same level (and I think sometimes does) as Heinz and still wouldn’t sell the same volume.
Amazon is clearly getting a big advantage here, I’m just curious about what the underlying dynamics are that allow them to be so much more successful in their context than it seems store brands are in other contexts.
The difference is that Safeway does not have any other sellers on their shelves. Safeway buys inventory at wholesale and sells it at retail. Everything that is sold in Safeway was intentionally selected by Safeway to be there.
If you see a product on a Safeway shelf, the company that makes that product already got paid--by Safeway. If Safeway puts a generic ibuprofen bottle next to a bottle of Advil, that's fine with Advil because Advil already got paid! Safeway is assuming the risk that those bottles of Advil might not sell because everyone buys the generic.
Amazon is different--they sell things themselves, but they also offer to run a logistics platform for other folks selling things. Folks who use this platform believe (are led to believe) that they are going to direct to consumers, NOT selling wholesale to Amazon. Amazon purports to be a neutral infrastructure provider, like UPS or Verizon.
Now, you can say that these folks are naive for believing Amazon about their neutrality, but it is what Amazon said! Many of these companies would never have used Amazon for logistics in the first place if Amazon had said "we are going to use all your data to copy your products and go direct-to-consumer ourselves with our copies, including placing them above yours in search results." Who would take that deal?
I don't see as big of a distinction between Safeway and Amazon. The demand for pain medication is relatively constant, so if sales of Safeway's generic ibuprofen increase it will come at the expense of Advil because Safeway will start buying fewer units. The harm is one step removed but is still there.
I think a better argument would be the scale of the data collected by Amazon vs physical stores. But on the other hand, Safeway has an online store where they can collect the same information and if they are anything like Walmart then they also already have startlingly detailed insight into the supply chains and logistics of their suppliers that surely rivals what Amazon sees if you use their warehousing service.
I don't think it makes sense to draw a clear distinction between Amazon generics and Safeway/Walmart generics. It seems like a fuzzy line at best.
Maybe. One distinction I want to argue is placement: Amazon always places the Amazon Choice options at the top of the search and product listings. They also always include them in the "Popular, Editor's Picks, Highest Rated, etc." box that appears in the middle of most pages on the site. This would be like you walking into Safeway for a bag of sugar, and as soon as you turn down the aisle, there's an employee telling you everyone buys the Safeway brand Sugar or an advertisement with three boxes showing Safeway's as the Most Popular option, and two others next to it.
Where this gets real distinct is in delivery: Amazon is currently purging its warehouses of stock from thousands of vendors so it can keep stock of Amazon-brand and big box brand alternatives to those same products. (See: https://www.bloomberg.com/news/articles/2019-05-28/amazon-is...) So, the Safeway equivalent of this would be you going down the sugar aisle and finding exactly 1 or 2 bags of competing brands with a note that says, "Hurry! Almost out!", and each bag has 10lb. anchor attached to it. But there's 100 bags of Safeway sugar, and there's a line of employees offering to carry it through the store for you do you don't hurt your terribly sore shoulders...
How would you feel if a Safeway associate slapped a tracking device on you when you walked in the door, and then didn't tell you they were recording everything you thought while you were working your way through the store? That's how Amazon.com works. Oh, and if Safeway could just look at your other recent thoughts and know you fapped about 20 minutes before you walked in the door? That's also Amazon.
Another issue. At Safeway, Heinz ketchup is the real deal. No duplicates.
Amazon, on the other hand, has allowed duplicates, cheap reproductions and false reviews to proliferate. Now the only way you are assured a product is what it says is if it is an amazon brand.
That's actually not true at all the shelf space at grocery store are often paid for by the name brands. "Slotting fees" etc. Often if the product doesn't sell Safeway returns it to get the money back.
> If you see a product on a Safeway shelf, the company that makes that product already got paid--by Safeway.
This is not necessarily true. It's typical to not be paid for anywhere between 30 and 90 days. Additionally, some deals are more complex and depend on actual purchase volume.
I have wondered the same thing every time this question comes up. It seems the difference is that the companies that put products in grocery stores are very large companies that spend a huge amount on marketing themselves (e.g. P&G, General Mills). So, the "house brand" is less recognizable to consumers and sells at a discount to the known brand that is often a larger company than the grocery chain. The grocery stores need the name brands because shoppers come looking for them (and Safeway gets the benefit of all the marketing they do). In Amazon's case, they are serving as a distribution channel for many, many small brands, none of which are known as well as Amazon (whereas Kellogg's cereal is better known than Safeway). That changes the power dynamic in favor of Amazon.
I had a friend who worked at a milk factory. They took their 2% organic milk and piped it into cartons with different labels: brand names as well as store brands, off to be sold at various price points.
To his company it didn't matter at the end of the day if people bought the brand name or the store brand, it was all the same stuff.
I think you’re totally right. In addition/corollary, it seems a lot of the things Amazon Basics sells are basically commodities. If you have a million iPad stands, eh, just buy the amazon basics one, it’s probably not crap and the reviews look good. I need my stand, my USB adapter, my cable, my whatever to just, “do the job”, there’s not a whole lot of performance differential within the category beyond works/doesn’t work. If there’s a strong quality differentiator in the product I think they’d do less well and I bet their data scientists have answered that question one way or the other.
This also points to a hidden advantage Amazon has which is totally unethical. Namely, Amazon is perfectly willing to sell counterfeit name-brand goods, and presumably this doesn't extend to their own Amazon Basics products.
I don't think this singlehandedly explains why Amazon is so unwilling to do anything about their huge counterfeit problem, but it's suspicious that the dilemma resolves in their favor.
We allowed this vertical integration in retail when maybe we shouldn’t. Yeah it shaves some costs, but is probably having a huge effect on supplier diversity and margins. If we’re revisiting the consumer welfare above all doctrine, this seems fair to revisit as well.
The vast majority of the "store brands" are made by the same companies who make the usual branded stuff. In many cases, it's the exact same product in a different wrapper or container, made on the same production line by the same company and the same staff. Sometimes to differentiate the product, it might have subtly different ingredients, or be of slightly lower quality to differentiate it from a "premium" product but still within the quality spec of the original product (for products which are binned or have batches of varying quality, or where there's variability e.g. biscuits which cook differently at different places on the conveyor).
I used to work in a big brewery where we made supermarket branded beers. It was the same product in a different can. Actually, the exact same can, with a custom paint job. It was one of the more generic beers, rather than one with a taste associated with one of the well-known premium brands, but there was zero compromise on quality there. What was packaged for the supermarkets was 100% identical to beers with our own company name on it.
It's only the cheapest of the cheap "value" stuff which has been significantly cost reduced and has compromised quality. That's stuff like pastry with a higher water content in place of fats, or substituted ingredients such as palm oil in place of butter etc. In these cases you're paying less, but obviously getting less product for your money. That's its own specialised segment. These are often made by different companies with their own separate supply chains, and possibly living by a different set of ethics... There clearly seems to be a market for this type of thing, but given the reduced nutritional quality and taste, it's not necessarily providing a genuine cost saving.
Does it mean that the brand of Amazon is better than the likes of Safeway or Target who sell their own products to compete with more name brand ones? Or it could also be that the brands on Amazon such as the top voted comment here might be smaller brands without enough name recognition to gain the attention of a buyer.
Such a difficult thing to regulate. The instant you stop Amazon from selling on its own platform, they will open a subsidiary Amazon Retail, which is a favored customer on their platform. Whatever new regulation you can come up with, there will be armies of corporate lawyers ready to satisfy your requirements while still capturing that audience who is ready (and wants) to be captured by a platform-branded generic option.
Yeah, just take a look at the financial sector. Your typical big investment bank has insider knowledge of a sizable percentage of the companies in the economy and separately, makes tons of trades. The two businesses are kept separate, no information exchanges between the two groups, no winks and nudges. If they get it wrong, they could go to jail.
If it is possible to create a so-called firewall [0] within banks to avoid unfair advantage via insider trading, it is possible to create a firewall between the platform and seller divisions withing Amazon for a similar effect.
Do you believe that investment banks actually respect the principle of a level playing field? Given the widespread fraud revealed during the 2008 financial crisis, I find that a more plausible scenario is the banks pay lip service to the idea of a level playing field and make a show of instituting a firewall, but in practice the firewall leaks information like a sieve, which the banks ruthlessly exploit for profits. The bigger the bank, the more clients they have, hence the more information they have, hence the higher the chance for insider trading and big profits.
Because "consumer choice" isn't a practical and full response to corporate abuse of power. Regulation is complete - if it's a well written regulation it works.
Amazon has a dominant position in the marketplace and it is leveraging it in a blatantly anti-competitive manner. As a country we have consistently decided that smaller and decentralized is better - there is no compelling reason to allow Amazon to keep borging small businesses.
This is a ban against vertical integration no? There are real efficiencies (apples entire premise) from owning and running the whole stack top to bottom.
It'd be a ban of any mixture of vertical integrating with not vertically integrating. Which in turn makes it tough to transition (either direction) between the two.
So, Apple would be allowed to vertically integrate and make the chips, hardware, operating system, and applications for their products. But they'd have to stop selling Belkin chargers alongside Apple chargers at apple.com, and the iOS app store would have to contain either only Apple apps and no third-party ones or vice versa.
It fixes a power imbalance that allows for the platforms to take advantage of their customers. A platform becoming dominant is insidious because it takes away the "choice" ... if you want to do business, you will probably have to engage with them, but as we see here, Amazon is taking advantage of the fact that they own the platform by taking their customers' (the sellers) data, and using it for themselves to put their customers out of business.
I agree a diverse marketplace is a healthy one, and that requires intervention since clearly the initial rules are not enough. Some like to pretend that free markets are only negatively impacted by regulation, and only positively impacted by its participants.
That seems like a distinction without a difference. Yes, Safeway owns inventory of branded merchandise that's on their shelves, but in modern retail, they probably don't own more than a couple of weeks of inventory. And, in modern retail, it's highly likely that branded vendors (like Coke and Pepsi) have very complex relationships with retailers that include co-op fees for marketing, premiums paid for end-cap placement and special displays, and bonuses for hitting certain volumes.
App stores are the same thing since most companies with app stores have their own apps. They can decide when the right time is to build their own version of something that's popular and promote it in their app store.
> I say there should be an explicit difference between "running a platform", and "selling on a platform", and never should the two meet.
Its a free market, you can do what you want as long as costumers like it. Valve makes its own games and the platform. There are other example where this is true.
Should SpaceX not be allowed to launch Starlink. Falcon 9 is a platform, and Starlink is selling the product that you get threw this platform. Maybe not a perfect example, but one could equally make a argument about that as well.
All of these things are pretty artificial opinion based market restrictions, and everybody want to create different rules based on different was to evaluate this question for every market business and so on.
So you would make totally different choices about what is a platform and what isn't. If my company has a product and then opens up the underlying API, is my product now illegal?
For me this is all nonsense, why not just have both the suppliers, consumers and everybody else involved make choices based on what they think is best. Why do you know better of how to define these terms and what evidence is there that when you force a separation it is better at 'raising all boats'. There is no evidence to prove that in the majority of cases.
In the example of Steam they lost many games because suppliers didn't want to deal with them. Microsoft SQL now runs on Linux because people didn't want to us Windows. In all of those cases, costumers and suppliers are perfectly capable at making those decisions for themselves and then the company has to make choice how adjust to this situation.
Why any of this is bad, is totally unclear to me.
Its easy to say 'see this one bad example' and the ignore a huge amount of efficiency gained by vertical integration. The idea that we have bureaucrats to have control over every single vertical integration decision by every company is pretty insane dream to me.
This reminds me of 'Indian Socialism' where you had to fill out a application for every market each company wanted to get into and the of course super smart regulator would then make sore that the 'correct' amount of companies were in each market. Of course as always there was tons of regulatory capture and corruption to say who got a permit and who didn't. Witch is basically the same pickle you want to get into, just with 100x more detailed determination about ever companies internal structure as well. A recipe for disaster if you ask me.
The idea of enlightned regulator who for each choice of each company on each level can figure if that decision is correct for 'the global population' is a total fantasy. Neither can they do it, nor would their intensives to do it actually be for the good of 'the global population'.
I saw this happening a decade ago, but I had no real proof.
I had a profitable Amazon store in 2010. I found niche products that Amazon didn't sell. As soon as I started getting traction on any one product, Amazon would start undercutting me, and my sales would drop to almost zero over the course of a couple of weeks.
I had near 100% feedback and I had a single customer complaint that I sold them the wrong product. Within a few minutes of me receiving this claim, my account was suspended. I had no chance to rectify the situation.
No amount of calling or emailing Amazon could get me in front of someone that could help me. All responses were an automated rejection.
This was a rough time for me as it was my only form of income and Amazon held almost $30,000 of my money for 3 months. I ended up having to close my business and move on, though I did eventually get all of my money back.
I've built multiple successful businesses since then and Amazon has recently had many business reps try to get me to sign up with a business account, because we purchase lots of items on Amazon/month. I always try to get them to re-investigate my old seller account and our email correspondence stops shortly after this. It's crazy to me that after 10 years and in a completely different industry, I still can't open a seller account.
It taught me a valuable lesson not to build my entire business on someone else's platform.
It only gives them more control over you and they will most likely use your customers, data, and more resources to out-compete you, if you get too big. Twitter has also done this to their app developers.
My wife runs a small business on Etsy and it's just as bad. They make random code changes, which bumps listings up or down and you suddenly have no orders for weeks at a time.
What's even scarier is if a handful of companies run everything we use online. Will I suddenly not be able to get a home loan for a decade because of an account closure?
> It taught me a valuable lesson not to build my entire business on someone else's platform.
This sounds eerily similar to what happened to a close friend of mine, and that's 100% the right takeaway from the situation.
> My wife runs a small business on Etsy and it's just as bad. They make random code changes, which bumps listings up or down and you suddenly have no orders for weeks at a time.
Same as above, different friend, but again Etsy.
> What's even scarier is if a handful of companies run everything we use online. Will I suddenly not be able to get a home loan for a decade because of an account closure?
And that's why I'm in favor of strong individual privacy laws, and corresponding enforcement of said laws. Because 'I've got nothing to hide' only works so long as your values/goals are in line with everyone else in the system you're operating in.
