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> The services may not work a la carte If the service cannot compete on it's own merits, and is being propped up by an unrelated business, how competetive is i

> The services may not work a la carte If the service cannot compete on it's own merits, and is being propped up by an unrelated business, how competetive is it actually?

runako 4y ago
> the service cannot compete on it's own merits This is only true if external actors redefine "the service" to be something other than what millions of customers voluntarily purchase (Prime). For example, I subscribe to Prime because I get free/better shipping on goods as well as video. I don't know what % of my subscription fee I would allot to either, but fortunately I don't have to do that.
- mulletbum 4y ago
  Not to mention, these other comments are for Disney. However, Disney is propping their business up with lots of other businesses. If you are going to make Amazon less competitive, you can't leave the giant business next to it in a better position. Disney will just buy it then.
  - runako 4y ago
    This is such a great point. Disney makes a lot of money in theme parks etc.; Walmart makes something like $42B annually in healthcare; Costco sells cars & travel packages; Kroger sells gas (petrol); Apple (also a competitor) makes most of its money selling phones. Why leave all those businesses intact and target Amazon?
  - runevault 4y ago
    Frankly among the not-tech-first companies Disney is the one that should most be targeted. The fact they were allowed to buy LucasFilms and Fox media (minus Fox News and Fox Sports because they already own ABC and ESPN) was so stupid. The year before those purchases the collected movies of those 3 were most of the top movies at the box office.
  - danaris 4y ago
    Why, in this hypothetical, would the antitrust bodies see Amazon as needing to be broken up or otherwise restricted to improve competition, but not see acquisition by Disney as being something they should block? That just doesn't seem internally consistent.
  - pclmulqdq 4y ago
    Disney's business lines are pretty synergistic. You have a media company, at its core, that provides other entertainment (theme parks) related to its IP, sells merchandise, and runs 3 different online distribution platforms for the media companies. The Disney corporation is built around exploiting the rights to these media IPs to the fullest. In contrast, Amazon is the online version of Walmart that can also sell you computing time and makes feature films which are just a perk of their "fast shipping" club. There's a pretty clear distinction here, even with one of the other mega-conglamerates (disney) that probably owns too many different content production units.
ericmay 4y ago
So Google should have to charge money for Chrome?
CydeWeys 4y ago
Also the most obvious split would be AWS and then everything else. What does AWS have to do with Prime?
- mkmk3 4y ago
  I'm poorly informed regarding breakups of this kind, and I don't have the experience/research to assess the infra costs of a streaming service like Prime video. Assuming the hosting costs are a significant portion of their expenditure, what would it look like in a breakup, what kind of deal would they be able to get from the newly spun off AWS?
  - runako 4y ago
    > Assuming the hosting costs are a significant portion of their expenditure I would consider this unlikely, for reasonable definitions of "significant." Costs to license IP and develop content are likely the dominant term in expenses. > what kind of deal would they be able to get from the newly spun off AWS? The same as everyone else, or it was a re-org and not a breakup.
  - CydeWeys 4y ago
    There are lots of video streaming services that don't operate the bulk of their own infrastructure. They would simply become a customer of GCP, AWS, Azure, whatever.
- judge2020 4y ago
  AWS is only apart of Amazon for shareholder purposes. Even internally, word is that AWS bills all of Amazon's internal businesses similarly to how they bill external customers, so it's not like Amazon is getting super discounted/free hosting out of keeping them under the same unit.
rtsil 4y ago
What if it's not an independent service, merely a perk of the actual service? Where do we draw the line? Should Apple be asked to spin off iCloud because email, photos, documents should all be independent services? Note that neither Prime Video nor iCloud are monopolies, which would bring different considerations into the matter.
- orra 4y ago
  Prime Video isn't a monopoly, but Amazon clearly has Significant Market Power when it comes to retail. They're anti-competitively vertically bundling Prime Video along with retail delivery.
  - runako 4y ago
    Their largest competitor is Walmart. Walmart's bundle includes video, fuel discounts, from-store delivery, long-haul delivery. Further, the Walmart.com e-commerce site is subsidized by the Walmart bricks & mortar operation. Businesses are allowed to do more than one thing. I'm not sure when it became popular to try to strip down businesses to a single SKU each, and it's not obvious to me that consumers (or anyone) benefits from pursuit of that goal.
  - conductr 4y ago
    Could make a case that local retail is anticompetitive by not incorporating film production cost into a gallon of milk. Or maybe they’re anticompetitive because they have physical stores and do not need to bear the burden of labor/vehicle/fuel to deliver each order. I think it’s a bit absurd to call in the regulators. Retail is hyper competitive and part of that is they all choose these odd little perks/differentiators to entice customer loyalty. It’s a net positive to the consumer.
dahfizz 4y ago
Who decides what is unrelated or not? Amazon's whole retail business started by selling paper books. Extending that to kindle and audio books doesn't seem so outrageously "unrelated". Its more of an ecosystem which has legitimate benefits to the consumer. And once you have audio books, music and video doesn't seem like a huge stretch.... etc etc. Apple is the obvious example of this. Do you think every single service apple offers should be broken into a separate company? Apple pay, apple music, icloud all seem to be "unrelated" but the consumer legitimately benefits from these things being bundled into a cohesive ecosystem. Breaking these things into individual companies which has to be profitable based on just their one product would lead to higher prices and worse user experience, IMO. For non-consumer facing products, the case is clearer. AWS / GCP could be split out nicely. The ad networks of meta and google could be independent without hurting the consumer at all.
tshaddox 4y ago
I’m a long time paid subscriber to both Amazon Prime and Costco, and I can’t say I’ve ever thought of the services as particularly similar. Maybe that’s because I rarely use Costco to buy things online (I’ve only ordered a few online-only items and one travel package), which is the primary way I use Prime. Prime certainly feels more like a bundle of unrelated things, with the streaming service, and cloud music/photos/ebooks/etc. stuff no one uses, and whatever Twitch benefits they have now. I guess Costco might actually have some stuff like that, but I’m not aware of anything other than warehouse access, some online shipping benefits, and the travel/car/“Next” shopping.
- ghaff 4y ago
  No one uses Kindle ebooks? People may not read books as much as they used to and many still read physical books but lots of people use ebooks.
  - tshaddox 4y ago
    I meant "Prime Reading": https://www.amazon.com/kindle-dbs/fd/prime-pr https://www.amazon.com/kindle-dbs/fd/prime-pr But I could be wrong about it being rarely used.
    - ghaff 4y ago
      I had forgotten about Prime Reading. It looks a lot like the free digital services a lot of libraries have--not really a whole lot of quality content.
jimbokun 4y ago
It's not so much being propped up, as at achieving better efficiencies. Leveraging the larger organizations compute resources and ads technology makes Youtube more valuable than a stand alone company would be, for example.
- pclmulqdq 4y ago
  This isn't always true. A conglomerate isn't always more efficient than separated entities. You wouldn't get magical efficiencies by combining an oil company with an airline, for example, even though oil is a key cost component of air travel. The same goes for compute resources and ad sales - both are roughly commodity services with lots of competitors. Youtube gets some efficiencies from vertical integration with both, due to incentive alignment, but also gets a lot of inefficiencies from the added complexity and management and the need to keep up with competitors in the commodity part of the business, which can be expensive. The semiconductor industry is a place where you would think you would see an obvious efficiency to vertical integration - designing your process technology specifically for your chips. In practice, vertical integration between the chip design and manufacturing sides is almost gone, with a few notable exceptions. This is because it is actually not more efficient to be integrated. Technical infrastructure seems to be similar to me.

