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> I get the feeling Amazon was happy to eat the cost to reduce friction in deploying EC2 instances [...] and now they can just add another charge to the pile th

> I get the feeling Amazon was happy to eat the cost to reduce friction in deploying EC2 instances [...] and now they can just add another charge to the pile that 99.99% of users will never notice. This always leaves me puzzled about the concept of "free markets." How can smaller entities compete when these massive conglomerates can perpetually introduce loss leaders or subsidize pricing in new sectors using profits from their existing businesses? This strategy effectively shields them and reduces competition. My initial thought is that it should be illegal for companies to invest in sectors unrelated to where they generated their profits. However, I recognize this could lead to numerous unintended consequences. So, what could be an alternative solution?

dataflow 3y ago
Predatory pricing is already illegal. Or at least was, but apparently SCOTUS weakened it substantially.
- capableweb 3y ago
  When was the last time antitrust laws were actually used in the US "against" these huge companies?
  - fnimick 3y ago
    Not just huge companies! The entire venture capital model relies on providing a service substantially below cost and burning money to acquire users and eliminate competition so you can raise prices and profit later. In a sane world, Uber undercutting taxis with VC money should have been illegal.
    - nine_k 3y ago
      Is it how it works in the EU? Has it worked well for them? If the cost of initial operation were prohibited to be eaten by investment money, why the cost of development would not be, by the same logic? I do think that there are cases of competition stifling through dumping, and that's illegal for a reason. Unfortunately, things are not as clearly delineated as with e.g. burning down your competitor's factory.
  - tl 3y ago
    It's been a while. Wikipedia [1] is relatively useful here: 1890 - Start of conventional anti-trust enforcement 1930 - Ramp up of law's usage (under FDR) 1966 - First dissent against anti-trust (Brown Shoe Co. v. United States) 1974 - First decision against anti-trust (United States v. General Dynamics Corp.) 1982 - United States v. AT&T allows break up of Ma Bell. Weakened enforcement allows re-merger. 1999 - Microsoft successfully fights off anti-trust enforcement prevent company from ever being split. If you want anti-trust enforcement, do not elect Reagan and his descendants. [1]: https://en.wikipedia.org/wiki/United_States_antitrust_law https://en.wikipedia.org/wiki/United_States_antitrust_law
    - thrashh 3y ago
      It happens all the time. But usually it’s blocking mergers and acquisitions. Here’s an example: https://www.nytimes.com/2022/11/21/books/penguin-random-house-simon-schuster-deal.html https://www.nytimes.com/2022/11/21/books/penguin-random-hous... Waiting to break up a company for anti-trust is like waiting for your house to completely flood instead of fixing the pipe before it gets to that point.
justapassenger 3y ago
> My initial thought is that it should be illegal for companies to invest in sectors unrelated to where they generated their profits. However, I recognize this could lead to numerous unintended consequences. Main consequence would be forcing companies to go bankrupt, instead of pivoting to new areas, when their current market becomes obsolete/commoditized.
thrashh 3y ago
It’s a case by case basis. You can’t set a rule and say that every time an established leader eats a cost that it’s right or wrong. In this case, AWS has had plenty of competition via other cloud services like Azure and Google Cloud as well as other hosting options. The fact that they ate this cost was immaterial and I don’t see any issue with it. Even with all the competition, the alternatives still kind of pale in comparison so it’s definitely not a competition problem.
zamadatix 3y ago
I'm not sure I agree with the premise of the question. Not charging for IPs was less likely to be some massive subsidization plan to create a loss leader and capture market and was more likely just what everyone else was doing - ignoring charging for the few pennies because the juice wasn't worth the squeeze and they've got better ways to spend time trying to make real money. Now prices are getting very high and that's no longer true.
ApolloFortyNine 3y ago
Well since aws has been hugely profitable, you can easily argue it was simply priced in. I guess they did buy a lot of their ips when they were much cheaper, but it's similar to buying and holding land in many ways. I had heard more than anything it was due to behind the scene implementations anyways, they likely finally resolved those.
Gigachad 3y ago
This would be impossible to ban, and even small businesses do it. Imagine if the corner store charged you to park in the car park, charged you to stand in the store, charged you for every staff interaction, if you open the fridge they charge you a small amount for the power you consumed, etc. IPv4 addressees were once as insignificant as any of these costs, now they aren't, so they are charging for it.
fomine3 3y ago
Speaking of IPv4 addresses, it's far more worse than "free markets". It's a rent seeking by internet early adopters (specifically the US). New indian ISP doesn't have much choice. IMO it's good thing because AWS users will waste less IPv4 addresses.