The second that changes, good luck and godspeed.
Thanks for the great read, and... I dunno just validating your view of things.
I support such laws too, but I wouldn't expect them to really change this. I think what we're seeing is more of a monopoly problem than anything else, even if violating privacy is a part of how they pull it off.
It's very hard to prove that a company that does, in theory, have access to data is not storing it or looking at it. Even accidentally. I just finished explaining all this to someone who freaked out about a Facebook post they saw about how Facebook was starting to collect information about everything you do off-Facebook. I had them show me what they meant, and it appears to just be every app that integrates with Facebook comments or allows Facebook sign-in as an option, etc.
The problem is one Facebook naturally got because of it's success: everyone has good reasons to want to work within their ecosystem. So they get tons of data on everyone. You can inconvenience yourself and refuse to ever visit a service that might share data with Facebook. But honestly: who's going to find that practical and do it? And if Facebook ignores the setting and "accidentally" captures all this data, and I suspect they're misusing it, how do I really get an investigation and more than a slap on the wrist for them?
It's messy to be a platform that provides a service and a consumer of that service that competes with your other consumers. At a previous job of mine we made a conscious decision not to do that for fear it would hurt our core business to ruin relationships with our customers. The problem here is Amazon just doesn't fear that. And I can't say they should. But the root problem seems to me to be more of a monopoly problem than a privacy problem.
The American idea used to include anti-monopoly rules. Granted Amazon is not a monopoly, but the idea was to keep businesses small (and govt small) so no single superior entity would reign abusively on individuals. And that would make the federation stronger.
Maybe it’s time to revive it. Google, Apple, Amazon, all cause issues because they are too big and haven’t been broken up (or menaces of) for way too long.
We’ve scratched antitrust laws in 9/11, when Microsoft was recognized guilty but never sanctioned, because the domination of USA after 9/11 was important. But maybe that led to two decades of really huge corporations, and a bit more liquidity in the market (choice of platforms, etc) could be nice.
This is a legislative/governmental issue not a technical one. In jurisdictions where privacy and anticompetitive laws are enforced (EU) regulators have the ability to regulate with fines of real consequence which is not the case in the US. It does not always lead to perfect outcomes but it does give greater protection to most people.
The 'I got nothing to hide' is when discussing law enforcement surveilence? It is funny how fear of the "police state" is more or less irrelevant now vs early 2000s and private companies are the main problem. It is hard to predict the future.
Yeah that may have not been the correct phrase to turn there. I guess in this context it's more about personal ownership of data. Which at this point in time, is 100% trust based with Amazon and 0% tech based.
I don't think that's something people, even many very technologically knowledgeable people, are aware of.
1st I got an item from a fraudulent 3rd party shipper. Did not get my money back and amazon claimed they don't know his identity
2nd Packet got stolen. Amazon claimed based on statistical analysis this packet is assumed to have reached me. Delivered to "mailbox". Paid with CC, made a charge back, closed my account.
You know what is a pretty good competitor? eBay. As a business it may be terrible, but as a market place it is quite good.
Competitor on what vector? Speaking from a US-centric viewpoint here, but my thoughts;
* Distribution & Warehousing - Walmart & Costco
* Sales & Advertising - Google & Facebook
A few notable online storefronts that are independent and I use frequently are B&H Photovideo and Newegg. Realistically though the options I listed above are the only companies I see having the scale to compete with Amazon at anything, and even then they're an order of magnitude behind. Just my opinion, again very US-centric.
As a side node: I am actually thinking of buying a tiny bankrupt travel equipment company. Friends advised against it because of "Amazon essentials". I would not sell on Amazon but it is a strong argument.
Maybe someone has some words of wisdom regarding to this.
What do they have that you want, or what do you think you're going to do differently?
Why did it go bankrupt?
If they claim it's only bankrupt because of COVID-19, then it must not have been very profitable (if at all) if they didn't have enough money to weather out at least 3 months. So I recommend not accepting that explanation.
They were "bankrupt" before. They just selling what is left of the stock.
I was always impressed by the quality of their products. It is a comparatively "old" company, they produce their stuff in Eastern Europe, not Asia.
Why they did not sell?
1. Their webpage looks like from the 90ies
2. No marketing. I think I can solve this, I also have contacts with some small travel agencies. I am sure they would be interested in some affiliate scheme.
3. Has also some niche products where I have contacts in the US (Military, dogs etc.)
Biggest problem is to convince the guy to either sell or take on partners.
Depends on the country. But why would you like to purchase one?
I asked this business if I can buy a stake before they filed for bankruptcy because I saw potential and value that I could bring to the company. I still do.
If a restaurant of bakery goes bankrupt I would not want it for free since I don't understand the business, nor can I bring value to the business.
Not only on goods, they even charge commission on shipping costs. With eroding seller protection and stupid changes to the UI, I guess one of the only reasons they still have vendors is their monopoly.
> I don't see how this is legal, Personally i don't think you should be able to run the market and compete in it at the same time.
It may be, it may not be. I don't know, I am not a Lawyer nor do I play one on the internet.
What I do know is that to date no individual, or collective, has had the financial or political will to test any of this in court.
I suspect this is largely a positive feedback loop whereby any entity that has the financial or political capital to do so and stand a reasonable chance of winning has done the calculus and come to the conclusion that setting said legal precedent would do their own businesses more harm than it would net them in value from Amazon.
Until that changes, meet the new boss same as the old boss.
Any individual or collective which had the wherewithal could do the math and it will always be strongly in favor of working with Amazon rather than against it.
Old boss wasn't going anywhere until a new one came along that was big enough to crush at will.
There’s a step before them undercutting you, and that’s the margin squeeze.
I’ve seen it happen, repeatedly - also years ago. If you sold a high volume commodity on seller central, you’d see your commission go up, and up, and up, until you squeak - you either quit or you complain.
They now know exactly how much that line nets you, and whether it’s worth selling.
I recently (pre-COVID19) sold all my Amazon and replaced it with Apple due to these issues. I feel Apple Pay, and the fast followers, will drive shopping to more platforms than Amazon by reducing friction for customers of independent websites (supported by USPS, UPS, Fedex... which Amazon has decided not to compete with anymore). With the Amazon COVID19 shipping delays, I’ve established many new shopping relationships online, and I hope that is the experience for many others, changing the market. The CEO of Shopify gives great talks about the important of this, so I do support that platform at this point.
It's one of those Schrodinger's laws that applies to companies like Amazon. They're either a marketplace or not depending on the complaint. Complain about shady sellers and fakes? They're a marketplace and not responsible! Complain about anti competitive practices? Well this is clearly the Amazon store, says so right on it, clearly not a marketplace!
I think this is just a special case of “online communication”. It’s illegal for the phone company to arbitrarily suspend your service for what (legal things) you say over the phone.
It’s legal for Twitter or Amazon or Etsy or Twitch or Discord or YouTube.
I recently got suspended by Twitter after using it daily for 12 years and in addition to not being able to send new tweets or DMs (or do data backup/takeout), I also can no longer see even the usernames (or the message history) of the people I was communicating with in DM. For many of them, that was my only contact info for them.
I am becoming increasingly convinced for the need to regulate arbitrary suspensions for communications platforms (including sales/business platforms, that’s just a special case of communication). The current emergency situation really woke me up to the huge dangers involved.
GP lost his business, which is sad and tragic and unfair. I envision that in disasters or emergencies, eventually someone is going to lose their life.
Imagine if the mobile phone or cable company could arbitrarily suspend your connectivity because you left bad reviews online about their service.
I recently did a deep dive on how these sorts of centralized, censorship systems pose an inherent and existential threat to safety and human rights in an emergency/pandemic/war that is non-obvious in peacetime: https://sneak.berlin/20200421/normalcy-bias/
It’s truly terrifying to me that these systems (among them Amazon, Discord, Twitter, YouTube, Facebook, Instagram) have final say, practically, over who gets to speak to whom in a lot of cases in society, or what is allowed to be said. These companies (and the government in their jurisdiction) are entirely unaccountable for this terrible censorship power they wield, and it is only a matter of when, not if, it will be horribly abused. TFA is just one important facet of this danger.
Can I see the laws that affect phone companies and free speech? That's an interesting observation, and does parallel Twitter/YouTube/etc, so I'd like to see the wording for it.
I think that the relevant laws are those related to the phone/cable companies being public utilities (and thus explicit, by-design, state-permitted monopolies or duopolies). They aren’t allowed to wiretap them (because communications privacy was a bigger deal to legislators pre-internet) and have to provide service to all comers (ostensibly in exchange for being a monopoly-by-design).
From my limited understanding, this regulation forcing them to offer service (as a utility) to 100% of the market is coordinated on a state-by-state basis by the public service/public utilities commission.
(Fun fact, I learned this at a young age because my dad ran a paging/voicemail service out of the basement of our single family, suburban residential home when I was about 10. We were the only house on the block with dozens of trunk lines coming into our little bungalow; but by law they had to do it if you ordered it. Try that today with internet access from a cable company, ha! It’s all but impossible due to TOS to run an internet business at a residential address now. Hosting for-profit services with the internet you pay for or reselling the service in any way means you get instantly unplugged.)
Sorry I don’t have a direct link to the all-comers bit of PUC/PSC regulation, but this should give you a starting point for research.
The not-allowed-to-tap-phones bit is a federal law:
It’s sort of insane how provider-wiretapped has been the all-encompassing default for almost all of the largest DM/1-to-1 communications systems in the world: SMS, WeChat, Facebook, VK, Instagram, Gmail. WhatsApp and iMessage are outliers in this regard. Almost all popular new entrants like Slack and Discord are provider-tapped, too.
This is a relatively recent development in our society’s relationship with electronic communications. Reading content by the provider used to be illegal as fuck.
Is life significantly better for retails selling through grocery or other retailers? What stops Safeway from one day selling a competing product under their store brand? And then they'd still be charging you for shelf placement.
Same happens to us but we split sales to Shopify. Any idea if Shopify does same? It seems their ambitions keeps growing, they started charging percentage of revenue instead of flat subscription.
I've had this thought as well, and certainly there seems to be nothing preventing them from going down that road. Though at least with Shopify, it's theoretically easier to move your website to another platform/service or just roll your own.
I'd say that you're basically at their mercy with regards to the charging a percentage of revenue though. I mean, that's how all card processors work.
By default I trust Shopify more than Amazon, and in both instances your business is essentially succeeding 'at their pleasure' so to speak. So I thought on it for a minute.
I think the main difference comes down to individuals in the business and culture. I'd elaborate more but I'm not sure I want to write that much speculative crap on the internet this morning, and I should get something productive done with my day.
EDIT: Also just realized, that if you look at my spending habits, they 100% imply I trust Amazon more than Shopify.
The solution isn't hoping the free market would solve this with a competing platform. The solution is to create regulations & laws that prevent this behavior.
You're either a platform/retailer or you're a manufacturer. You don't get to be both because we see the perverse incentive that happens when it's allowed.
Many years ago I worked for a small analytics company bought by Amazon. My job was to analyze and report on the rise and fall of various product sectors on the web. We were in a unique position at the time, with the ability to see what URL's people were visiting. Reports we presented to Bezos, Jason Kilar and team, were used to make acquisition and growth decisions. In one case we found that that toys and plus size women's clothes were the top sellers for ecommerce in the US. They looked at the data and backed out of buying one of the major e-commerce players in toys and instead launched their own toy site / section. It was the beginning of Amazon moving away from Books and Music and into all other products.
The point is that competitive data is what drives decisions for product and segments in all areas of retail and business. Either in house or outside. Gathering that data from within your property is no different than using an outside agent.
You are acting as if they're spying on their customers, when the customers are you and me, not the reseller using their platform/space/warehouse/services.
How come we don't see this kind of angst with other store brand items. I can't imagine these comments being lobbed at Wal-Mart's Great Value, Costco's Kirkland Signature, or Bi-Lo's SE Grocers items.
And private label doesn't mean you have to manufacture anything at all. Sometimes, you will go to the company whose marketshare you are trying to take and they will manufacture the product for you.
What really is the issue? That Amazon is leveraging its success to be successful? It's unfair that Amazon is able to see that a product category is doing well so it invests its own money into manufacturing a product to sell through its site?
Do you really think that if Amazon couldn't use the data from its own site that it wouldn't procure it elsewhere? Before any product is developed there is extensive market research done to get an idea of how much money this product could make.
Anyone can and does do this, why should Amazon be punished that its data collection mechanism is cheaper than others?
Sun pushed OpenOffice to cut MS's profits from Office
Google and MS are pushing into the Cloud to reduce Amazon's influence
Amazon is creating its own ad network and offering Twitch to reign in Google
Walmart is slowly creating its own global online shopping platform to compete with Amazon
Should Amazon ever have no competitor, monopoly regulations would kick in. But usually, all the other big players will make sure that Amazon has enough competition to not be invincible. It's not fun for small players, but they obviously don't care enough to organize and take their products off Amazon.
Btw, Amazon does not necessarily have less overhead due to Price's law: [1]
>The square root of the number of people in a domain do 50% of the work.
Should Amazon expand into every business, they would be so huge that all their efficiencies and more would be eaten up by the overhead.
Price's law is of questionable empirical validity, it's more like a useful guideline/urban legend. On the other hand, there is substantial economic research demonstrating the harms of monopolies, including vertical ones.
I'm a bit confused. Are you claiming that because of Price's law, Amazon doesn't actually benefit from it's monopoly position?
Almost. I think that Amazon cannot hold a monopoly position in all markets because its size would be so big that a smaller competitor could compete.
As a consequence, there will be an optimal size where Amazon is serving many markets, most likely the most profitable ones, thus massively benefiting [ * ], but they leave every other market open.
Depending on the future, this is not necessarily a bad position because low interest rates could seed plenty of startups which means that competitors could operate below break even points.
The question is: will Amazon ever reach that position or will its competitors make sure that all its profitable markets will dry up and its growth will be limited?
[*] Actually, not Amazon is profiting because the value of that dominant position would be priced into Amazon shares in advance. Amazon would just execute its dominant position that its investors had foreseen.
We run a DTC automotive retail website that has both white-label products and vendor products and have product development and manufacturing capability in house. We also sell through multiple channels like wholesale customers, marketplaces, (including Amazon when it makes sense), and a 2 retail stores.
