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Here's a scenario that gives me pause: you as a company goes all in to re-engineer your critical apps to use AWS as efficiently as possible. Your apps are now

Here's a scenario that gives me pause: you as a company goes all in to re-engineer your critical apps to use AWS as efficiently as possible. Your apps are now no longer portable away from AWS without a lot of time and work. Then Amazon enters your business space in direct competition to you. Through your business with AWS you are now funding a large, fierce, and direct competitor. Anyone else think of this, or am I just being paranoid?

makerofspoons 7y ago
This is already happening to SaaS startups: https://www.inc.com/sonya-mann/aws-startups-conflict.html https://www.inc.com/sonya-mann/aws-startups-conflict.html
jessriedel 7y ago
What is the relevance of funding your competitor? Amazon is so huge that the AWS fees you pay them are a drop in the ocean, and will have negligible effect on the (relatively tiny) unit of Amazon that's competing with you. More concerning would probably be the possibility that your AWS service would be suspended or otherwise purposefully disrupted.
- pova 7y ago
  That's not an argument. People say the same thing about voting or polution, it adds up. Also, AWS is not a smart part of Amazon, AFAIK most of their profit comes from it. They sell products for cheap, so they can push competitors out to keep growing and then they balance the loss with AWS profits.
  - nordsieck 7y ago
    >>> Then Amazon enters your business space in direct competition to you. Through your business with AWS you are now funding a large, fierce, and direct competitor. >> What is the relevance of funding your competitor? > That's not an argument. Sure it is. It's a great argument. Do you somehow think Amazon is limiting itself to copying businesses on the AWS platform only? No: they'll copy any successful business anywhere. Unless your business is Netflix, you, by yourself, are not contributing enough to their bottom line to boost their efforts to compete with you. And guess what: Netflix doesn't believe that the money they're paying AWS is enough to hurt their competitiveness with Prime Video. The 10 VMs your company is going to run aren't going to matter.
  - jessriedel 7y ago
    Voting is not a good way to pursue your own self interest, which is the typical context of business decisions (bounded of course by morality and the law). From a standpoint of classical rationality, it only makes sense to vote insofar as you are pursuing collective goals, but what is the collective goal with regard to Amazon? You can certainly object to Amazon business practices and take a principled stand against doing AWS business with them, but that's something you would presumably do whether or not they were competing with you.
ColanR 7y ago
This is called 'market cannibalization', when considered from the opposite perspective where amazon is competing with their customers. It's definitely considered bad for business, for precisely the reason that customers will look for other suppliers.
anthony_franco 7y ago
Amazon directly competes with Netflix and they get along fine. https://aws.amazon.com/solutions/case-studies/netflix/ https://aws.amazon.com/solutions/case-studies/netflix/
- tw04 7y ago
  I think it's a stretch to say they directly compete. Amazon's Prime service covers a tiny fraction of their catalogue. And everything else is a per-move/show rental or purchase fee. I technically have both because prime video is just included with the membership, but there's no way I would ever pay Amazon more money for Prime Video vs. something like Netflix.
  - jjeaff 7y ago
    A stretch? If prime isn't a direct competitor, then no one is. Competitors can have different pricing structures and still be competitors.
    - tw04 7y ago
      So GM and Avis are competitors?
- djsumdog 7y ago
  I thought Netflix has slowly been moving stuff to their own data centers as they grow and has distanced themselves from AWS on more critical stuff?
  - secabeen 7y ago
    Netflix still uses AWS for much of their support systems (billing, discovery, etc. etc.) The core business of delivering video is not on AWS and has never been. That runs on their in-house CDN, OpenConnect.
    - notyourwork 7y ago
landonxjames 7y ago
I worked at an major insurance company that was evaluating AWS. As soon as Amazon announced they would be getting into the insurance industry[1] the project was immediately terminated. [1] https://www.insurancebusinessmag.com/us/news/technology/measuring-the-scale-of-amazons-threat-to-the-insurance-industry-116810.aspx https://www.insurancebusinessmag.com/us/news/technology/meas...
- W-Stool 7y ago
  This is exactly the scenario I was thinking of.
EpicEng 7y ago
I doubt any one company's use of AWS makes a bit of difference in their ability to keep the lights on. You "funding" them in some round about way is irrelevant.
- justaguyhere 7y ago
  I guess you're missing the point. It is not the money that matters more here, it is the collective business intelligence that Amazon gets access to, for free - for example, if one FBA seller leaves Amazon, no big deal. Even if a thousand FBA sellers leave Amazon, it is still no big deal for Amazon, because they have something more important than any money they could've earned from those FBA sellers - data. They did zero work (market research, advertising etc), but they know precisely what is selling well and where. If they keep doing this for a while (which they have), then they are in many more verticals in a few short years. It is like these FBA sellers are paying Amazon, then giving valuable data to them and helping Amazon put them out of business. It is just a shitty situation