dataflow 3y ago

Predatory pricing is already illegal. Or at least was, but apparently SCOTUS weakened it substantially.

capableweb 3y ago
When was the last time antitrust laws were actually used in the US "against" these huge companies?
- fnimick 3y ago
  Not just huge companies! The entire venture capital model relies on providing a service substantially below cost and burning money to acquire users and eliminate competition so you can raise prices and profit later. In a sane world, Uber undercutting taxis with VC money should have been illegal.
  - nine_k 3y ago
    Is it how it works in the EU? Has it worked well for them? If the cost of initial operation were prohibited to be eaten by investment money, why the cost of development would not be, by the same logic? I do think that there are cases of competition stifling through dumping, and that's illegal for a reason. Unfortunately, things are not as clearly delineated as with e.g. burning down your competitor's factory.
- tl 3y ago
  It's been a while. Wikipedia [1] is relatively useful here: 1890 - Start of conventional anti-trust enforcement 1930 - Ramp up of law's usage (under FDR) 1966 - First dissent against anti-trust (Brown Shoe Co. v. United States) 1974 - First decision against anti-trust (United States v. General Dynamics Corp.) 1982 - United States v. AT&T allows break up of Ma Bell. Weakened enforcement allows re-merger. 1999 - Microsoft successfully fights off anti-trust enforcement prevent company from ever being split. If you want anti-trust enforcement, do not elect Reagan and his descendants. [1]: https://en.wikipedia.org/wiki/United_States_antitrust_law https://en.wikipedia.org/wiki/United_States_antitrust_law
  - thrashh 3y ago
    It happens all the time. But usually it’s blocking mergers and acquisitions. Here’s an example: https://www.nytimes.com/2022/11/21/books/penguin-random-house-simon-schuster-deal.html https://www.nytimes.com/2022/11/21/books/penguin-random-hous... Waiting to break up a company for anti-trust is like waiting for your house to completely flood instead of fixing the pipe before it gets to that point.

justapassenger 3y ago

> My initial thought is that it should be illegal for companies to invest in sectors unrelated to where they generated their profits. However, I recognize this could lead to numerous unintended consequences. Main consequence would be forcing companies to go bankrupt, instead of pivoting to new areas, when their current market becomes obsolete/commoditized.

thrashh 3y ago

It’s a case by case basis. You can’t set a rule and say that every time an established leader eats a cost that it’s right or wrong. In this case, AWS has had plenty of competition via other cloud services like Azure and Google Cloud as well as other hosting options. The fact that they ate this cost was immaterial and I don’t see any issue with it. Even with all the competition, the alternatives still kind of pale in comparison so it’s definitely not a competition problem.

zamadatix 3y ago

I'm not sure I agree with the premise of the question. Not charging for IPs was less likely to be some massive subsidization plan to create a loss leader and capture market and was more likely just what everyone else was doing - ignoring charging for the few pennies because the juice wasn't worth the squeeze and they've got better ways to spend time trying to make real money. Now prices are getting very high and that's no longer true.

ApolloFortyNine 3y ago

Well since aws has been hugely profitable, you can easily argue it was simply priced in. I guess they did buy a lot of their ips when they were much cheaper, but it's similar to buying and holding land in many ways. I had heard more than anything it was due to behind the scene implementations anyways, they likely finally resolved those.

Gigachad 3y ago

This would be impossible to ban, and even small businesses do it. Imagine if the corner store charged you to park in the car park, charged you to stand in the store, charged you for every staff interaction, if you open the fridge they charge you a small amount for the power you consumed, etc. IPv4 addressees were once as insignificant as any of these costs, now they aren't, so they are charging for it.

fomine3 3y ago

Speaking of IPv4 addresses, it's far more worse than "free markets". It's a rent seeking by internet early adopters (specifically the US). New indian ISP doesn't have much choice. IMO it's good thing because AWS users will waste less IPv4 addresses.