Are you saying that we need to dramatically change our business model and can only either be a manufacturer or sell other peoples products because this model is unethical?
Vertical monopolisation is a mixed bag actually. Vertically integrated companies profit more with lower prices in the downstream market than a purely downstream product company because they make profit at both stages. Antitrust law is far kinder to vertical mergers than horizontal mergers.
Or a competing product emerges with a lower price and/or better quality. Step 6 would only happen if competing products are not allowed to be sold on Amazon. And even if Amazon does that, I would assume that if the delta in price and quality is big enough people would switch to buying the product on Shopify, eBay, or any other platform the manufacturer can use to sell.
The fallacy in this all too pervasive argument is assuming that once a competitor dies or is bought out, there is no more competition from now until judgement day.
This is flat out silly and has never been observed. Monopolies cannot significantly raise their prices, or competitors instantly appear.
Why wouldn't 7. be: a competitor easily enters the market because they can just make the good and charge a markup that's somewhere between what amazon is charging and 0 and still make a profit and get all the business?
If what you said about amazon having less overhead prevents the above hypothetical from happening, then what's the problem? It's apparently more efficient for Amazon to supply this good and that's what an omnipotent benevolent economic dictator would choose anyways.
>What really is the issue? That Amazon is leveraging its success to be successful?
The issue is that over the long term, Amazon is lowering the ROI on innovating and taking risks in the consumer goods space. It's able to do this because of its dominance as a marketplace.
Where it gets grey is when stakeholders privately invest or start companies that sell on the platform. Amazon chose to do it upfront with Amazon Basics but there’s nothing stopping them from creating house brands/labels even at arms length to give the impression that it’s not Amazon.
It is not illegal to have a monopoly; but it is illegal to use a monopoly you have in one area to get an unfair advantage in another.
Amazon may or may not legally be a retail monopoly - I do not know the answer. But your question can be rephrased for any monopoly and the answer would be “monopolies should be punished for leveraging their monopoly power in other markets, because that ruins the market for everyone else.”
Free markets and democracies are good at a lot of things, but self preservation is not one of them - therefore you need anti-freedom laws.
> It is not illegal to have a monopoly; but it is illegal to use a monopoly you have in one area to get an unfair advantage in another.
This is a very common misconception in the United States. It’s how a lot of defenders of antitrust law want antitrust law to work, but it is not how antitrust law does work.
This Supreme Court case explicitly establishes that antitrust laws can be used against companies which obtain a high market share simply by anticipating future demand and responding effectively and efficiently.
> antitrust laws can be used against companies which obtain a high market share simply by anticipating future demand and responding effectively and efficiently.
This would make sense as a feature. If you subscribe to the view that competitive pressure is the source of progress, then you never want any company to actually win. Like a donkey chasing a carrot on a stick, you want companies to endlessly run towards market dominance, but never actually get there - because once they do, they stop contributing to progress.
This issue us that Amazon also dictates what you are allowed to sell your product for elsewhere. It would be one thing if they just used your own data and created a competing product, but the fact you cannot sell your product cheaper elsewhere is the issue.
Anticompetitive practices include activities like price fixing, group boycotts, and exclusionary exclusive dealing contracts or trade association rules, and are generally grouped into two types: agreements between competitors, also referred to as horizontal conduct.
Thanks! I meant how would Amazon prevent it at all. (But maybe they would just sue you. But ... can't you just create a separate company to conduct off-Amazon business?)
Definitely not. Consumers are best served when you have a bunch of relatively equal players competing for their business, and where success is rewarded financially. That gives everybody an incentive to focus on continuously getting better at serving the customer through R&D, etc.
But if the reward for success is just having Amazon come in and hoover up the money you would have gotten by launching a knockoff, then suddenly there's a lot less incentive to invest in novel products. That's true both for categories where Amazon is competing and ones where it isn't currently.
I wouldn't be surprised if Amazon's replacement product is sometimes modestly worse, because a) they don't have the kind of deep expertise in a product that the original creators do, and b) it doesn't have to be as good to get the money.
And then there's after-sale support. Amazon's customer support is atrocious. The one thing they're good at is taking things back. But anything more complex and it's a nightmare.
I dislike Amazon as much as the next guy but let's not kid ourselves here. Consumers aren't looking for innovation in the paper towel market. They just want cheap stuff. If Amazon can make these products cheaper then the consumers win.
There’s no evidence that that mechanism is effective any longer. The United States regulators seem to be entirely content with fake not-monopolies (eg ISPs) lying about how much competition they have, and let monopolies or duopolies fleece millions for essential services or products as long as they spend the requisite amount of kickback via lobbying.
Admittedly those are public utilities but the attitude seems to hold true in antitrust as well. Walmart is probably the best example there, or now Amazon as evidenced by TFA.
Product feature innovation is not the only kind of innovation. Supply chain innovation provides the cost reductions needed to lower prices. And you regardless need product expertise to know where to cut costs.
As a super-obvious example, an accountant looking to cut costs at a hamburger chain might first suggest reducing the amount of meat or using old meat. But that reduces value as much or more than costs, so it's a bad optimization.
> Consumers are best served when you have a bunch of relatively equal players competing for their business, and where success is rewarded financially.
That depends on the significance of economies of scale and barriers to entry in a particular market. The term “natural monopoly” (as it’s used in economics) refers to a particular market where, because of barriers to entry, the optimal number of firms is one. Two firms would not be able to produce their good for cheaper than one firm.
Consumers are definitely better served by competitive markets than monopolies, natural or otherwise. I agree that's not always possible, and where it isn't, we generally get bad monopolist behavior, heavy regulation, or both.
I also suspect the notion of "natural monopoly" is oversold and too simple. Would it be more efficient if we had exactly one ISP for the country? In theory, yes, because then we only have to run one set of wires everywhere, and we'd get rid of a lot of duplicative equipment and staff. But in practice, monopoly and oligopoly ISPs are generally both expensive and bad. I just moved from a competitive area to a "natural monopoly" area; my internet now costs twice as much for 10% of the bandwidth, much lower quality, and much worse service.
I think that's because companies aren't static entities that reliably produce goods, even though that's what most people imagine. Instead they're temporary coalitions of individual actors hopefully prodded into optimal behavior by external forces like competition. Especially so given American business culture, which often refuses to recognize ways of thinking that might mitigate the problems.
No, this is not great for the consumer. It lowers the bar for everyone. What I find mostly on Amazon in the past year or so is cheaper imported versions of decent products. The decent products are hard to find or I have to look outside of Amazon. They've pushed out the quality and replaced it with higher profit junk.
Its kind of the same thing with Home Depot. I used to be able to buy quality hardware from a local store. Now all I have is Home Depot and they sell mostly imported junk hardware. I have to go somewhere like McMaster-Carr now for quality hardware. Home Depot has not been good for me, Home Depot has only been good for itself.
Different problems. One is the regulation of which suppliers can distribute on a platform, deceptive advertising, right-to-repair, and similar consumer protection considerations.
The other problem the article and parent comments are describing relates to the distributor/retailer creating or sourcing generic alternatives to the items sold by their existing suppliers and informing their decisions to do so based on the sales data from their own partners/suppliers.
This latter case seems ok to me, even if it sucks for suppliers, in the sense that we generally get better outcomes for customers. As long as the general regulations for consumer protection are in-place such as preventing confusion between brands and generics.
Fair enough, its not quite the same thing. Though Home Depot has a ton of its own products now too - they are doing the same thing inside physical retail stores rather than online only.
For pharmacy items where there is some regulation around the quality of the product, I find generics/store brands to be great. For products that are not regulated in some way quality is all over the place. If you search Amazon for "ul listed usb charger" you will mostly see results for products that are not UL listed - there are probably 5 times more unlisted products for sale there than listed products - Amazon is pushing a bunch of cheap and high-profit crap at me even when I try to avoid it.
Giving consumers the same basket of goods at a lower cost just increases their real income, purchasing power, and overall standard of living. Amazon is effectively distributing billions of dollars of charity to those who need it the most. They lose $2 billion a quarter on retail. That's $2 billion per quarter in subsidies to consumers.
...which is classic anti-competitive behavior. That isn't a free and fair market - it's one that's in the process of being captured by a few large incumbents.
If they raise prices then they invite an instant flood of competition and lose their monopoly. They have no power to raise prices and restrict competition. Their only competitive advantage is pricing. Amazon's only profitable products are AWS and its stock. The benefit of losing $2 billion a quarter doing retail is debatable. Would you prefer a world without amazon's subsidies given that they have no power to exploit anyone?
Your theory is that Amazon is spending $2 billion a quarter even though it gets them no long-term advantage?
If you're right, then capitalism is hopelessly bad at optimization and we should scrap it. But what I think is more likely here is that Amazon's execs understands the economics of their business way better than a zero-karma free-market fundamentalist whose pseudonym is a genitalia joke.
They get a long-term advantage in that their stock continues to rise. The stock is the product. And AWS enjoys having a household brand attached to it. And don't be mad that someone with a genitalia username is making a point your brain is incapable of making a cogent argument against, in spite of it eliciting a strong enough emotion for you to leave a comment.
Their stock will only rise if they eventually make more money. Meaning that investors expect them to be able to make that $8 billion/year up eventually. Presumably through pricing, because selling stuff at above-cost prices is where their money comes from.
Also, I only made fun of your username and your lack of karma because you were making absurd unevidenced claims like, "They have no power to raise prices and restrict competition." If you're going to say things like that, then it's not so much making a point as doing what Frankfurt calls bullshiting. [1] That combined with your very low karma suggests you're not really worth the time of a serious reply. Note the link in my bio: http://www.penny-arcade.com/comic/2004/03/19
And at least I don't resort ad hominem arguments. That's what happens when lower IQ individuals have nothing else to say and don't know how to deal with the cognitive dissonance that arises when truth clashes with their feelings. Feelings based on cartoons and TV shows that programmed you to viscerally react that way.
And what do you propose in place of capitalism? You sound like a child. Why would you want to force companies to make a profit on every product? There's something called a loss leader. How about just prohibiting all forms of charity? You make zero sense.
Good question. Actually I don't have any data for that. Anecdotally many "store brand" items of things that seem commodity-like, are things that I can get the same quality as a name brand at a lower price. This is better for me, and I suspect better for most consumers in a static situation. But the market is dynamic. Does this stifle innovation of new products? Does the reduced revenue of "brand" named producers, especially smaller ones hurt? Does the price competition produce a race to the bottom that ultimately doesn't benefit consumers? I don't know. But I would say that the considerations of increased regulations of "generics" vs increased regulation of "online markets" seem to me to involve different tradeoffs.
Sadly, the American grocery store is not optimized for consumers, so we can't draw many inferences from it. It's true that no-frills versions of commodity products are a good deal compared with heavily marketed products. But I don't see any reason to think letting individual stores dominate that market segment would be necessarily better for consumers.
I tried to look for a decent priced backpack on Amazon a few months ago but there are a gazillion listings for what appears to be the same backpack, only the names differ. I ended up just buying it straight from Aliexpress from where it undoubtedly has been sourced from one of the same (or single?) factories. There's basically cheap-as-chips level products, and then 'high-grade' which is still dubious at times whether the quality of materials is better or not. Middle of the pack product pricing seems to just be swallowed up in a race for the bottom or the top.
Tip- check out Fastenal. They don't tend to have small retail packages, so you need to buy larger quantities, but it's really nice not to have to wait for shipping. They're an industrial supplier, but all the stores I've been in were perfectly happy to sell to the general public.
> That reduces competition and allows Amazon to charge more.
that never happens, unless there's a regulation in place that prevents new sellers to get into the market as quickly as they can. When a price for the product begins to rise, it attracts new sellers, as now there's a wider price range to position your competing product.
You're focused to much on Amazon. Every company does this just go to your local Walmart, everything is white-label. A law like this would have to be applied to them as well.
On the contrary, house brand products are great for consumers. Rather than having to figure out if they can trust a brand for a product category that they really don't care about, they can just buy the house brand knowing that a certain minimum level of quality exists. This is why Amazon Basics products are so popular on Amazon: consumers know that, at the very least, Amazon can be sued, a form of recourse that is not available with most of the smaller brands and sellers on their platform.
This is me. I bought an AmazonBasics product initially, a phone cable, thinking it would be crap. It wasn't. So I bought another one, a set of HDMI cables. They weren't crap either! Then I bought AmazonBasics wash cloths as a joke. They were quite nice! Now I find myself shopping around the AmazonBasics section first. I still find it amusing in a "Spaceballs, the flamethrower!" kind of way.
Similarly how Microsoft launching Internet Explorer to beat Netscape and eat another Market was technically more competition (for a while, until they've established another monopoly and all competition ceases).
This is a frequent trick in econ 101-style defenses of anarchic markets - play with the time horizon.
If you're hungry, a soda is "great for the consumer". For 15 minutes, it alleviates that feeling. Does it follow that everyone should consume only soda?
People seem to think "capitalism" produces the best results simply because of privatization, but it is the competition that is created. It doesn't matter if the one producer is Soviet Russia or Amazon, it hurts everyone in the long run when their is one supplier.
>You're either a platform/retailer or you're a manufacturer. You don't get to be both
Ok, done.
Now what are manufacturers supposed to do when Amazon and Walmart start bullying them some other way? You just made shipping their product directly to the customer against the law.
Well, the function of anti-trust law is specifically to target massive unchecked power.
If you're the supplier with a Shopify and Amazon Merchant account, or a local grocery store with white label products, none of this applies to you because you don't have the capability to effectively hold other businesses or markets hostage, no matter how aggressive you are.
No, that's not what a platform is. You can always sell your product direct to consumer. You just can't be the intermediary for both your own and other companies' products on the same site.
Alright, so you actually can be a manufacturer and a retailer at the same time, just with your own products on a separate website.
Are manufacturers legally barred from linking to the marketplaces of its peers?
Could Amazon not just maintain two websites, and shut down the marketplace for certain goods when it feels it has enough information to sell its own versions on the other site?
If not, could Amazon not just sell the information it would have used to develop its own products to another company (which we'll assume is totally unrelated) to develop its own off-brand products, and then treat those products preferentially?