  - EpicEng 7y ago
    I think you're just changing "the point" as I replied to this direct quote: >Through your business with AWS you are now funding a large, fierce, and direct competitor. No one here is talking about FBA's or the Amazon marketplace; they're talking about using AWS and having Amazon infiltrate your product space down the road.
    - justaguyhere 7y ago
      FBA or AWS, I think the same argument holds - AWS and Amazon in general are so big, that they wouldn't care if a few hundred (or even a few thousand) smaller clients leave them. The data they lose matters more than the money. That said, you are funding a fierce competitor, even if your AWS bill is just 10 bucks a month...
      - EpicEng 7y ago
        It's not the same though. If you jump in and start selling merch in Amazon then you are entering _their_ space directly and using their platform to do so. As you said, you're not only handing them money; you're handing them all of your data. Using AWS to build your back end before finding out that Amazon is now going to enter your market is hardly the same thing. Your handful of VMs make exactly zero difference. AWS or no, Amazon was going to eat your lunch.
zymhan 7y ago
This has been an issue for a while now. I worked at a retail analytics company that was entirely AWS hosted in 2012, and either Target or Walgreens didn't want us to use AWS because they viewed Amazon as a competitor, and didn't want to feed the beast. This is also an issue at my current company, and I think a significant driver of the "cloud agnostic" push.
ProAm 7y ago
This is what Amazon does. See Amazon Basics? Sellers sell on Amazon, Amazon tracks what sells well, enters market with same cheaper product and puts you out of business. You are doing a large part of the market research for your competitors by using cloud services and platforms. You just pray they are good actors and ethical.
- lozaning 7y ago
  I used to sell something like over 50% of all the HP LTO cleaning tape that got bought in the US through our FBA setup with amazon. The 3rd month in a row we grossed more than 80K in sales, guess who started stocking and selling LTO cleaning tape 'shipped from sold by Amazon'. Thankfully my HP oem pricing had them beat by a mile when it came to cost and we still did pretty well until the market fell out for the product. Their entire business model at this point seems to charge other business for the right to figure out what a good business for them to get into it.
- bredren 7y ago
  All retailers, that can, do this though. Safeway, Fred Meyer, Costco, you name it there is a Select or some other generic offering of their competitor’s goods.
  - oldmanhorton 7y ago
    Except many of those stores haven't fostered distrust in their market place with fake products. I found myself buying Amazon basics because I felt like I could trust them in ways I couldn't trust anything else on the site.
    - nacs 7y ago
      Are you saying you got counterfeit Amazon Basics products? I'm pretty sure Amazon Basics items are only stocked and sold by Amazon and not any of their "marketplace" fronts so I don't see how you would have got fakes. Amazon Basics is just like the grocery store brands that have become popular. They're basically rebranded products by a different company at a cheaper price with some level of quality endorsed by the retailer (Amazon, Costco, Kroger/Publix grocery stores, etc)
djsumdog 7y ago
I remember TOMS didn't want to host anything on AWS because they considered Amazon a direct competitor when they bought Zappos. That was well over a decade ago.
chis 7y ago
It probably works the other way around. Amazon is incentivized to not compete with their customers because they’re already collecting rent on them thru AWS. Why drive your competitor out of business if they already pay you yearly fees? And more directly to your point, Amazon presumably evaluates each market they enter separately. They have a big enough war chest to run at a loss forever, but they won’t do so because it’s not good business
rdtsc 7y ago
Having talked to some people at trade shows and tech conferences, there is absolutely that feeling from major retailers. Some people would like to use AWS but they are banned since it would directly fund their competitor (Amazon).
notatoad 7y ago
>Through your business with AWS you are now funding a large, fierce, and direct competitor. other than making you feel bad, is there any practical downside to this?
brohoolio 7y ago
This was the subtext at Google’s Next conference. Basically 9 of the top 10 retailers are moving to GCP. The last one is Amazon.
deepnotderp 7y ago
This is more or less Microsoft Azure's pitch.
owenmarshall 7y ago
If you did this it was likely the result of a valid cost/benefit analysis, yes? Let’s assume so - and that your cloud journey wasn’t just done to send your CTO to speak at a conference. So if the savings in time to market/cost/whatever truly justified moving to AWS, does it matter that Amazon comes to town? In other words, consider: if you did the analysis and saw the potential benefit but decided not to move to AWS due to the risk of feeding the beast, what happens when Amazon still enters your product space? You’re still gonna have to fight them, but you just gave up months or years of cost savings or product features or whatever other positive you identified that could’ve improved your position in the market.
Johnny555 7y ago
Moving away from AWS would be a symbolic gesture in this case, and may make you even less competitive. Your business is not going to make any difference in Amazon's financial situation, but if you're saving money by using AWS's services, why would you spend even more money by porting to Azure or GCP?

