I hate how we are just giving away control over the internet to Amazon/Google.
How does a small cloud provider stay in business when up against these multi billion dollar companies? At any point in time, these companies can just lower the cost of their products, and suffer through a few bad quarters while the small businesses slowly bleed out and die.
So predatory pricing is very illegal, and considering that there are three major players in this space (azure/gcp/aws), all three of them would have to coordinate to kill other competition (since otherwise one of them could break from the deal and make their own money by betraying the other two), which is also very illegal.
And why would they even need to do something like that? AWS is wildly profitable anyway with enormous amounts of market share. When would it ever make sense for them to give up billions and billions and billions of dollars in profits to wipe out tiny cloud providers while also screwing up the economics of the space (changing people's expectations of how cloud should be priced meaning they won't accept prices as high as they are currently) and hoping and praying that GCP and Azure play along when it's time to hike prices back up?
What about the case of Amazon vs Diapers.com? Amazon basically undersold this company on diapers to the point where diapers.com was told to sell to Amazon or fuck off and die. The company ended up selling out for $540M USD.
This behavior is illegal yet Amazon is still here. While there’s no obvious case for their cloud division, it’s not unprecedented within the company to do so.
Good point. As a counter, this article (It's a national review article, so take it with a large grain of salt - I don't agree with it entirely but you and I have likely read the same articles on the other side of this and the NR article provides a good alternate perspective) suggests that the Quidsi case is not really predatory pricing (as the FTC determined in their investigation) as this did not drive amazon to achieve a monopoly in diaper sales (most diapers are still bought in grocery stores etc), even in the online space did not have a long term effect (The founders of Quidsi did quite well for themselves in their next venture, Jet.com). The allegations of undercutting to kill quidsi also came primarily from the founders and hasn't really been backed up. In the long term, that didn't really impact the consumer at all, even if amazon did kill Quidsi, they weren't able to shape the market.
Sorry for the miscommunication then, since if it seems like I was implying that, I clearly wasn't explicit enough in stating that this sort of tactic would not work because it absolutely requires communication in order to coordinate. The game theory does not support the idea that coordination could happen without communication. AWS, Azure, and GCP are all competitors who are incentivized to make moves that hurt the others at their benefit. Coordinating would be moving away from the nash equilibrium, and that behavior would not be able to be sustained without a defined punishment as a part of a collusive relationship, and they would need to communicate to set that up.
They have to target a different market. They have to provide customer support. They need to provide a lot of white glove services. They have to offer "tours of our facility" to those who think that has value. This could be businesses like lawyers but not tech businesses.
> while the small businesses slowly bleed out and die.
This is what killed small grocery businesses. The bigger corporations lose money on lots of popular items and make margins on other products. Walmart is especially bad, they can take lots of losses on grocery because they're making margins in other areas of the store.
The ultimate question is what is allowing these bigger businesses to operate more efficiently than a small business? Offshoring labor forces, offshoring manufacturing, low to no import tariffs, ability to utilize immigrant labor (small companies have no shot in the H1B process), corporate HQ's in lower tax jurisdictions, legalized accounting fraud (CapEx vs OpEx), skirting labor laws by hiring 'contractors,' getting outright handouts from municipalities (see Amazon HQ2 or any NFL stadium), onerous regulations, etc, etc.
Democracy in action. This is what everyone keeps voting for. Kill small business, empower multinational corporations.
> Democracy in action. This is what everyone keeps voting for.
What's amazing is that, literally nobody goes to the polls hoping to vote for such outcomes, yet despite that fact, it is indeed what we end up getting. Democracy is simply unable to fix this.
Democracy is the root cause, let alone able to fix it. And when people finally have a referendum to cast off their overlords, the overlords decide that democracy doesn't matter and jail your leaders.
>The ultimate question is what is allowing these bigger businesses to operate more efficiently than a small business?
I would think technology allowing businesses to scale with extremely low, near zero, marginal costs would be the big reason. That's why the per employee net income figures are so high for the leading tech companies, they can do so much with so little. I predict lots of vertical monopolies in the future.
Focused customer service directly meeting the needs of your existing customers, and serious attention to the products and features they need.
It's not a guaranteed formula---AWS, Google, even Azure have big moats around their offerings and significant table-stakes features implemented. But "focusing entirely on the needs of the customer" is the thing their scale makes challenging; they have customers with multiple disjoint or competing needs.
That's not the problem. It's when the little guys try to compete with what the big giants are doing and get completely blocked out. Amazon/Google are all about being magnanimous and supporting startup growth, just as long as they are getting a piece of the action and that it doesn't threaten their market duopoly too much.
Not every market and product needs to be accessible to the little guy. Things like infrastructure have huge scale benefits, and if the big guys are doing it at modest profits already and some at a loss it's very economically efficient.
How does a small cloud provider stay in business when up against these multi billion dollar companies? At any point in time, these companies can just lower the cost of their products, and suffer through a few bad quarters while the small businesses slowly bleed out and die.