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The pattern is quite simple. Build infrastructure to serve internal operations at a scale no rational external buyer would justify. Optimize it to a level that
by SoftTalker 6mo ago
The pattern is quite simple.
Build infrastructure to serve internal operations at a scale no rational external buyer would justify. Optimize it to a level that drives marginal cost below the buyer’s internal alternative. When the surplus capacity is too large to write off, open the API and sell it.
Forgot the last part: when you have eliminated all the competition and have all your customers locked in with no other options, raise the price.
We need to get back to preventing (or breaking up) monopolies.
- voakbasda 6mo agoI don’t think it will ever happen. The corruption is so widespread and now openly practiced. The powers that be all have their hands in those cookie jars. Their sweet tooth is insatiable, and they will never relinquish those treats until they get severe spankings.
- varispeed 6mo agoIsn't that already illegal in many countries (dumping)? The issue is that AWS is embedded in many governments and there is no appetite to do anything about it. If a country started proceedings against AWS they'd risk their country infrastructure going down, so it is a no go. I wonder why this has not been considered as national security risk and frankly negligence.
- s1artibartfast 6mo agoDumping is selling at a loss. The quote clearly describes selling for a profit. Aws marginal cost is below the internal production price of the buyer
- SoftTalker 6mo agoAmazon "operated at a loss" for years, avoiding income taxes, as they dumped all their profit into building their infrastructure, which they are now selling for less than anyone else can because the taxpayers effectively subsidized it.
- s1artibartfast 6mo agoThat isnt dumping. There is a big difference between running a company at a loss and selling a good at a loss. This is exactly what we want our tax structure to incentivise. Investing in the future for growth and cheaper goods.
- SoftTalker 6mo agoYes, I should not have used the word dumping there as it's not in the same context as its usage upthread. I just meant they plowed all their profits into R&D and infrastructure growth, and as a result had very little or even negative taxable income. They operated at a loss, but it was contrived. They had revenue pouring in. While I agree we want to incentivize investing in future capacity, I don't think we intend that incentive to be used to create monopolies. As with many things, what's good at small scales can be bad at huge scales.
- s1artibartfast 6mo agoThe tax situation isnt what created monopolies. It was and is available to all. It is unclear what is bad about it, as long as they provide a better or cheaper product than the competitor. If they are ilegally preventing competition, then regulatory action should be swift. Otherwise, it is a win-win and the consumer is getting a better product than others could provide. This is the classic walmart scenario.
- SoftTalker 6mo agoIt is win-win until there's no competition left and they can now raise prices and enshitify their products with impunity.
- steveBK123 6mo ago> Forgot the last part: when you have eliminated all the competition and have all your customers locked in with no other options, raise the price. AND don't forget to degrade services as well
- NickC25 6mo agobreak. up. Amazon. break up Apple, Meta, MSFT, etc... while we're at it. Or, keep it simpler - if a company passes a market cap of 1 trillion dollars, they must forgo lobbying and "government relations". if you're worth a trillion dollars or more, you don't need the government to hold your hand.
- kennywinker 6mo agoA trillion? Why wouldn’t we set the bar at $0 - companies are not people, and allowing them to influence politics, at any size, corrupts democracy
- NickC25 6mo agoI like the way you think. But most wouldn't agree, they believe a company should have the right to influence government.
- PaulDavisThe1st 6mo agoUnproven, really. I don't think I'd argue that most people think that the individuals in a company (even its CEO) have the right to influence government. But the question is whether the corporation ("are people too, my friend) itself has this right. I'm not clear that most agree with that.
- s1artibartfast 6mo agoThe corporation is the primary structure for individuals to organize - from soul crushing businesses to chess clubs, environmental non-profits, or labor unition. Government influence primarily consistes of sharing information with votes passing flyers on the street or running adds. When framed this way, I dont think most people would agree that groups should be prevented from getting their message out.
- kennywinker 6mo ago
- clearstack 6mo agoThe 10-K makes this concrete. AWS is 17% of Amazon revenue but ~60% of operating income (FY2024). The retail arm runs on thin margins — the infrastructure arm subsidizes everything.
- thayne 6mo agoAlso worth pointing out the "Optimize it to a level that drives marginal cost below the buyer’s internal alternative" includes reducing labor costs by underpaying and overworking workers.