makerofspoons 7y ago

This is already happening to SaaS startups: https://www.inc.com/sonya-mann/aws-startups-conflict.html https://www.inc.com/sonya-mann/aws-startups-conflict.html

jessriedel 7y ago

What is the relevance of funding your competitor? Amazon is so huge that the AWS fees you pay them are a drop in the ocean, and will have negligible effect on the (relatively tiny) unit of Amazon that's competing with you. More concerning would probably be the possibility that your AWS service would be suspended or otherwise purposefully disrupted.

pova 7y ago
That's not an argument. People say the same thing about voting or polution, it adds up. Also, AWS is not a smart part of Amazon, AFAIK most of their profit comes from it. They sell products for cheap, so they can push competitors out to keep growing and then they balance the loss with AWS profits.
- nordsieck 7y ago
  >>> Then Amazon enters your business space in direct competition to you. Through your business with AWS you are now funding a large, fierce, and direct competitor. >> What is the relevance of funding your competitor? > That's not an argument. Sure it is. It's a great argument. Do you somehow think Amazon is limiting itself to copying businesses on the AWS platform only? No: they'll copy any successful business anywhere. Unless your business is Netflix, you, by yourself, are not contributing enough to their bottom line to boost their efforts to compete with you. And guess what: Netflix doesn't believe that the money they're paying AWS is enough to hurt their competitiveness with Prime Video. The 10 VMs your company is going to run aren't going to matter.
- jessriedel 7y ago
  Voting is not a good way to pursue your own self interest, which is the typical context of business decisions (bounded of course by morality and the law). From a standpoint of classical rationality, it only makes sense to vote insofar as you are pursuing collective goals, but what is the collective goal with regard to Amazon? You can certainly object to Amazon business practices and take a principled stand against doing AWS business with them, but that's something you would presumably do whether or not they were competing with you.

ColanR 7y ago

This is called 'market cannibalization', when considered from the opposite perspective where amazon is competing with their customers. It's definitely considered bad for business, for precisely the reason that customers will look for other suppliers.

anthony_franco 7y ago

Amazon directly competes with Netflix and they get along fine. https://aws.amazon.com/solutions/case-studies/netflix/ https://aws.amazon.com/solutions/case-studies/netflix/

tw04 7y ago
I think it's a stretch to say they directly compete. Amazon's Prime service covers a tiny fraction of their catalogue. And everything else is a per-move/show rental or purchase fee. I technically have both because prime video is just included with the membership, but there's no way I would ever pay Amazon more money for Prime Video vs. something like Netflix.
- jjeaff 7y ago
  A stretch? If prime isn't a direct competitor, then no one is. Competitors can have different pricing structures and still be competitors.
  - tw04 7y ago
    So GM and Avis are competitors?
djsumdog 7y ago
I thought Netflix has slowly been moving stuff to their own data centers as they grow and has distanced themselves from AWS on more critical stuff?
- secabeen 7y ago
  Netflix still uses AWS for much of their support systems (billing, discovery, etc. etc.) The core business of delivering video is not on AWS and has never been. That runs on their in-house CDN, OpenConnect.
  - notyourwork 7y ago

landonxjames 7y ago

I worked at an major insurance company that was evaluating AWS. As soon as Amazon announced they would be getting into the insurance industry[1] the project was immediately terminated. [1] https://www.insurancebusinessmag.com/us/news/technology/measuring-the-scale-of-amazons-threat-to-the-insurance-industry-116810.aspx https://www.insurancebusinessmag.com/us/news/technology/meas...

W-Stool 7y ago
This is exactly the scenario I was thinking of.

EpicEng 7y ago

I doubt any one company's use of AWS makes a bit of difference in their ability to keep the lights on. You "funding" them in some round about way is irrelevant.

