Amazon fact of the day

Amazon, representative of the big tech firms, have long been accused of abusing their market position and indulging in anti-competitive behaviours. Sample the latest from the Times on AWS,

Amazon has used its cloud computing arm — called Amazon Web Services, or A.W.S. for short — to copy and integrate software that other tech companies pioneered. It has given an edge to its own services by making them more convenient to use, burying rival offerings and bundling discounts to make its products less expensive. The moves drive customers toward Amazon while those responsible for the software may not see a cent. Even so, smaller rivals say they have little choice but to work with Amazon. Given the company’s broad reach with customers, start-ups often agree to its restrictions on promoting their own products and voluntarily share client and product information with it. For the privilege of selling through A.W.S., the start-ups pay a cut of their sales back to Amazon. Some of the companies have a phrase for what Amazon is doing: strip-mining software. By lifting other people’s innovations, trying to poach their engineers and profiting off what they made, Amazon is choking off the growth of would-be competitors and forcing them to reorient how they do business, the companies said...

What Amazon is doing to software start-ups is unsustainable, said Salil Deshpande, founder of Uncorrelated, a venture capital firm. “It has intercepted their monetization, it has forcibly wrestled control of software from their owners and it has siphoned customers to its own proprietary services,” he said... In 2009, Amazon... introduced a service for managing a database, which is critical software to help companies organize information. The A.W.S. database service, an instant hit with customers, did not run software that Amazon created. Instead, the company plucked from a freely shared option known as open source... Again and again, the open-source software industry became a well that Amazon turned to. When it copied and integrated that software into A.W.S., it didn’t need permission or have to pay the start-ups for their work, creating a deterrent for people to innovate. That left little recourse for many of these companies, which could not suddenly start charging money for what was free software.

Since companies rent computing space from Amazon and host their applications and store their information on Amazon machines, the possibility of Amazon drawing on it cannot be eliminated. AWS is three-times bigger than its next competitors, Microsoft, and generated $25 bn in revenues in 2018, which in turn enables Amazon finance the expansion of its e-commerce and other businesses.