I think those are good implementation concerns. Maintaining two separate websites isn't really an option under the supposed regulation, that's still one company being a platform and a manufacturer. The second option seems alot more likely to be allowed -- but now, at least you've created a market for that information and it's not just Amazon that has access to the data. Not sure I understand why it would treat the those products preferentially though -- unless you're bundling selling that information with product placement fees, which doesn't seem to be related (or necessary). I would assume product placement would be another revenue stream for the platform, like it is now for brick and mortar retailers like walmart
The software corollary would be that Apple can no longer host GarageBand and Keynote on the App Store, and Google can no longer host GMail or Google Docs on the Play Store.
I think that's a great call-out. It's interesting that we don't see the same problem in app stores -- probably because there's not much profit motive for apps like there is for general retail.
OK, done.
Now you have Amazon Basics' products competing with Amazon Fulfillment's products on Amazon Dotcom's website. Different entities, not even under the same corporate governance.
If they are different entities, how come Amazon Basics can use the same name as the platform? Did Amazon sell the rights to another company to use their brand?
"Did Amazon sell the rights to another company to use their brand?" But of course, why not? These kinds of trademark licensing agreements are all over the place, there would be no difference here.
I would disagree, the free market is working just fine. Many brands are no longer selling on Amazon and doing very well.
We don't need laws to restrict one party from taking advantage of another in a deal... it just takes brains and some companies are using theirs to partner with other platforms or sell DTC(Direct To Consumer)
Sounds nice in theory, but deferring to the government for this is how to fuel the lobbyist industry and end up with regulatory capture.
Anyone can host a website, market their product, ship with FedEx/UPS. Preach people do that instead, rather than bow down to our government stamped and approved overlord Amazon.
The alternative to introducing this regulation is not going to a system with no regulation, it's continuing with the current framework where Amazon is actively driving competition out of the market. Opposing this regulation without an actual alternative is just defending the status quo.
> "The solution is to create regulations & laws that prevent this behavior."
I'll take a slightly contrived and simplified set of examples to illustrate why a lot of free-market advocates don't agree with this sentiment as being correct.
1. We identify this "market failing" behavior of Amazon. I.e. Amazon does it a few times and after a while, public starts to
2. Legislators make it illegal for a platform to sell the same products as their suppliers. Easy, right?
3. Amazon alters products to not be technically "the same" so they skirt regulation. E.g. Renames "Plain Artisan Soap" to "Amazon Artisanal Soap", never mind that the product they "copied" was called "Joe's Plain Artisan Soap", and Amazon's product is advertised as "cheap alternative to expensive artisan soaps".
4. We notice and we complain.
6. Amazon complains back (maybe even a few court-cases along the way?), says certain products aren't the same. E.g. Supplier sells artisan soap, but Amazon argue their white-label "soap" isn't the same, it's just soap.
7. So to be fair, legislators start coming up with a reasonable system to identify similar products, which forces amazon to identify "similar" products in order to get them off.
8. Legislators followup and create reasonable rules and exclusions how Amazon can market their branded soap, or how closely the soap can resemble an existing product.
9. Amazon happens to also have a bunch of their own genuine products that it manufactures cheaply. Perhaps a byproduct of some sort of warehouse process they have, and they use their idle machines to make it, or something. But new suppliers come on that happen to sell something that according to regulations is "similar" to those products, and Amazon gets into hot water.
10. Amazon has to put rules, processes, maybe software algorithms to identify such a case. Remember, at Amazon scale, they have thousands of new suppliers and orders of magnitude more "products" that get added each day.
11. Regulators realize it's too difficult to figure this problem out and go to court over it. So they come up with a complaints + arbitration system to address it fairly with a "human in the loop". Think DMCA, takedown requests, etc.
12. Above regulations require paperwork, and you have to register as a platform if you get requests, you're obligated to address complaints of "similar products", etc.
Amazon implements all these rules at each stage, neverminding the "good-faith" interpretation of the original and subsequent laws put in place each time. I.e. "We just don't want platforms abusing their power to undercut genuine businesses." But at this stage we've, through genuine and honest market "interventions" and reasonable rules that seem straightforward and simple and cheap to implement, created regulatory costs that by default get applied to every new "platform" that competes in a space similar to Amazon. You've now successfully put in place regulations that inhibit and prevent competitors manifesting to compete with the existing monopoly or oligopoly.
And the alternative, if I'm getting AbrahamParangi's point, is to create regulations that only apply to Amazon. That seems arbitrary and unpredictable. I understand that regulations applied equally to every company increase barriers to entry, but making special rules for specific companies weirds me out.
That's what India basically regulated with Amazon. i.e. a company can't sell proudts on their open-market platform from companies you have a stake in (or your own generics presumably?).
>The new rules could wipe out nearly half the products on Amazon.in, said Satish Meena, an analyst at Forrester Research Inc. “It’s likely to disrupt availability for customers,” he said.
>The biggest beneficiary from the tightened rules could be Reliance, which is India’s largest private company and owns the country’s biggest brick and mortar retail chain.
In theory India standing up to giant foreign corporations. In practice, a huge giveaway to another giant corporation at the expense of Indian consumers and a big warning to other companies hoping to expand to or invest in India.
Or it will allow small businesses space to compete in India instead of taking a shortcut of allowing unfettered access by large corps to increase commerce, but in a way that funnels profits away from India itself.
That portion of the article is basically the opinion part. I didn't find great coverage over the full details of the regulations themselves.
Wouldn't solve anything. They'd just split their company to be separate entities but still share all the information and operate as if nothing has changed.
What they would probably do is form special relationships to give certain brands special placement and/or endorsement, but charge those brands a larger fee for the special treatment. The end result is basically the same.
I agree. I am hard pressed to think of a recent time that I advocate for an anti - monopoly government action, but Amazon and its current practices is one of those times. If they provide the platform they should not be able to compete with and undercut those using their platform. They are at such as scale that they can basically put anyone out of business to the detriment of all other businesses. This is what the legislation is designed for and it should be used in this case. Pro sellers on amazon also have to pay a fee averaging 13% per sale, while amazon products don't suffer that handicap. Its a competitive advantage the sellers cannot overcome.
If the aim is to curb monopoly powers of Amazon etc this would be disastrously counterproductive
When Joe's Custom Bike shop isn't allowed to be a manufacturer and a retailer of someone else's bike equipment, the customer is going to go to Amazon or Wal Mart to buy it. And retail giants, buoyed by the government killing half their competitors, will still find a way of squeezing their suppliers and funnelling sales data to preferred suppliers or related entities.
that solves the problem for suppliers, but creates one for consumers with lower competition. Less competition, higher prices.
*just noticed I was down voted, likely by
MichaelApproved because he has 7500 Karma and I only have 156.
I'm starting to really hate contributing to HackerNews discussions because it's fully of a bunch of bullies who pound on your karma if you don't agree with their viewpoints. Bring on the downvotes, I know HN hates any mention of it's imperfections as well. At least my conscious is clear.
Please don't break the site guidelines by going on about downvotes. It just adds noise, and since it's against the rules, usually guarantees more downvotes.
If you think there's something abusive going on, email hn@ycombinator.com so we can look into it.
Please don't submit comments saying that HN is turning into Reddit. It's a semi-noob illusion, as old as the hills.
Please don't comment about the voting on comments. It never does any good, and it makes boring reading.
To your point, though, lower competition is not always bad. I as a consumer very much prefer having to deal with fewer toilet paper suppliers if they are of good enough quality. The toilet paper industry is not one where I expect dramatic innovation brought by competition. I just want the cheapest pack that won't feel like sand paper on my delicate behind.
There are, surprisingly, quite a lot of similar industries where consumer would prefer cheap and fast rather than elaborate and innovative products.
The cheapest pack comes FROM competition. You, as the consumer, want the cheapest pack. You want competition. It's the most basic of economic principles.
P.S. making comments without a basic education of a topic is equally boring to read. I would rather you say it and have the chance to learn than silence you though.
You missed the whole point in that uncalled for attack on my education. No one here is talking about preventing all competition. Then you went on repeating an economic principle without understanding it fully. I know that because you consider it absolute while it's in fact not. In the real world, it is very rare to find an actually efficient market with perfect and instantaneous discovery where those simplistic economic laws apply correctly.
The general point is that it is generally possible to keep fair competition flowing between a smaller group of companies, as long as that group is large enough for its members' respective interests not to align completely.
All other things being equal, there can be only one cheapest pack of toilet paper in a given market, which immediately disproves your argument. After all, having 5000 toilet paper manufacturers all competing among themselves is certainly no guarantee of any improvement to the consumer for that particular criteria, because 1000, 500, 100 or even 2 would have sufficed barring collusion.
Now we can add many other qualities to toilet paper that make discerning customers keener to see past price when they're buying between competing suppliers. However, in mature markets with proven, stable demand, there comes a point where adding more actors does not bring value. Those additional entities are merely tapping into existing market value without providing marginal benefits and without forcing others to improve.
Do you believe the toilet paper industry is so ripe with innovation that its warrants as many competing manufacturers as possible, with as much competitive spirit among them as possible? Nope. In a supermarket, the pack of toilet paper that's put in shelves slightly above eye-level will be chosen way more often by consumers than other packs located a bit below. Companies do not compete on the quality of their products, they compete on the amount of money they pay for their products to be stacked the right way on the right shelves at the right location.
Back in the real world, across many industries, going from thousands of competing companies to a few hundreds is definitely not worse for the consumer.
Stating the obvious I guess. All retailers do this and create their own white-label brands to squeeze profit from well-performing categories.
Target, for instance, is very upfront about it and they have like a gazillion white-label brands that compete in hundreds of categories, which makes it very gray for the customer.
Does anyone really think that any retailer launches a competing product in a category without looking at all their supplier data?
If you want distribution you risk this. The only way to avoid it, it's to do direct to consumer or having a product that is extremely hard to copy.
> Stating the obvious I guess. All retailers do this and create their own white-label brands to squeeze profit from well-performing categories. Target, for instance, is very upfront about it and they have like a gazillion white-label brands that compete in hundreds of categories, which makes it very gray for the customer.
IIRC, many traditional white label brands are actually manufactured by the name brands themselves, and they're part of a strategy to segment the market.
The difference here seems to be that Amazon has been cloning relatively unique products made by smaller companies, while traditional white label brands are fungible commodities made by large players with little differentiation. From the OP:
> Because of the limitations of shelf space, traditional retailers stock far fewer products than Amazon’s hundreds millions of items. Typically, they create private-label products to compete in generic categories such as paper towels, rather than copycat versions of items created by smaller entrepreneurs, private-label executives said.
That is largely not the case. I spent ten years making private label medical devices for CVS, Kroger, Target, and dozens of other stores.
There tend to be specialist manufacturers who fill the store brand niches. E.g. in pharma, close to 90% of the pills, tabs, and liquids sold in front of the pharmacy counter are made by one company, Perrigo, whose entire model is predicated on being a store brand supplier.
I don't think Kimberly Clark makes the store brand paper products, nor does P&G make the store brand beauty/cleaning supplies.
And I can give an opposite case. I used to work for a large 1st-tier manufacturer of consumer batteries (hearing aid, AA, 9V, etc etc).
We were constantly competing with the other manufacturers for the Wal-Mart, Walgreens, CVS, etc white label brands. It was increased volume for our plants and they would usually suck up surplus supply.
The catch was that your contract was continually up for renewal and you had to beat the others on price and other criteria. After all, nobody else would know that the rack at Wag's was half-bunny and half-coppertop, right?
It was also a headache because defective parts and customer complaints counted against you hard. We actually tested our white label products more than the name brand SKUs.
I work in this industry as well. That said - private label is a small (but growing) area in the US markets, so it's hard to make a generalized statement of how much someone does or does not participate.
Many retailers are beginning tie production of private labeled products in with being the captain of a category - which begins to create incentive for companies to start to pursue these private label opportunities.
K-C and P&G are two examples of companies who largely resist the private label trends in the US - you could counter with ConAgra and Treehouse.
A lot of that has to do with the product and what-not, of course.
I really don't think Target is that upfront. How am I supposed to know Mossimo and Goodfellow are Target brands. I do however understand that Kroger groceries are made by the kroger store.
>On March 28, 2000, Mossimo, Inc announced a major, multi-product licensing agreement with Target stores, for $27.8 million.
>In 2017, Target underwent a makeover, introducing new smaller lines and eliminating bigger billion-dollar lines, including Mossimo.
>Target distanced itself from Mossimo amid Mossimo Giannulli's alleged involvement in the 2019 college admissions bribery scandal, saying that Target had not been involved with Giannulli in over a decade
I mean. That's what I meant. Upfront in the sense that they compete with their suppliers by having a lot of brands that are hard to distinguish as white-label brands by Target.
To me that is not a problem as long as they are not giving their own products better placement. If 50 brands of cornflakes and in them target has a 10 white-label brands that is not a problem but if all 10 white-label brands are put in front of other brands ie first few in search results then it is a problem.
In all seriousness, not giving your own brands prominent placement would be ignoring the benefits of vertical integration, leaving money on the table, and violating your fiduciary duty to stockholders.
The idea that corporate directors (of whichever kind) have an legal obligation to maximize profits/shareholder value is a myth. Taken directly from Alito's (non-dissenting) opinion in Hobby Lobby:
"While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so."
Additionally, even if there were such a requirement, it would be toothless. The corporate directors of a company facing criticism from its shareholders that it is not maximizing profits (in the short-term) could simply retort that they are pursuing a strategy that maximizes profits in the long-run, and that investors should look elsewhere for short-term gains.
As a practical example, consider any company that pursues more environmentally sound practices, or tries to source materials more ethically. By doing more than the bare minimum, they are surely cutting into short-term profits, however they may in the process be building a more resilient and popular brand that profits more in the long-run.
This would actually be an interesting test of that decision and the law of Business Judgement, which normally shields corporate directors from micromagement via lawsuit.
I doubt it would pass the threshold of "grossly negligent" that you'd typically need to sue a CEO as a shareholder, but it's certainly different from an otherwise positive action that simply uses company resources - like raising salaries or making charitable donations.
Frankly all that distinguishes these “brands” is literally just the packaging. How’s this better than planned economy where every item is just labeled with its dictionary definition?
I mean seriously, if this is end-game capitalism what’s the added value?