> The services may not work a la carte If the service cannot compete on it's own merits, and is being propped up by an unrelated business, how competetive is it actually?

runako 4y ago

> the service cannot compete on it's own merits This is only true if external actors redefine "the service" to be something other than what millions of customers voluntarily purchase (Prime). For example, I subscribe to Prime because I get free/better shipping on goods as well as video. I don't know what % of my subscription fee I would allot to either, but fortunately I don't have to do that.

mulletbum 4y ago
Not to mention, these other comments are for Disney. However, Disney is propping their business up with lots of other businesses. If you are going to make Amazon less competitive, you can't leave the giant business next to it in a better position. Disney will just buy it then.
- runako 4y ago
  This is such a great point. Disney makes a lot of money in theme parks etc.; Walmart makes something like $42B annually in healthcare; Costco sells cars & travel packages; Kroger sells gas (petrol); Apple (also a competitor) makes most of its money selling phones. Why leave all those businesses intact and target Amazon?
- runevault 4y ago
  Frankly among the not-tech-first companies Disney is the one that should most be targeted. The fact they were allowed to buy LucasFilms and Fox media (minus Fox News and Fox Sports because they already own ABC and ESPN) was so stupid. The year before those purchases the collected movies of those 3 were most of the top movies at the box office.
- danaris 4y ago
  Why, in this hypothetical, would the antitrust bodies see Amazon as needing to be broken up or otherwise restricted to improve competition, but not see acquisition by Disney as being something they should block? That just doesn't seem internally consistent.
- pclmulqdq 4y ago
  Disney's business lines are pretty synergistic. You have a media company, at its core, that provides other entertainment (theme parks) related to its IP, sells merchandise, and runs 3 different online distribution platforms for the media companies. The Disney corporation is built around exploiting the rights to these media IPs to the fullest. In contrast, Amazon is the online version of Walmart that can also sell you computing time and makes feature films which are just a perk of their "fast shipping" club. There's a pretty clear distinction here, even with one of the other mega-conglamerates (disney) that probably owns too many different content production units.

ericmay 4y ago

So Google should have to charge money for Chrome?

