Companies Should Be as Mad About Amazon’s Ban as Shoppers
Yes, American consumers should be pissed.
Amazon runs the most popular e-commerce site on the Internet—by an astronomically large margin—and as Bloomberg reported earlier today, the company is now refusing to sell video streaming gadgets from Apple and Google. Amazon, you see, is looking for a competitive edge. The Seattle-based tech giant sells its own devices for streaming internet video onto your television set—the Fire TV and the Fire TV Stick—and these devices dovetail with an internet video service called Amazon Prime. Devices from Apple and Google—the Apple TV and the Google Chromecast—aren’t just alternatives to Amazon’s Fire TV gadgets. They don’t do Amazon Prime.
Amazon says the decision to ban Apple and Google devices is meant to maintain the mental health of the American consumer. “It’s important that the streaming media players we sell interact well with Prime Video in order to avoid customer confusion,” reads a statement sent to WIRED. But any customer of sound mind should be very pissed indeed. Amazon isn’t letting them buy what they want to buy (the Google Chromecast is the most popular video streaming gadget there is. The e-commerce giant is in no way serving customer (which, according to Amazon lore, is supposed to be the company’s primary aim). It’s serving itself.
That said, consumers shouldn’t be as pissed as all the companies that run their businesses on Amazon computers. And these companies are legion. Amazon isn’t just the world largest e-commerce company. It’s the world largest cloud computing company—by an astronomically large margin. Amazon Web Services—services where anyone can build and operate a website or other sorts of online software—help run everything from Netflix and Dropbox to Airbnb and Expedia. It’s a $4.6 billion business, and in the years to come, it could become Amazon’s primary business.
In the world of cloud computing, this has long been the question: What happens if you run your company on Amazon Web Services and Amazon ends up competing with you? It has happened so many times. And it’ll happen again. In fact, some people look at cloud computing services as a way of seeing where markets are moving. If Amazon sees which companies on its cloud are getting good traffic—and it does—it knows when the time is ripe to enter the same market.
Indeed, Amazon now competes with one of its biggest customers: Netflix. Amazon Prime Video rivals Netflix much as it rivals video services from Apple and Google. If Amazon is willing to treat Apple and Google differently, why would it stop short of treating Netflix differently?
The truth is that Netflix may have grown too big to mess with. In the past, Netflix has encountered problems running its video through internet service providers like Comcast and others—companies that are also competitors, offering old school TV feeds—but it has gained political clout to battle them toe-to-toe. Still, today’s news should give pause to anyone who’s beginning to build a business atop Amazon—or thinking of doing so. Amazon’s power, across multiple markets, is unquestionable. Its ethics are another matter.