Amazon is a monopolist in several categories. Different rules apply to monopolists than other organizations. A basic constraint is that a monopolist may not use their position of monopoly in one area to give them an advantage in another.
Similarly, Netflix's sometimes odd choices for their deals or for original content production is certainly driven by the performance or certain metrics of previously acquired content.
Does anyone really think that any retailer launches a competing product in a category without looking at all their supplier data?
So, if cars are inevitably becoming computers with wheels, what's going to happen to insurance companies? The major weapon of underwriting is data, and a company like Tesla is going to have a huge advantage in data over external insurance companies.
Is it really a societal good for big companies to control all of this data, or should the data belong to the consumer/owner/user? I suspect it's the latter which gives people the most choice and freedom by fostering the most competition.
There are insurance companies who already sell trackers that plug into your car's OBD-2 port and have onboard hardware so that the insurance company sees your acceleration, handling, sudden braking, times you drive, miles you drive, etc.
Right now, very safe and low risk drivers can use these companies to get discounted insurance.
Eventually, every safe driver willing to install these trackers will do so for the lower insurance rates, leaving a much higher risk pool with the non-tracking insurance plans, and it will become very expensive to not be tracked by your car insurance company.
I know. So again here's the heart of my point: Even with the OBD-2 port, the data available to these apps is nothing compared to the data available to Tesla. Tesla can figure out how often you get close to bumping into something, exactly how far, how fast you were going, and what the lighting/weather conditions were like at the time. That data is orders of magnitude better than the stuff coming out of the app.
Sure, but what's stopping any other car manufacturer from buying and using the same sensor kits? Look, I get that you can't get the same data with a 3rd-party kit but if you're an insurance company you're gonna be working with car manufacturers anyway.
Sure, but what's stopping any other car manufacturer from buying and using the same sensor kits?
Nothing, though I'm guessing they will be far behind for a year or so even after they deploy. (Unless that team is super competent, and they have absolute management backing.)
Look, I get that you can't get the same data with a 3rd-party kit but if you're an insurance company you're gonna be working with car manufacturers anyway.
It completely changes the dynamic of the business. One won't be able to compete, except as a manufacturer partner, and not all manufacturers will be equal. It will limit choices to consumers, and very strongly drive consolidation. I'm not saying only Tesla will be able to do it. What I'm saying, is that the nature of the business will change massively, in a way where customers will wind up with fewer coices.
Insurance companies are already offering discounts for using their apps while in car.
I was debating on whether I should include mention of these apps. Here's the thing about that: The data available to these apps is nothing compared to the data available to Tesla. Tesla can figure out how often you get close to bumping into something, exactly how far, how fast you were going, and what the lighting/weather conditions were like at the time. That data is orders of magnitude better than the stuff coming out of the app.
It's very analogous to iOS app makers competing with in-house Apple iOS apps. It's hard to compete, when your competitor controls the APIs.
All the things you name are available to a phone app as well. Particularly, if it has enough penetration to be in the vehicles near you. Local weather + data aggregation from all the insurance companies apps and suddenly about the only thing they don't have is whether you were looking at the road, and the condition of your tires and other vehicle specific metrics. Sure the GPS/accel data might be off a few percent vs the car but does that matter?
(BTW, Assuming a deal with your credit card company, they probably can approximate your tire age too).
All the things you name are available to a phone app as well.
Only 'kinda'. You might get 1 camera feed, and you can see what the weather report was for the area. Tesla has something like 8 camera feeds, and they can tell if visibility was compromised because the other car situated at 7-o'clock to the rear was in a building's deep shadow. The app could only kinda get that if one were lucky.
suddenly about the only thing they don't have is whether you were looking at the road, and the condition of your tires and other vehicle specific metrics
That and a lot more! Also, with far superior granularity, and with fewer data quality problems.
(BTW, Assuming a deal with your credit card company, they probably can approximate your tire age too).
Again, mostly. I would agree that the apps could compete. They're competing at a significant disadvantage, though.
The difference is aggregate vs specific data. If insurance companies use the cars' data to change their policies in aggregate, there's no problem. Meaning, if they discover that cars of a particular brand have more accidents, they can raise premiums on owners of that brand of car. On the other hand, determining that YOU drive really fast, should NOT trigger a higher premium.
It should absolutely trigger a higher premium if driving faster means higher losses. Otherwise the people driving slower are subsidizing the risk that the people driving faster are taking. How is that fair?
This is the same situation that happens on most platform plays.
You can see this in how Salesforce and Shopify are leveraging their platforms to learn what is popular and produce/buy their own products to sell to their customers to capture 100% of the value, rather than 30% of the value of the solution to the customer.
I think the biggest issue isn't the "copy product by leveraging data", but more like, their products play by a different set of rules.
They could copy products and launch them abiding by the same guidelines, policies and everything else.
That's not the case, and that's where the unfairness comes to play: Amazon plays on their market place by a different set of rules.
It's not only Amazon. Google, Apple, and so on. The question starts to arise, if they want such massive platforms and play on such marketplaces, they must obey their own guidelines, else they are either stripped from the playground or someone else should own the play ground.
if they want such massive platforms and play on such marketplaces, they must obey their own guidelines, else they are either stripped from the playground or someone else should own the play ground.
So here's a question: Is a store really a marketplace? It seems to me that Amazon, Target, Macys, etc, do a lot of curation and editorial work with regards to standards of production and marketing for items in their stores. Isn't that more akin to publishing?
I think the grey area and critical zone is this: Should a company be allowed to advertise their ecosystem/playground as akin to a "marketplace" when what's really happening, is that they are tightly controlling the product and harvesting the information for themselves? Seems like a bait and switch to me! ("Your margins are our opportunities," is the most fundamentally aggressive business statement I can possibly imagine, and Jeff Bezos said it!)
Apple, Amazon, and YouTube all seem to fall into this general pattern: A "marketplace" or "ecosystem" which is less bazaar and more their tightly planned cathedral. "Partners" who are put upon, data-analyzed, and sometimes cannibalized. This pattern seems to be very widespread, and it only stands to reason, given the tremendous increase in the ability of companies to leverage technology to harvest such data in their own playgrounds.
I understand your idea, but I still think they are and should be defined as marketplaces, with a scrutiny any marketplace should get.
The first reason is, Amazon isn't doing much curation (if any), due to their size they can't do proper curation, and bots are terrible at it (either based on keywords or reporting). This is proven by counterfeit items being sold, listings being stolen/manipulated, biased report systems.
Then Amazon claims they aren't liable for the products sold - the customer belongs to Amazon (you can't even have access to their names anymore), the listings belong to Amazon, everything except what arrives at the door.
At last, Sellers pay for the product advertising Amazon does, it's called a Referral Fee (ranges from 8% to 15%). In fact, the Seller pays for everything (and they should, yet the amounts are up for discussion).
So they have all the symptoms of a marketplace, yet Amazon plays what ever role is more suitable for them.
I only think they should be enforced the rules of a market place in any developed place in the world.
No real private marketplace would be open if they were selling counterfeits. Even if they sold legit products as well, until they purged everything counterfeit they would not be open, and they'd pay fines for it.
I bet if any public Health/Goods inspection force would be deployed on ANY amazon warehouse, they'd find shady shit. But such public organizations don't have the tools/protocols to do what they do in the real world.
I agree with you when you say, this isn't limited to Amazon.
For example, why can't we get the full data from the customer that purchases from us? Why can't they be our customer on Amazon? Amazon hoards everything, and we get the scraps.
What kind of "full data" would you want from the customer? Earlier, you mentioned their name. Why can't the customer's transaction be as anonymous as possible, if they choose to be?
It seems as if Amazon, likely prodded by the GDPR and CCPA, is limiting the personal information they share with third parties. I think that's a good thing, for the consumer at least.
That's a slippery slope: is the person the seller customer, or Amazon's customer?
Their name was an example of something required to provide feedback, make amendments, or any kind of engagement that's required with that customer.
Anonymity is one of the reasons review manipulation thrives on Amazon.
Honestly I doubt it was due to GDPR/CCPA, or user privacy concerns, and more turning FBA into a pipeline of homogeneous suppliers that race to the bottom.
This questionable business practice is neither new nor limited to online companies. Brick and mortar companies like Costco do have their own products competing from other vendors, and I am sure they analyze sales data before jumping on selling their own.
Everyone is arguing as if Amazon is the only retailer here. Yes, they are a platform, but they are one of many.
In fact, many people here contradict their own argument by saying that they are forced to go to other websites or direct to the supplier. Stating as much is tantamount to admitting that the market is functioning correctly.
Amazon is great for some things and bad for other things. If it doesn’t meet your needs, go elsewhere instead of rewarding it with your business and then complaining that it’s too big and powerful because people like yourself keep rewarding it with your business.
This is common practice in the retail industry. Large retailers want to ensure that they can offer their customers the lowest price on all of the products they sell.
This is totally false - the number of retailers who have testified before congress that they don't use seller data to compete against sellers - and then who go ahead and do just that is basically zero.
Additionally, most other retailers actually BUY the third parties products and take the risk of promoting and selling it. On Amazon third parties take the inventory and many other risks and may have to pay amazon to promote their product.
The story here is that amazon has testified it does not do something, has supposedly the "highest ethical principals" - yet goes ahead and does exactly that which it said it doesn't do.
Do that not matter to you from a trust / credibility perspective?
"Nate Sutton, associate general counsel at Amazon, told lawmakers the company doesn’t tap data from individual third-party merchants to determine what new products to create."
Of course they don't use data from individuals, they use all of the data, in aggregate, from everyone including themselves.
Amazon has promised individual sellers it would not use the data for their products to market against them (not individual buyers).
Despite the ludicrous lengths Amazon goes here to say there were multiple sellers and so this data was aggregate, we all understand (and amazon did too) that if you generate statistics such as median sale price per month / day etc where 99.95% of the data comes from one seller, you have the data from that seller.
> Amazon has promised individual sellers it would not use the data for their products to market against them (not individual buyers).
Again, there's that word. Individual.
They get off on a technicality with that comment to congress. The second you have even 0.05% (Your example, not mine.) of any category occupied by a second reseller, you're no longer targeting individuals -- you're entering a 'product vertical'.
Amazon does exactly what you're claiming they do not.
Major retailers buy and sell their product line data from neilson and others. I worked on a project with one of them so I know first hand. So the idea that they don't use seller data to market their own products has to be false.
And amazon sellers can sell their data (and do sometimes) as well. All that is fine.
Remember, for major retailers, a) THEY are the seller in most cases and b) in most cases they get mfg's to agree to whatever is going on in the agreement UPFRONT.
I mean, let's be objective for a minute here. Do you really believe that Walmart, Target, Costco, Kroger, etc, are more ethical with their suppliers than Amazon?
Let's not forget that many of these large retailers have moved to the practice of taking up to 90 days to pay their suppliers. 90 DAYS! That's three months before you see the money of the product you sold through their channels. And they do this because they simply can.
I believe that there's not a single retailer that doesn't leverage its distribution advantage to squeeze their suppliers. If you're not Coca Cola, PepsiCo, Unilever, Procter and Gamble or Colgate Palmolive, you have little to no room for negotiation.
I've done consulting for small business distributing into major stories.
Other stores are very very UPFRONT on what they will do. Many make the small mfg sign an agreement that not only will the store have all the data, but the mfg will need to pay the STORE if they want the data.
The difference here is that a) it is all upfront and b) the mfg can make an informed decision - is this worth it.
If you need store / day detail on sales because you are running promos and in-store marketing vs just being a low cost volume seller - all affect your view of this.
Finally, in grocery retail - once you have the order and deliver, you DO get paid regardless of whether product sells. This is an important positive even selling through Target in some cases especially with more perishable goods. Amazon as a seller you can't plan as well - their alog or someone else paying for promo could cut your demand in half overnight.
Additionally retail stores actually drive demand / discover ability when they purchase your product in a way amazon often does not.
> Finally, in grocery retail - once you have the order and deliver, you DO get paid regardless of whether product sells.
It's been quite a long time since I worked in the grocery business, but I don't think this is accurate. A lot of vendors stock their products themselves or use food brokers that do it, and they are on the hook for expired and returned product. And there was a shitload of bribery and corruption happening to steal shelf space and end unit space from competitors. It's a surprisingly cut throat business.
> The difference here is that a) it is all upfront and b) the mfg can make an informed decision - is this worth it.
You sign the same deal when you sell on Amazon, probably even signing away more rights. I'm not sure I haven't read the full EULA when you sign up to sell.
> Amazon as a seller you can't plan as well - their alog or someone else paying for promo could cut your demand in half overnight.
This is about the only thing you've said I agree with. But it's not due to lack of data, it's due to barrier to entry with retail sales you have less competition. Right for the wrong reason here.
> Additionally retail stores actually drive demand / discover ability when they purchase your product in a way amazon often does not.
Amazon drives way WAY more discoverability than any retailer.
Pretty much your entire argument contradicts real world experience, common sense, and actual reality from what I know of the situation. I can tell you for a fact your assertion that 'Amazon doesn't do this' everything you're saying is 100% false.
Amazon drives way WAY more discoverability than any retailer.
This is completely false. Amazon provides significantly less discoverability than a retailer. With a retailer, you get a product that actually shows up in front of people's eyeballs, and the ability to provide in-store promotions to attract customers, and, most crucially, the store lets you know how the promotions perform. A small minority of retailers make you pay for this data, but most don't because they want products to sell through. Many stores will even work with new brands to promote their products, such as (temporary) eye-level product placement, end-of-aisle placement, special displays, etc.
Source: Before going in-house I used to rep manufacturers of all sizes from startups to billion-dollar behemoths selling to major, regional, and local retail chains. Grocery stores are the best at working with brands (but also the fastest to drop products that don't sell), Target is about average, and Walmart was the worst at the time though I hear they've gotten better.
As a non shlock product seller you are much more comfortable in local retail I think? I just thought retail was easier to actually talk to real people.
The schlock sellers I think are more expert in the amazon game (image / product swapouts and seller targeting, review spiking games, competitor flag and return / hazard attacks etc). So much BS and so little real recourse - the scale of marketplace must be nuts.
Tim - have you actually ever reped / managed distribution into retail at the moderate scale at least?