justaguyhere 7y ago
I guess you're missing the point. It is not the money that matters more here, it is the collective business intelligence that Amazon gets access to, for free - for example, if one FBA seller leaves Amazon, no big deal. Even if a thousand FBA sellers leave Amazon, it is still no big deal for Amazon, because they have something more important than any money they could've earned from those FBA sellers - data. They did zero work (market research, advertising etc), but they know precisely what is selling well and where. If they keep doing this for a while (which they have), then they are in many more verticals in a few short years. It is like these FBA sellers are paying Amazon, then giving valuable data to them and helping Amazon put them out of business. It is just a shitty situation
- EpicEng 7y ago
  I think you're just changing "the point" as I replied to this direct quote: >Through your business with AWS you are now funding a large, fierce, and direct competitor. No one here is talking about FBA's or the Amazon marketplace; they're talking about using AWS and having Amazon infiltrate your product space down the road.
  - justaguyhere 7y ago
    FBA or AWS, I think the same argument holds - AWS and Amazon in general are so big, that they wouldn't care if a few hundred (or even a few thousand) smaller clients leave them. The data they lose matters more than the money. That said, you are funding a fierce competitor, even if your AWS bill is just 10 bucks a month...
    - EpicEng 7y ago
      It's not the same though. If you jump in and start selling merch in Amazon then you are entering _their_ space directly and using their platform to do so. As you said, you're not only handing them money; you're handing them all of your data. Using AWS to build your back end before finding out that Amazon is now going to enter your market is hardly the same thing. Your handful of VMs make exactly zero difference. AWS or no, Amazon was going to eat your lunch.

zymhan 7y ago

This has been an issue for a while now. I worked at a retail analytics company that was entirely AWS hosted in 2012, and either Target or Walgreens didn't want us to use AWS because they viewed Amazon as a competitor, and didn't want to feed the beast. This is also an issue at my current company, and I think a significant driver of the "cloud agnostic" push.

ProAm 7y ago

This is what Amazon does. See Amazon Basics? Sellers sell on Amazon, Amazon tracks what sells well, enters market with same cheaper product and puts you out of business. You are doing a large part of the market research for your competitors by using cloud services and platforms. You just pray they are good actors and ethical.

lozaning 7y ago
I used to sell something like over 50% of all the HP LTO cleaning tape that got bought in the US through our FBA setup with amazon. The 3rd month in a row we grossed more than 80K in sales, guess who started stocking and selling LTO cleaning tape 'shipped from sold by Amazon'. Thankfully my HP oem pricing had them beat by a mile when it came to cost and we still did pretty well until the market fell out for the product. Their entire business model at this point seems to charge other business for the right to figure out what a good business for them to get into it.
bredren 7y ago
All retailers, that can, do this though. Safeway, Fred Meyer, Costco, you name it there is a Select or some other generic offering of their competitor’s goods.
- oldmanhorton 7y ago
  Except many of those stores haven't fostered distrust in their market place with fake products. I found myself buying Amazon basics because I felt like I could trust them in ways I couldn't trust anything else on the site.
  - nacs 7y ago
    Are you saying you got counterfeit Amazon Basics products? I'm pretty sure Amazon Basics items are only stocked and sold by Amazon and not any of their "marketplace" fronts so I don't see how you would have got fakes. Amazon Basics is just like the grocery store brands that have become popular. They're basically rebranded products by a different company at a cheaper price with some level of quality endorsed by the retailer (Amazon, Costco, Kroger/Publix grocery stores, etc)

djsumdog 7y ago

I remember TOMS didn't want to host anything on AWS because they considered Amazon a direct competitor when they bought Zappos. That was well over a decade ago.

chis 7y ago

It probably works the other way around. Amazon is incentivized to not compete with their customers because they’re already collecting rent on them thru AWS. Why drive your competitor out of business if they already pay you yearly fees? And more directly to your point, Amazon presumably evaluates each market they enter separately. They have a big enough war chest to run at a loss forever, but they won’t do so because it’s not good business

rdtsc 7y ago

Having talked to some people at trade shows and tech conferences, there is absolutely that feeling from major retailers. Some people would like to use AWS but they are banned since it would directly fund their competitor (Amazon).

notatoad 7y ago

>Through your business with AWS you are now funding a large, fierce, and direct competitor. other than making you feel bad, is there any practical downside to this?

brohoolio 7y ago

This was the subtext at Google’s Next conference. Basically 9 of the top 10 retailers are moving to GCP. The last one is Amazon.

deepnotderp 7y ago

This is more or less Microsoft Azure's pitch.

owenmarshall 7y ago

If you did this it was likely the result of a valid cost/benefit analysis, yes? Let’s assume so - and that your cloud journey wasn’t just done to send your CTO to speak at a conference. So if the savings in time to market/cost/whatever truly justified moving to AWS, does it matter that Amazon comes to town? In other words, consider: if you did the analysis and saw the potential benefit but decided not to move to AWS due to the risk of feeding the beast, what happens when Amazon still enters your product space? You’re still gonna have to fight them, but you just gave up months or years of cost savings or product features or whatever other positive you identified that could’ve improved your position in the market.

Johnny555 7y ago

Moving away from AWS would be a symbolic gesture in this case, and may make you even less competitive. Your business is not going to make any difference in Amazon's financial situation, but if you're saving money by using AWS's services, why would you spend even more money by porting to Azure or GCP?