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Summarizing - Building a business on someone else's platform is very risky, because they will cut you off to promote their own competing product instead. AWS d

by fsk 12y ago

Summarizing - Building a business on someone else's platform is very risky, because they will cut you off to promote their own competing product instead. AWS doesn't do this, because the second they cut off a customer based on their type of business (even if it competes with Amazon), they'll lose their marketplace credibility. Facebook, Twitter, and Apple have near monopolies, but AWS still has lots of competitors.

cwyers 12y ago
I think it's a question of who your users are. When people build on Facebook or Twitter, their users are the same users as the platform's. Zynga and Facebook both are pulling from the same pool -- it's pure competition. When you use AWS, you are very directly Amazon's customer. They have a much stronger incentive to support you, because you're a direct revenue stream to them.
- pdpi 12y ago
  Plus Amazon is a large business with many divisions. If you compete with Amazon Instant Video, the AWS folks aren't going to like having their profit centre sacrificed for the sake of the video division.
EdwardDiego 12y ago
> AWS doesn't do this They don't, but don't forget their recently released Dropbox (who use a bunch of AWS) competitor.
- lmm 12y ago
  Isn't that the same as the Netflix example? Amazon have their own version, but they're still happy for their competitor to run on AWS.
akkartik 12y ago
That isn't a summary, that's actually more accurate than the article. The article suggests that you don't have to worry as long as you're paying your platform for use. Against which there's a huge counter-example called Microsoft in the 90's. The real distinction between platforms and Platforms is the word 'monopoly' that you use, and that is prominently absent from the article. But even that doesn't quite feel like a complete theory, because there are monopoly Platforms that are real utilities, like the electrical grid. PG&E doesn't embrace, extend and extinguish. Why not? How can we arrange for more healthy seeking of monopolies and less rentierism? Are those even well-posed concepts? There might be something more valuable than the OP in this direction.
- zobzu 12y ago
  yeah, if aws achieves something close to a monopoly we'll be fucked. And of course this is BOUND to happen. If its not AWS it'll be someone else. But it's inevitable.
- walterbell 12y ago
  > PG&E doesn't embrace, extend and extinguish. Why not? Regulation?
  - akkartik 12y ago
    Ah, such a simple word, but such complexity hidden under its hood. Regulation can create rentier institutions like the taxi medallion system[1] alongside PG&E. So another way to phrase my question is: how can we distinguish regulations that result in PG&E from those that result in taxis? When do the benefits of regulating an established player outweigh the costs in reduced incentives for others to attempt to create future monopolies? One potential resolution to the question is that you can't, that PG&E's failure to grow is just a temporary failure of imagination. Rentierism is a weed that, uh, finds a way, to quote Jeff Goldblum from Jurassic Park (https://www.youtube.com/watch?v=SkWeMvrNiOM https://www.youtube.com/watch?v=SkWeMvrNiOM). Under this worldview, a utility is merely a monopoly that nobody wants to compete with anymore -- for now. It has temporarily exhausted its growth/optimization curve, leading to predictable revenues. For a while the predictable revenues are divided between existing players (shareholders, govt, employees, etc.) in a stable equilibrium. But eventually, institutions that fail to grow (taxis) will run into hacks that do (Uber/Lyft). An alternative solution would be that there is a distinction between good and bad regulations, perhaps that you have to weigh the size of the regulator against the size of the regulated industry. Taxi regulations were bad because they were suppressing a small industry. Regulation of large industries on the other hand, is more likely to do good than harm. Provided public attention can outlast private lobbying. That tension then becomes the new frontier for the eternal battle of public policy. [1] More examples here: http://www.cloverfoodlab.com/blog/2008/09/05/licensing-and-other-city-services-to-date; http://www.cloverfoodlab.com/blog/2008/09/05/licensing-and-o... http://en.wikipedia.org/wiki/Licence_Raj http://en.wikipedia.org/wiki/Licence_Raj
kristianp 12y ago
A big difference between AWS and a social site is that all except the most basic level of API access is paid, and that payment is the main revenue source of AWS.

by fsk 12y ago

cwyers 12y ago

I think it's a question of who your users are. When people build on Facebook or Twitter, their users are the same users as the platform's. Zynga and Facebook both are pulling from the same pool -- it's pure competition. When you use AWS, you are very directly Amazon's customer. They have a much stronger incentive to support you, because you're a direct revenue stream to them.

pdpi 12y ago
Plus Amazon is a large business with many divisions. If you compete with Amazon Instant Video, the AWS folks aren't going to like having their profit centre sacrificed for the sake of the video division.

EdwardDiego 12y ago

> AWS doesn't do this They don't, but don't forget their recently released Dropbox (who use a bunch of AWS) competitor.

lmm 12y ago
Isn't that the same as the Netflix example? Amazon have their own version, but they're still happy for their competitor to run on AWS.

akkartik 12y ago

That isn't a summary, that's actually more accurate than the article. The article suggests that you don't have to worry as long as you're paying your platform for use. Against which there's a huge counter-example called Microsoft in the 90's. The real distinction between platforms and Platforms is the word 'monopoly' that you use, and that is prominently absent from the article. But even that doesn't quite feel like a complete theory, because there are monopoly Platforms that are real utilities, like the electrical grid. PG&E doesn't embrace, extend and extinguish. Why not? How can we arrange for more healthy seeking of monopolies and less rentierism? Are those even well-posed concepts? There might be something more valuable than the OP in this direction.

zobzu 12y ago
yeah, if aws achieves something close to a monopoly we'll be fucked. And of course this is BOUND to happen. If its not AWS it'll be someone else. But it's inevitable.
walterbell 12y ago
> PG&E doesn't embrace, extend and extinguish. Why not? Regulation?
- akkartik 12y ago
  Ah, such a simple word, but such complexity hidden under its hood. Regulation can create rentier institutions like the taxi medallion system[1] alongside PG&E. So another way to phrase my question is: how can we distinguish regulations that result in PG&E from those that result in taxis? When do the benefits of regulating an established player outweigh the costs in reduced incentives for others to attempt to create future monopolies? One potential resolution to the question is that you can't, that PG&E's failure to grow is just a temporary failure of imagination. Rentierism is a weed that, uh, finds a way, to quote Jeff Goldblum from Jurassic Park (https://www.youtube.com/watch?v=SkWeMvrNiOM https://www.youtube.com/watch?v=SkWeMvrNiOM). Under this worldview, a utility is merely a monopoly that nobody wants to compete with anymore -- for now. It has temporarily exhausted its growth/optimization curve, leading to predictable revenues. For a while the predictable revenues are divided between existing players (shareholders, govt, employees, etc.) in a stable equilibrium. But eventually, institutions that fail to grow (taxis) will run into hacks that do (Uber/Lyft). An alternative solution would be that there is a distinction between good and bad regulations, perhaps that you have to weigh the size of the regulator against the size of the regulated industry. Taxi regulations were bad because they were suppressing a small industry. Regulation of large industries on the other hand, is more likely to do good than harm. Provided public attention can outlast private lobbying. That tension then becomes the new frontier for the eternal battle of public policy. [1] More examples here: http://www.cloverfoodlab.com/blog/2008/09/05/licensing-and-other-city-services-to-date; http://www.cloverfoodlab.com/blog/2008/09/05/licensing-and-o... http://en.wikipedia.org/wiki/Licence_Raj http://en.wikipedia.org/wiki/Licence_Raj

kristianp 12y ago

A big difference between AWS and a social site is that all except the most basic level of API access is paid, and that payment is the main revenue source of AWS.