Do you have a reasonably high volume ($1M+ sales) amazon account to compare to?
I just ask because for such strong opinions "everything you're saying is 100% false" you don't seem like you have actually worked with businesses in this way.
Beleive it or not, you can actually talk to real human beings at your local retail stores. And yes, you can talk to real people at amazon, but if issue is outside their box (on seller side) you get little mercy. If inside box some of the treatment is amazing (amazon payments for goods they show as lost by them as a sale with no return risk)
"Nate Sutton, associate general counsel at Amazon, told lawmakers the company doesn’t tap data from individual third-party merchants to determine what new products to create."
> The online retailing giant has long asserted, including to Congress, that when it makes and sells its own products, it doesn’t use information it collects from the site’s individual third-party sellers—data those sellers view as proprietary.
Amazon agrees that what is being reported goes against their policies.
'"However, we strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch." Amazon said employees using such data to inform private-label decisions in the way the Journal described would violate its policies, and that the company has launched an internal investigation.'
That carefully phrased language could be technically accurate but still allow them to use seller-agnostic information about the market for batteries or speaker wire to decide to launch Amazon Basics batteries or speaker wire.
(Which by the way, I’m totally fine with, because there’s no reasonable way to prove you’re not doing it and any brick-and-mortar retailer is almost surely doing it as well.)
It's also ethically fair game to base your decisions to launch a product on the amount of consumer interest the category gets. Everyone does that.
What they promise not to do is take a look at seller specific data. That makes sense because it won't get them much extra compared to looking at categories, and the sellers ethically claim it's their data.
Actually - as the article described, they DO spend a lot of time looking at SPECIFIC seller data for unique products because it gives them LOTS extra that category details don't provide.
Could you please stop using allcaps like this? This is in the site guidelines: Please don't use uppercase for emphasis. If you want to emphasize a word or phrase, put asterisks around it and it will get italicized.https://news.ycombinator.com/newsguidelines.html.
> This is totally false - the number of retailers who have testified before congress that they don't use seller data to compete against sellers - and then who go ahead and do just that is basically zero.
I can't understand this at all. Retailers create in-house brands all the time. Do they somehow make decisions of which products to create in a black box? How would they even do that?
If you go into the Walmart pharmacy, their store-brand equivalents are full of statements such as "Compare to the active ingredient in Advil".
a) actually sell their product to walmart, even the branded product is owned, priced and managed by WALMART. So there is much less SELLER specific data to datamine.
b) sellers to walmart AGREE that the data on products priced, sold, and promoted by walmart (even branded one) belongs to walmart, and in many cases the seller has to pay extra if they want day/store level detail on sales. So in most cases it is a very upfront relationship, and walmart takes a lot more risk in pricing, promoting etc.
Here Amazon has enticed sellers by reassuring them that in CONTRAST to target, Amazon will NOT use the data they provide amazon to market against them AND sellers give amazon a lot more "seller" data because the sellers are often doing their own price management etc etc.
A lot of businesses do this. It's far less risky to copy a successful model than it is to explore the unknown space of products/services and find out what a successful model is, what to price it at, etc.
This is part of the reason systems like the patent system were created for inventions: to encourage people to bother exploring risky unknown spaces to develop inventions by granting them essentially a short term monopoly to harvest their reward which they would then compete against after a time period so society could further benefit from their finding by allowing competition to drive prices down and iterate on those inventions.
Obviously the patent system doesn't really serve this purpose anymore like so many systems that have been sidestepped/bypassed, changed through regulatory capture and corrupted by pure profit seeking behaviors.
It's a little bit different because Amazon claims to be a marketplace at the same time as curating its own specific product offering. It would be kind of like if a mall required all transactions from independent stores in the mall to go thru the malls servers and then the mall started its own product lines to sell based on that data.
That amazon does has been common knowledge since Amazon Basics first appeared. Obviously, Amazon is enjoying the enviable position enjoying being the mall, the payment processor, and everything else.
Many Amazon sellers only sell on Amazon, or have a large majority of their business sales there. This is equivalent to having insight to almost your entire business.
Most brands at Walmart and other stores are sold many other places.
There are many businesses who are 100% dependent on Amazon as a platform and Google as an acquisition stream. If you want to break out and sell on your own online platform, you're still dependent on Google, be it through search or advertising.
I would love to hear of consumer facing (B2C) online businesses who are successfully operating without any Google or Amazon dependencies to see if it's even possible in the current online ecosystem.
My hypothesis is that it isn't, and as such Amazon and Google should be broken up. They have close to a functional monopoly on consumers, but I'm putting forward that they also have a functional monopoly on online businesses in commerce.
Which goes back to the buyer problem, that they don't consider other channels. Then you get hostile co-development of browser extensions for cross-channel price comparison, and life in the jungle continues on as such...
The key difference between what Amazon does and Costco/Walmart etc does, is that regular retail takes the risk of buying the product to resell, prior to gathering data and considering whether to clone it.
Amazon is able to snoop on all the sales data without any risk.
We sell an ERP catered to distributors and many do sell on Amazon. I’ve always wondered why on earth they would continue to sell on a platform that’s constantly gathering their selling data, or even inventory if they’re going FBA, and eventually try to undercut them if their products sell well.
Their response is usually “I’m making enough money now, why worry about later?” or “our product category is too niche for Amazon to enter.” It seems like that kind of reasoning makes sense for traditional retailers like Costco/Walmart/Macy’s etc., but not Amazon where Amazon virtually has no risk in listing a product.
When your customers say that their product is too niche, they're probably right in a lot of cases. The argument that Amazon can enter every niche and cater to every consumer want is essentially saying that planned economies can actually function. But they can't. Amazon is skimming the highest volume product categories and that's it. They couldn't manage the complexity of branching out into every single long tail product.
Yes they can't but what Amazon is usually doing is pretty simple.
It gets into things where not much is needed.
For example, USB cables, laptop sleeves, kettle bells, dumbell, weight plates, led light and this kind of category is simply too big and it will put whoever ever discovered a new niche which doesn't require anything more than the physical product get outcompeted by Amazon.
And how would you ever know either of these two (volume, margin) if you were an arbitrary 3rd party?
Amazon doesn't need to branch out into every single long tail product to cause severe disruption to a retail sector that is often predicated on low single digit margins.
Amazon know volume, Amazon goes to suppliers on alibaba and gives them the quantity they require and then Amazon figures out what margin they'll be making if they sell it at the same or lower price than the original seller.
If you can't see volume, you can't estimate profit, and you can't differentiate which products are worth considering as a primary seller.
Start with volume as a suggestion of which products to investigate for purchase price with sellers. If you can get the "right" price with the "appropriate" volume, start selling the product direct.
Also, at Amazon scale, you can estimate margin by looking at price variation over time and throwing in some well tested assumptions.
> Also, at Amazon scale, you can estimate margin by looking at price variation over time and throwing in some well tested assumptions.
You really can't. You have to do research and modeling to figure out margins. There are probably half a dozen factors that determine a product's margin.
The other thing is that Amazon effectively has unlimited funds to fight a seller for control of an ASIN. They can sell at a loss for as long as it takes to squeeze you out. They have a massive unfair advantage.
Amazon makes life so hard for their suppliers it doesn't even surprise me. I once shipped a box of 10 laptops to sell on FBA (retail value ~$10k) and UPS showed the box as delivered, Amazon checked in the units and showed them available for sale on the website. Then 24 hours later all of them got removed saying I sent the inaccurate quantity in the box and none where now available for sale. The laptops disappeared and I had to do an insurance claim with UPS. Amazon's support was horrible and made me never want to sell with them again. Lots of stories like mine on the Amazon subreddit.
Subreddits tend to wildly misrepresent reality due to survivorship bias. People generally don't post or noodle through such communities when things are going well. That's not to say there isn't a significant supplier issue -- just be aware of the company you keep. I often forget to be critical of the bubbles I inhabit.
In any case, I do wonder if Amazon's treatment of folk like you would improve considerably if Amazon had competition. It seems they can push you around because there are no consequences to pay.
"Subreddits tend to wildly misrepresent reality due to survivorship bias"
I disagree. If Amazon had great customer service, there wouldn't be a large volume of people complaining.
"In any case, I do wonder if Amazon's treatment of folk like you would improve considerably if Amazon had competitio"
I agree with you here. The only two marketplaces that actually get traffic are Ebay and Amazon. I've tried them all over the years and the rest combined don't even come close.
> If Amazon had great customer service, there wouldn't be a large volume of people complaining.
Volume of complainers is an absolute number. Customer service can only reduce the proportion of complainers. If you have 50 complainers on 100 customers, bad customer service. If you have 50 complainers on 1,000,000 customers, good customer service.
You can conclude nearly nothing based on the absolute number of complainers in isolation.
As a counterpoint, we regularly have Amazon reimburse us for thousands of dollars of merchandise when they lose our products at their warehouses. And they reimburse us for what we would have netted had we sold the product, instead of what the product cost us. It's been a great arrangement so far.
This is different that Costco selling their own brand vodka or toilet paper because buyers can see those items side by side when shopping. Amazon has their products on the top every time and if 3rd party sellers want to be next to them, they have to pay for ads. Amazon doesn't pay for its own ads so they can effectively hide their competition.
You say Amazon doesn't pay for ads, but by them taking the space of the ads others aren't buying, they're losing ad money, which probably equates back to the value of the ad. ?
I mean, they own the whole platform so click fraud would be easy to get away with but hopefully that's not happening. I'm not sure if anyone has the ability to audit their honesty.
I believe amazone should pay for their own advertisement to well themsell and prices should be transparent (amazone has to pay them self what other would have to pay), _because then they would still need to pay tax_ for this. At least in countries where taxes are not very low this could make the situation slightly better. Through not that much better tbh.
Yes this sounds like an antitrust situation to me (I know they are not technically a monopoly but different countries have different takes on these laws so it's worth considering why they exist).
A phone wholesaler with a retail business will be broken up since it is a problem for their other retail customers.
This is quite similar where Amazon is acting as both the provider and a retail customer competing against their other retail (marketplace business) customers, with a number of advantages.
Having them forced to provide services at arm's length, at published costs, with audited public books and no inside information would level the playing field. They probably already account for advertising "spend" internally anyway if they're smart, since as another poster alluded they miss out on PPC when someone clicks on an Amazon product so need to know what it cost them.
That is how it works in the physical goods world, at least. A corporate owned store "buys" it's inventory from the corporation. I'm not sure exactly how taxes intersect with those transactions, but they establish a much clearer picture of how money moves within the organization. Opportunity costs become a lot clearer when it's not "we could have made X amount from ads here" but instead "we spent X on advertising."
You think store brands are sitting side by side with name brands? If anything they’re at eye level. And with amazon, they can’t actually delete the listing, but maybe you have to scroll down a bit.
You think store brands are sitting side by side with name brands?
Based on my last trip to the supermarket, absolutely.
The stores have to put their brand next to the name-brand, or nobody will see their stuff.
They can't just shove the name brand items to the bottom of the shelf because the brands have done all of the advertising, and those are the logos, colors, and packaging that people are looking for.
Yeah, this. I often buy house brands of things like Ibuprofen (same stuff, but cheaper), but they absolutely put it next to the well-advertised brands, because otherwise finding it would be a nightmare and nobody would bother.
Display in a store is much more limited than online. They have to put like items together if they want customers to find them.
Then that's even worse! They're counting on the fact that you're going to look at one item, to make you see theirs. The point isn't that Amazon is great, it's just that stores do the exact same dumb shit and we've grown accustomed to it.
Why the sudden outrage?
PS: I didn't read the article because of what I consider an even more grotesque form of consumer manipulation...blocking your news website from displaying the full article unless you interact with it, and breaking reader mode so that you have to see their ads/graphics. I'd get my pitchfork out for that.
Not much. Walmart crushed an art supply company by enticing them in, copying the product at a lower quality and price, then slowly reduced shelf space of the other guy as he deflated. He ended up worse off than when he started.
With its huge market share Amazon has practically a monopoly as a marketplace or as an online-retailer, depending how you define it.
If a supermarket starts playing dirty there are many others in which you can sell your product. If Amazon steals your product, you have no other marketplace to turn to.
Amazon gives an opportunity for many businesses to flourish, but then can kill them on a whim. "Live by the Amazon, die by the Amazon."
Traditional retailers buy their inventory from manufacturers to place on the shelf and in turn sell to customers. There may be some agreements on buying back unsold inventory, but generally the retailer takes on risk for the inventory they are selling.
Amazon, conversely, only provides the platform connecting manufacturers to customers. They may hold consigned inventory in their warehouse, but they typically don't take on the risk for any unsold stock.
This is a big difference between grocery private labels and Amazon basics. Amazon is reaping the benefits without taking on any of the risk.
Disclaimer: I don't work in retail, this is my understanding based on reading but I could be mistaken.
we should really stop thinking there is always a direct parallel between web and physical equivalent. On the surface they look alike but the reality is that they are fundamentally different in scale and personalization/targeting/tracking possibilities which makes the online case completely different than the physical case. I can see all the products at costco, I cannot see all products on amazon for example. Besides, costco is not a monopoly, and I can go to target or safeway if I want to...
> Besides, costco is not a monopoly, and I can go to target or safeway if I want to...
amazon doesn't have a monopoly in online retail, and i can go to any other website just as easily. far more easily than you can drive to a different store.
You want to start a discussion about company stated policies and how each person feels they do or do not live up to them? That could go on for quite awhile!
You're either missing the point or strawmanning, I'm not sure which.
In speaking with Congress, they're stating to everyone that they are there to act as a platform for third parties. They're a "pass-thru" service.
That implies that while metadata may be being collected, you shouldn't be looking at it, as it isn't "yours". It would be like a cloud provider going into business undercutting their client's because they weren't savvy enough to encrypt their business records. Or the post office going through your B2B mailings, figuring out your footprint, them becoming a competitor.
You have one job. That's it. Once you start abusing your access to your seller's transaction data to figure out where to or whether to diversify into their vertical, there is a fundamental breach of trust, and a very reasonable case to be made in having exploited something you shouldn't be.
That's the Hobbesian Leviathan for you; you don't need all those little businesses anyway!