CydeWeys 4y ago

Also the most obvious split would be AWS and then everything else. What does AWS have to do with Prime?

mkmk3 4y ago
I'm poorly informed regarding breakups of this kind, and I don't have the experience/research to assess the infra costs of a streaming service like Prime video. Assuming the hosting costs are a significant portion of their expenditure, what would it look like in a breakup, what kind of deal would they be able to get from the newly spun off AWS?
- runako 4y ago
  > Assuming the hosting costs are a significant portion of their expenditure I would consider this unlikely, for reasonable definitions of "significant." Costs to license IP and develop content are likely the dominant term in expenses. > what kind of deal would they be able to get from the newly spun off AWS? The same as everyone else, or it was a re-org and not a breakup.
- CydeWeys 4y ago
  There are lots of video streaming services that don't operate the bulk of their own infrastructure. They would simply become a customer of GCP, AWS, Azure, whatever.
judge2020 4y ago
AWS is only apart of Amazon for shareholder purposes. Even internally, word is that AWS bills all of Amazon's internal businesses similarly to how they bill external customers, so it's not like Amazon is getting super discounted/free hosting out of keeping them under the same unit.

rtsil 4y ago

What if it's not an independent service, merely a perk of the actual service? Where do we draw the line? Should Apple be asked to spin off iCloud because email, photos, documents should all be independent services? Note that neither Prime Video nor iCloud are monopolies, which would bring different considerations into the matter.

orra 4y ago
Prime Video isn't a monopoly, but Amazon clearly has Significant Market Power when it comes to retail. They're anti-competitively vertically bundling Prime Video along with retail delivery.
- runako 4y ago
  Their largest competitor is Walmart. Walmart's bundle includes video, fuel discounts, from-store delivery, long-haul delivery. Further, the Walmart.com e-commerce site is subsidized by the Walmart bricks & mortar operation. Businesses are allowed to do more than one thing. I'm not sure when it became popular to try to strip down businesses to a single SKU each, and it's not obvious to me that consumers (or anyone) benefits from pursuit of that goal.
- conductr 4y ago
  Could make a case that local retail is anticompetitive by not incorporating film production cost into a gallon of milk. Or maybe they’re anticompetitive because they have physical stores and do not need to bear the burden of labor/vehicle/fuel to deliver each order. I think it’s a bit absurd to call in the regulators. Retail is hyper competitive and part of that is they all choose these odd little perks/differentiators to entice customer loyalty. It’s a net positive to the consumer.

dahfizz 4y ago

Who decides what is unrelated or not? Amazon's whole retail business started by selling paper books. Extending that to kindle and audio books doesn't seem so outrageously "unrelated". Its more of an ecosystem which has legitimate benefits to the consumer. And once you have audio books, music and video doesn't seem like a huge stretch.... etc etc. Apple is the obvious example of this. Do you think every single service apple offers should be broken into a separate company? Apple pay, apple music, icloud all seem to be "unrelated" but the consumer legitimately benefits from these things being bundled into a cohesive ecosystem. Breaking these things into individual companies which has to be profitable based on just their one product would lead to higher prices and worse user experience, IMO. For non-consumer facing products, the case is clearer. AWS / GCP could be split out nicely. The ad networks of meta and google could be independent without hurting the consumer at all.

tshaddox 4y ago

I’m a long time paid subscriber to both Amazon Prime and Costco, and I can’t say I’ve ever thought of the services as particularly similar. Maybe that’s because I rarely use Costco to buy things online (I’ve only ordered a few online-only items and one travel package), which is the primary way I use Prime. Prime certainly feels more like a bundle of unrelated things, with the streaming service, and cloud music/photos/ebooks/etc. stuff no one uses, and whatever Twitch benefits they have now. I guess Costco might actually have some stuff like that, but I’m not aware of anything other than warehouse access, some online shipping benefits, and the travel/car/“Next” shopping.

ghaff 4y ago
No one uses Kindle ebooks? People may not read books as much as they used to and many still read physical books but lots of people use ebooks.
- tshaddox 4y ago
  I meant "Prime Reading": https://www.amazon.com/kindle-dbs/fd/prime-pr https://www.amazon.com/kindle-dbs/fd/prime-pr But I could be wrong about it being rarely used.
  - ghaff 4y ago
    I had forgotten about Prime Reading. It looks a lot like the free digital services a lot of libraries have--not really a whole lot of quality content.

jimbokun 4y ago

It's not so much being propped up, as at achieving better efficiencies. Leveraging the larger organizations compute resources and ads technology makes Youtube more valuable than a stand alone company would be, for example.

pclmulqdq 4y ago
This isn't always true. A conglomerate isn't always more efficient than separated entities. You wouldn't get magical efficiencies by combining an oil company with an airline, for example, even though oil is a key cost component of air travel. The same goes for compute resources and ad sales - both are roughly commodity services with lots of competitors. Youtube gets some efficiencies from vertical integration with both, due to incentive alignment, but also gets a lot of inefficiencies from the added complexity and management and the need to keep up with competitors in the commodity part of the business, which can be expensive. The semiconductor industry is a place where you would think you would see an obvious efficiency to vertical integration - designing your process technology specifically for your chips. In practice, vertical integration between the chip design and manufacturing sides is almost gone, with a few notable exceptions. This is because it is actually not more efficient to be integrated. Technical infrastructure seems to be similar to me.