So this seems to be getting drowned out a bit; but the core issue here is not that Amazon is creating their own labels to compete with seller's products. It's that they've publicly stated, including to congress, that they don't use non-public, seller specific data to compete with them; and now former employees are claiming that's a lie.
Amazon agrees that, as claimed, this is a problem.
'Amazon said employees using such data to inform private-label decisions in the way the Journal described would violate its policies, and that the company has launched an internal investigation.'
I've lived in Kirkland, Washington, off and on since 1994. It's amazing how many people all over the world know of Kirkland from Costco branding. For a log time the reddit tag line[0] was "We're more than Costco!"
> but I am a Costco fan boy, and they do the same thing
Are you sure? My understand was the Kirkland is mostly just a re-badge for already existing manufacturers.. Kirkland usually buys up their "B" stock/bin of items and just rebrands them.
There is going to be a coordinated attack on Amazon ahead of the US presidential election and it will have valid information and misinformation. The WSJ will no doubt be involved.
Question why and when old news is being dredged up. For example, is Amazon any worse than Wal-mart or Oracle or any other number of companies out there? If something is not contemporaneous news, then why is being being used at the point in time you are reading it? What is the motivation of the group pushing that information? Sometimes that is the even bigger story.
I am happy to buy these products over generics because of the higher quality. Batteries, paper shredders, water filters, electronics accessories, household supplies, office products...
every major retailer has store brands, and I fully expect they all use their sales data to inform their generic products business, and all of their suppliers expect that too. As a consumer, I like that Amazon is upfront about what products come from their brand. Good luck browsing through the plumbing and electrical fixtures at Home Depot or Lowes and figuring out what crappy store brand stuff and whats not.
(1) it's not just about generic products. Amazon uses the same approach to decide what non-generic products it should become a direct seller of, potentially (and normally) negatively impacting 3rd party sellers.
(2) HD and Lowes have almost no generic/store brand stuff at all. There are a few exceptions, and they likely do represent fairly profitable sections of their overall business. The main ones I am aware of: lighting, ceiling fans, toilets/sinks, flooring. That leaves huge sections of these stores without generics.
(1) You don't think HD and Lowes and Safeway and Walmart and every big retailer doesn't use their sales data to decide which products to try to disintermediate distributors and other middle-men in the supply chain?
(2) I'll concede HD and Lowes have a lot of departments without store brands [1], but raise you the local grocery store, which doesn't.
[1]: The pattern I see is that the stuff marketed mostly to contractors is less likely to be infected with crappy store brands than the stuff marked mostly to DIY'ers. I suspect its in part because pros will learn whats quality and whats crap a lot faster than DIYers, because the latter only buy a ceiling fan or whatever once a decade.
Amazon has done a lot more than you describe. Their marketplace has been a major online venue for retailers not just manufacturers and distributors. Companies (typically small) that focused on small niches (e.g. triathlon equipment). Amazon has siphoned off the best-sellers and high margin items from these sellers, making their businesses somewhere between less profitable and completely unviable.
The model here is not "Safeway and Walmart and every big retailer [ using their sales data]". It's more akin to the flagship store in a mall actually owning the mall, and requiring that all customers check out via their registers. Every other vendor in the mall surrenders all their sales data to the flagship, which it uses to decide how to use its own internal spaces to sell with higher volume and/or profit.
The own-brand stuff that Amazon is doing is dubious, but sure, I agree that many large retailers do it. Most large retailers do not operate 3rd party retail marketplaces, however, where they can siphon sales data from largely unsuspecting 3rd party retailers.
> figuring out what crappy store brand stuff and whats not.
Don't they usually have only one store brand? Or maybe two, if there's a premium option? I don't think I've ever questioned which is the store brand. I know I've questioned which non-store brands are of dubious origin though (e.g., knockoffs)
Up front disclaimer: this is my own personal conspiracy theory with no objective proof. I have quite a few pieces of anecdotal evidence to support this, but anecdotal is anecdotal.
Looking through the comments, everyone is talking about Amazon.com purchases, but the much quieter, arguably more valuable move on Amazon's part would be to do this via AWS. If you're running your entire system on AWS, Amazon immediately knows what kind of scale you're currently running. Depending on the type of product, they can pretty easily ballpark what your profit margin is based on your pricing model and all the metrics they have on your application (which is basically everything).
The application of this data could be used for acquisition targets, deciding which products to build into AWS, ongoing competitive analysis when they do build those competing products...
First, Amazon has no idea whether you run your whole business on AWS or only 5% of it. Second, different businesses have such vastly different computing requirements, which make up drastically different percentages of budgets, that there is virtually no signal here to figure out profits.
You're going to be far better off just looking at publicly available data -- funding, employees, pricing on the website -- and having a business analyst put them together.
Wow, lots of comments stating that it was common knowledge, but some fact doesn't become common knowledge simply because everyone knows it. Everyone should also know that everyone knows it and know that everyone knows that etc. which only becomes true after the article is published. The situation is materially different - this is illustrated e.g. by the famous 'island with a blue eyed population' puzzle: https://en.wikipedia.org/wiki/Common_knowledge_(logic)
In this case one of consequences could be that previously during negotiations with Amazon suppliers couldn't effectively use the fact that Amazon would scoop them (even if both parties knew that it was true), and now they can.
Sure, not going to quibble about word choice. The point is that many comments are like "so what, everybody knew this", but there is a material difference between "everybody knows" and "everybody knows that everybody knows".
It's one thing to see that unbleached toilet paper is selling well, and getting a supplier to sell you a store brand version. But it's completely different to see that a particular office stand is selling very well, determine that it has a 20% margin, and have someone build an identical product which you sell 5% margin.
If you look at many Amazon Basics products, they are clear ripoffs of existing products. To the point where they are indistinguishable from the images. I was looking for a Lodge braisier just yesterday and saw that AB produced an identical product, down to the unique blue color Lodge uses in their enamel.
I guess you could go through the trouble of suing Amazon, assuming you had the resources. But then you'd be booted from the platform and they'd still be selling your knockoffs for years.
I think it's fine if Amazon sees that cast iron cookware is selling well and decides to enter that market. What's not fine is to blatantly steal the design of the best selling product in a category, then make your ripoff more visible on your site. At least make an attempt to differentiate the product.
> "It's one thing to see that unbleached toilet paper is selling well, and getting a supplier to sell you a store brand version. But it's completely different to see that a particular office stand is selling very well, determine that it has a 20% margin, and have someone build an identical product which you sell 5% margin."
Those two sound like the exact same thing to me. There is no real difference.
It even happens between electronics manufacturers; you'll see a company noticing a competitor's product is successful, dissecting it to figure out the manufacturing costs and estimated margin, and tailoring its product line to provide a competitive product.
(Aside from all that, I though HNers didn't believe in IP?)
Well, you can patent or trademark designs. And our legal system protects the holder of those patents and trademarks for good reason. Amazon is able to leverage their position in the market to abuse suppliers and get away with illegal behavior because the suppliers lack the resources to fight Amazon.
There's a difference between a clean room design that takes inspiration from a product and an identical copy. I can write and perform a song in the style of The Beatles, but I cannot write and perform "Hey Jude" without paying royalties.
A. Amazon doesn't know what seller margins are. They can't because they have no insight into what sellers pay for the products, only what the products sell for.
B. The main reason that products, in general, look alike is because they're all being produced at the same 3 factories in China. And for lots of products, there's no reason to deviate significantly from the house design that the factory offers.
A. They absolutely do. There are plenty of companies out there that will analyze a product, describe how they believe it is made, and produce a cost break down to the penny. They will go so far as to measure the thickness of the paint used.
B. I used Lodge as an example because I know they make their own products in the US and they do not produce generics. Ergo, I'm quit confident Amazon ripped them off.
Of course, Amazon has been sued over this before [1] [2] [3]. Is three references lawsuits enough evidence for you, or should I dig up some more? And there are many reports of them ripping off vendor products, as I described, from smaller vendors who never sue because they lack the means [4].
Finally, here's evidence from a former Amazon employee claiming they do exactly what I said they do. [5]
In what way does Amazon know the backend margins that any other store wouldn’t?
They don’t. Amazon isn’t being asked to produce a product for a vendor then taking that and selling it themselves, that would be wrong. This is Amazon doing exactly what other stores do, seeing what sells well and making their own version.
I suspect that's more coordinated - you get the own brand which is generally cheap and cheerful, then the premium brands. I suspect there's some oversight there though.
I think the real question to ask is whether or not Amazon has a monopoly and whether they are abusing it to gain an unfair advantage over the producers of the stuff they sell. I mean when you mention other stores, I don't know if you mean this but I'm picturing e.g. a grocery store - where I come from there's usually three competing ones in the neighbourhood. They will all sell products from a premium brand, alongside their own (cheaper) store brand. But the premium brand is usually available at all competitors at similar prices.
Oftentimes this is done to circumvent paying patent license fees- for example if a patented component in a BOM would cost 75 cents per unit from the manufacturer, and the in-house team found a way to perform the equivalent function for 15 cents then it would instantly allow your product to undercut the competition. In Amazon's case, all it takes is a query to find high margin items in which knockoffs can be made and self-promoted to eventually outrank sales of the original item.
Another approach ... they could also identify which products either have wide-supplier diversity for the same thing (commodities) or narrow supplier density with many branded variants (OEM suppliers). In either case, they can go direct to the manufacturer without ANY innovation, slap the label on, and cut out the middle-man/sub-retailer costs. I think Amazon, in particular, has a team analyzing these factors as input into their sourcing (on top of general considerations like margin).
Sometimes I wonder if Shopify’s long-term plan is to do something like this.
It's probably the leading direct-to-consumer platform out there right now, it’s touted sometimes as the anti-Amazon. The leading D2C brands I’ve seen are on there (Allbirds, Atoms, Untuckit) as well as random drop shippers. Shopify is also expanding into a fulfillment network too: https://www.shopify.com/fulfillment
Maybe. But I think the first step is that Shopify creates a means of unified discovery across its many merchants. Maybe not quite a unified store front like Amazon, but maybe a unified search listing, like Google Shopping. Probably also get into recommendations across stores as well. There is a lot of related opportunities here once Shopify starts to link data and search and recommendations (and eventually ads) across their various stores.
I think they want to do something like this. The problem is that Shopify has zero traction with consumers. Until they solve the problem of getting consumers to search for products on their platform, they'll have no success. That's a tall mountain to climb.
Based on how much Amazon will grow during this pandemic, I wouldn’t be surprised if they are cut up by government to reduce their power to destroy any competitor.
has there been any antitrust activity in the united states recently? Like... past 10 years?
Particularly given the current administrations disposition, I think pinning your hopes to anti-trust is like financially planning around lottery tickets.
I mean, no one's concerned amazon is going to merge with someone, my god I hope the FTC would block that. But I think the grand parent comment and I are talking about breaking up gigantic pre-existing monopolies. Not any general activity that can be categorized under "anti-trust"
I don't know if you count it was antitrust, but there's been two blocked mergers in the last ten years: Comcast and Time Warner as well as AT&T and TMobile.
But Trump hates Bezos because Bezos owns Washington Post, which publishes articles critical of Trump.
I'd imagine if the administration goes through with the antitrust investigations, Bezos would just show up with a suitcase saying "Here's my offer to your 2020 reelection campaign" (not literally, he could put it through a Super PAC) and Trump would say "Art of the deal!" and that threat would disappear...
Or Bezos could double down and get a law firm very rich trying to prove that the suit would be unfair because it's driven by the president's little ego...
All the platforms do this. Many of the big online travel agencies (booking.com, expedia, etc.) are some of the biggest buyers of AdWords (or at least were before coronavirus), spending billions on Google. Last fall Expedia's stock tanked (again, before all the coronavirus stuff) because Google's search results started including the ability to go through directly to booking sites without going to an OTA.
Many retail stores do this to their vendors. Amazon does it to it's "sellers", which are really just a category of "customers". As an amazon seller, you pay for the privilege of selling through their platform.
Well, because marketplaces like Amazon have a strategy for that: learn from sellers, imitate their products, offer your imitated product prominently on your "neutral" marketplace and crush the competition with a lower price until they have to give up or let themselves be bought [1]. That's nothing really new. The difference with Amazon is just the scale.
Because for any individual seller there’s a heavy short/medium term advantage to using the marketplace in the form of dramatically increased reach and simplified logistics.
You could ask why people start businesses that rely on buying stuff for x and then selling it for y when that business model has already been fully exploited?
There is a supermarket chain called Aldi who's entire business seems to rely upon copying branded products yet they are lauded for offering great value?
Because there's not another marketplace where you can, with some effort and very little actual innovation, turn a $5,000 investment into a six (and sometimes seven) figure a year revenue stream.
Anti trust and anti monopoly oversight is urgently needed. Amazon is growing like a rapidy mutating weed on coronapocalypse fallout and the centralization is rapidly getting out of control imo.
https://slopeofhope.com/2020/04/locking-in-amazon-gains.html
I worked for a small health products reseller around 2008 that had stores on Amazon, Yahoo (when that was a thing) and other marketplaces. It was well-known that any exclusive distribution deals between the health products reseller and manufacturers had a very short life: if the product was profitable Amazon would go around the reseller, negotiate a better deal, and sell it themselves.
Fast forward to today, and companies that are direct competitors with Amazon (like Netflix) are completely committed to AWS. Amazon is watching, learning, and evolving from every piece of data they can get their hands on. What better way to learn about your business model than to watch them being tested and deployed on their infrastructure?
I'm not specifically pro or anti Amazon...but I find it surprising the C-suite of most organizations seems content to think of AWS as a separate business un-related to the business that is actively trying to corner the market they are competing in.
Ethically, I don't see how this is much different from hiring someone at the lowest possible wage, then using the hours and vital years of their lives to enrich oneself. In the end, one either cares as much about the welfare of those in one's employ, or just uses them as tools in some Pyrrhic victory.
Is there any Business to Consumer intermediary/platform that doesn't do this?
All big retailers (Walmart, Costco, etc)
Apple
Google
Amazon.
Once you sell or distribute through a marketplace where they also sell or offer products to the same audience, expect the best ideas to be copied by the platform owners.
That's one of the downside retailers have to deal with.
This is not only obvious, it's Amazon's explicit strategy to have their own products listed alongside 3rd party products. It's been that way ever since they made the then-controversial decision to launch a 3rd party marketplace business in 1999 to compete vs eBay.
The competition with eBay started before 1999, and 3rd party sellers was not a major part of the strategy nor was it really concerned with eBay (which is 1999 was literally NOTHING but an auction site).
Amazon had its own "auctions" site in the late 1990s which many people forget even existed (it's one of the few things that Amazon tried and failed at). Bezos knew that eBay was a problem as soon as they emerged, and worried that Amazon would never compete effectively against them. In many senses, he was right.
How do I know this? I worked with Bezos in the legendary "garage" in Bellevue, WA.
The fact that Amazon can argue they don’t do this with a straight face tells me that they have no fear of regulators and feel confident they can get away with just lying about it.
Any observant Whole Foods shopper can see this happening over the arc of weeks and months. New products from small brands show up on the shelves at Whole Foods. If they sell quickly, it’s only a matter of time before a Whole 365 knock off shows up in the exact same spot on the shelf with similar packaging and a lower price. The predecessor brand is relegated to a low visibility location nearby, and eventually disappears altogether. They don’t even try to hide this practice, they just say they don’t do it.
Given Amazon's willingness to spy on their business customers (traffic data in this case), should I be worried to deploy code on AWS that has high IP value in source code form (JS, Python, etc) or bytecode (Java/C#, which can be easily decompiled). I ask this because I noticed on AWS EC2 the default behavior is that Amazon produces the private/public key pair (as opposed to having the user add their SSH public key) so if they wish, they can access any code I deploy. Let's say I make a product on AWS that competes with a current or future product of AWS itself, and let's say it gets a ton of traffic, should I be worried? Should I be using only native binaries? (C/C++, Go, Rust, etc) ??
Amazon is a cesspool of scammers now. I created a listing for a physical book. I have yet to send a single book out to anyone and there are already two sellers trying to sell the book on the listing I created. And one is listed as a "collectible"!
Not sure I understand. Are you saying you are the author of a new book, you haven't sold any copies yet, you created a listing for your book and people are offering to sell it as a collectible (presumably as an arbitrage where they'd fulfill on your book)?
Or did you create a new listing for someone else's book, that others might credibly own already?
This type of practice right there is why there will always be a place for at least one cloud competitor. No company that is slightly invested in retail (directly or indirectly) want to increase Amazon's profitability by paying AWS.
Amazon draws a distinction between the data of an individual third-party seller and what it calls aggregated data, which it defines as the data of products with two or more sellers
Any seller will do this, it is natural. Watch how WholeFoods for years has replaced successful independent brands with "365" competitors. Any seller will act this way; only regulation will prevent it.
Regulation would not prevent Whole Foods and “some independent company” sharing data and producing these white label products to be sold exclusively at Whole Foods.
This very easily defeated regulation is a perfect example why they aren’t a silver bullet. Throwing your hands up and saying “just make government fix everything” isn’t realistic, there is overhead and cost and bad precedent in that.
This reinforces the belief I have that antitrust regulation of online companies needs to force them to pick between being a platform or being a store (or publisher), but they're not allowed to be both.
Some companies foster cordial relationships with their partners by staying strictly in their lane.
For example, ARM licenses CPU core designs to chip manufacturers, but they don't make their own chips, as doing so would turn their customers into their competitors.
Businesses like contract manufacturers are similar - Foxconn wouldn't start making their own smartphone.
"Amazon.com Inc. employees have used data about independent sellers on the company’s platform to develop competing products"
Don't brick and mortar stores do this too? Not sure how popular "own brand" products are in America but in Europe grocery stores will sell "own brand" produce at cheaper prices. How do grocery stores choose what products to sell under their own brand, surely this is based on how well certain products are selling?
Didn't anyone read Brad Stone's book? This is Amazon's play. Jewelry was one category they had trouble making work, but many other categories fell to them. They did it with Diapers.com and really everyone they wanted to acquire. And really the only thing keeping the regulators off of them is that it doesn't harm the consumer because prices are kept low. That's really the only test for antitrust cases to proceed because of a slippery slope.
I wonder if issues like this combined with the COVID crisis will impact customer and supplier behavior?
For me, Amazon has been a shitshow for the last month. For in-stock product, they project delivery for Memorial Day and deliver in 24 hours, or promise prime and deliver not-so-much. Other retailers seem to be fine. Target, NewEgg, Walmart, etc seem to be fine. Small online retail seem to be fine.
I wonder that their awful practices are biting them now... once they hit a bump the whole system jams up.
From what I have gathered at various user group meetings Scraping online web prices is pretty much done by everyone in the industry to provide for competitive pricing. It looks like Amazon took this up a notch.
On the other hand at least for Amazon's first party products you don't have to worry about them being counterfeit and I haven't had a bad experience with what I have bought from them (HDMI cords).
so did a lot of retailers. Walmart, Target, REI, every major grocery chain, etc. have all done it. IMHO, this is just business as usual, not sure why it's worth pointing out that Amazon did it when others have been doing the same for years.
Direct to Consumer is the way of the future, only way to protect your brand, sales numbers, and other proprietary infos.
A point that I have not seen mentioned while skimming through the comments is that the relationships between traditional retailers and their brands is one of buyer <> wholesaler (in simple terms, I understand there are complexities here) and that in itself is different from Amazon Marketplace (as compared to sold by Amazon.com).
The obligatory, "I'm shocked I tell you, shocked!" but unlike say the "Kirkland" brand at CostCo, this is more like UPS using the data it has on what is being delivered to peoples houses to start stocking their trucks with things people order often[1].
[1] Maybe the next step after food trucks is "mini-mart" trucks.
Good comparison, except in this case it would be like, "Hey we've been delivering USB chargers to all of your neighbors, why not get one from the van here, same quality, lower price and you get it right now? How about it?"
Invent and Simplify
Leaders expect and require innovation and invention from their teams and always find ways to simplify. They are externally aware, look for new ideas from everywhere, and are not limited by “not invented here." As we do new things, we accept that we may be misunderstood for long periods of time.
Those were the dirtiest business tactics of Amazon
Nobody can beat Amazon’s margin.
Amazon “invites” you to sell on their marketplace.
You hustle.
You innovate.
You test the market.
You risk your time and money.
Until FINALLY you nail it!
After weeks or months of hard work you finally find the right product at the right price… SUCCESS!
You start making money!
Everything is amazing…
But “someone” has been watching you!
The “owner” of YOUR customers has been collecting ALL your data.
Watching your progress, your growth, your competitors, your margins, your shipping costs, etc.
THANK YOU FOR PARTICIPATING!
Amazon will copy your product.
Add their private label “Amazon Basics” to it.
Sell it at an unbeatable price.
Attach FREE Amazon Prime shipping to it.
Position the exposure of their product on their website better than yours.
In a matter of days, you will be OUT of business!
THANK YOU FOR PARTICIPATING IN AMAZON MARKETPLACE!
Regulating them to a pure marketplace is the best outcome we an hope for, i.e. require them to divest any product they sell in the marketplace. India took some steps in that direction last year. Why not in the US?
Because the US regulatory framework and enforcement has been chipped away at by corporate interests over the past 3 decades to the point of non-existence.
America went from filing >50 antitrust lawsuits in the 1970s to ~5 in the past 2 decades.
Actually that thread doesn't work at all. Because restricting them might cost Amazone jobs BUT:
1. Not all of them, probably a negligible amount. (Just the ones responsible for crating/producing copied products, not any ones involved in any other area)
2. Create new jobs through fair competition in similar amounts as jobs lost, likely even more as more companies being involved means more operational positions like e.g. for book keeping.
3. (2. reformulated). Not restricting it will cost as much or more jobs due to small companies going out of business and amazon as a giant company can better optimize overhead of operation away compared to many small independent businesses.
Is it really in the spirit of anti competitive laws if the consumer wins?
This is more like one business owner (FBA seller) trying to sic the authorities on their competition (Amazon Basics) in order to keep a competitive advantage. This seems more anti competitive than what Amazon is doing
Yes. Anti-monopoly laws are about overall society health, not just consumer protection. Having only a few large companies controlling large segments has massive negative effects on suppliers, employee wages, etc. etc.
You might wish that this was the case, but in the US, the anti-trust law doesn't work this way.
The law doesn't prohibit monopoly by itself. Monopolization is only prohibited if it restrains trade, or if the monopoly position was improperly gained. If Amazon attains monopoly position through superior products, innovation, or business acumen, it is very much legal in the US[1].
I think it's hard to argue that Amazon undercutting the participants in its marketplace is restraining the trade: the complaint here is, as I understand it, that through better knowledge of the market, and better integrated and more efficient platform, it is able to offer same or better products at lower prices. I can't see how it restrains the trade, according to how FTC understands it. It would only be illegal if Amazon did sold these products below their own costs, and then planned to recoup the losses by raising the price after the competition is gone. I haven't seen any evidence that this is what's going on.
Obtaining a monopoly via legal means is irrelevant if there is then monopolization, the examples given in this thread of "product tying" via Amazon Prime, essential facilities denial via superseding with their own products, and predatory pricing via not having to pay platform fees are all restraining trade.
Whether these could be sufficiently proved is a whole other matter.
> the examples given in this thread of "product tying" via Amazon Prime, essential facilities denial via superseding with their own products, and predatory pricing via not having to pay platform fees are all restraining trade.
If you don't trade on Amazon's platform, you're not affected by any of these. You might as well complain about Safeway's (or whatever grocery chain operates in your area) anti-competitive practices, because Safeway will also do product tying via membership card, rewards and coupons, deny you facilities to put your products on their shelves, and won't pay carrying fees for its own store brand products.
Sure, it might be much harder for you to compete with Amazon if you can't use its platform, but then the argument is that the Amazon is too competitive, not anti-competitive, and that is in fact legal (and a boon for customers).
The consumer doesn't win in the end if there's only one major retailer that survives. There's lots of benefit in diversity of retailers competing against each other.
The consumer doesn't feel the effect of the consolidated marketplace until Amazon decides to start squeezing its customers. Once all the ducks are in a row, look out.
“Don’t worry guys! The magical invisible hand of the market will fix this! Just like how it stopped abuse and exploitation by itself all those other times! This time it will _definitely_ work”
In all fairness, if Amazon doesn’t copy your product, then some Alibaba store or Chinese manufacturer will and in a few weeks time you’ll see the same product and description surface on Amazon under the name YUKOOLSEE and with 1000 5-star reviews already.
I mean, this is essentially how capitalism has always worked. Mountain bikes were invented by tinkerers in California, the blues was invented by slaves or former slaves, none of those people died rich. The big guys have all the money and power, and if you dont like it, well, this is how capitalism is designed to operate, so I don’t know what to tell you.
I am believing more and more that these big companies are really bad for the economy and size should be discouraged. In the short run they can be very efficient and create cheap products for consumers but this comes at the cost of killing innovation that may come from smaller players.
I've heard about these kinds of practices anecdotally. We really need some anti-trust action in the US. We have these laws that give the federal government a lot of power to force companies to play fair, but we don't use them because of politics.
Learn from US businesses and launch same white label product in Europe. This avoids running afoul of taking advantage of any data on European Amazon sellers.
Same thing happens on Etsy. You work hard, get your product out there. You are successful. Then, 100 people copy you. And you tank. And copyright, trademark, and patent laws all fail you miserably.
Years ago I said amzn should buy shopify or another vendor, host it and get transaction revenue for those anti-amzn. Would have been huge. Similar to how people use insta thinking its not FB.
Target and probably other physical retailers do the same exact thing. Bring a product line in. See how it sells. Replace that with a white label brand they own once data proves a winner.
In long-run, I predict that sellers de-listing because of this and moving elsewhere will have not been worth whatever money it is they will make as a seller on their own platform.
Good. Once Amazon has gobbled up all competition, we can have one reliable place to buy every thing we'll ever need. All detractors are impeding on the approach of utopia.
Let's call those happy customers the Eloi, and call the Amazon employees (who are by then manufacturing everything) the Morlocks. See where this is going? I for one don't want to be living in that timeline.
This is probably illegal via antitrust law -- it's inherently anticompetitive -- and just hasn't been tested. Another example of Amazon being an unethical company.
isn't this what Costco, Walmart are doing? I thought this is pretty common in the retail world - i.e to cut out the middle man and price it just below the name brand so people buy the store brand because it's cheaper.
And? Every supermarket chain does this... First they look for good-selling brand products in their assortment, then they launch a very similar product under their own house brand following the "80% of the quality for 50% of the price" principle
This is not something unique to Amazon. Everyone does it. Costco, Target and even smaller ones do it. However the problem and scale is magnified because Amazon has a monopoly on online shopping so given their volume they can always undercut everyone else.
Isn’t this what Walgreens, CVS or even Costco do? It’s called capitalism. When you want to invest, build and grow the channel then you can do the same. Not totally sure why people think this is unfair.
Thanks for the enlightening insight, captain obvious.
Every single platform company, whether online or offline, does this. Apple does this with their appstore. Microsoft did this with their windows platform. Every retail or grocery store does this by developing their own native brand that blatantly copy existing products but with a bit lower quality and lower price.
Is this good or bad? Well this is how the vendors are forced to innovate, and that's good for the consumers! If we just all become social justice warriors and shame all these platform companies to do nothing because their products shouldn't hurt others like a bunch of communists, then it is US, the consumers, who lose from this. And even these social justice warriors, at the end of the day, are all consumers.
I also find it weird how they say Amazon "scooped up data", when all that data has been on Amazon's own server all along, voluntarily.
Hmm, I see a lot of people here mad and arguing for regulation to stop Amazon from making their own white label products, but it seems like selective outrage.
When the discussion is about censorship online (demonetizing, blocking people who they don’t like but have done nothing against explicitly stated rules, banning anyone critical of the WHO) the argument often becomes “They’re a private business, they can do whatever they like and you don’t need to use them”.
How is the solution if you don’t like what Amazon is doing with white label products (that almost all major retailer does) to just not use Amazon?
Even if you consider Amazon a monopoly, they don’t prevent the name brand product from being sold there. If they did it would be a similar issue.
This really seems like a Rorschach test for a political ideology.
I'm not sure that Amazon would be able to pierce the veil of the hypervisor like that, but his instincts were in the correct direction.