Amazon's Absolute Influence: AWS That Makes the Technology World Love and Hate

Some start-ups describe Amazon as "open-mining" their innovations. The new product release of the annual AWS conference won the nickname of "red wedding". Apple's app store policy, Facebook's acquisition of Instragram, Whatsapp, and Google's third-party advertising products all harmed innovation and caught the attention of US regulators. But another giant Amazon seems to have received less attention. But in fact, Amazon's suppression of competitors is just as severe, even worse than that. Daisuke Wakabayashi focused on how Amazon's cash cow business, AWS, suppresses competition by copying the business and bundling advantages of emerging rivals. At the same time, it also describes in detail the complicated relationship between some startups and AWS: they can't stand it, but they can't live without it.

Elastic, a software startup in Amsterdam, is thriving and has grown to 100 employees. Then Amazon appeared. In October 2015, Amazon's cloud computing department announced that it had copied Elastic's free software tools for people to search and analyze data, and would also sell it as a paid service. Although Elastic's product Elasticsearch has been listed on Amazon, Amazon still does its best. In less than a year, Amazon has made more money from things developed by Elastic than this startup, because it integrates more closely with other Amazon products and makes others use them more. Convenience. To that end, Elastic added advanced features last year while restricting the use of those features by companies like Amazon. But Amazon still replicates many of these features and offers them for free.

In September, Elastic launched a counterattack. It sued Amazon in federal court in California for infringing its own trademark because Amazon used to give its product the exact same name: Elasticsearch. The company said in a lawsuit that Amazon "misled consumers." Amazon has denied any fault. The case is still pending. Since Microsoft dominated the personal computer industry with Windows in the mid-1990s, no technology platform has instilled so much fear into competitors as Amazon has done with its cloud computing division. Although you may still be in the cloud of what cloud computing is, this industry has developed into one of the largest and most profitable businesses in the technology industry, which can provide enterprises with computing power and software. Amazon is the dominant supplier in this industry.

Amazon has been using its cloud computing unit (called Amazon Web Services or AWS) to replicate and integrate software created by other technology companies. Then build its own service advantage by making it more convenient to use, obscuring competitors' products, and reducing its own product prices through bundle discounts. These moves have sent customers to Amazon, and the original developers of the software may end up with nothing. Even so, smaller competitors say they have no choice but to work with Amazon. Considering the company's widespread influence among customers, startups often agree with the latter's restrictions on the former to promote their products and voluntarily share their customer and product information with the latter. In order to get the privilege of selling through AWS, the startup also needs to return part of the sales revenue to Amazon.

Some companies have given a name to what Amazon is doing: strip-mining software. By stealing the innovations of others, leveraging each other's engineers, and profiting from their creations, Amazon inhibits the development of potential competitors and forces them to readjust the way they do business. All of this has prompted a review of Amazon and whether it abuses market dominance and engages in anticompetitive behavior. The company's strategy has led several competitors to start discussing antitrust lawsuits against them. Regulators and legislators are studying their influence in the industry.

"Everyone fears that Amazon's ambitions are endless," said Matthew Prince, the CEO of AWS competitor CloudFlare, which protects websites from attacks. AWS is just one of the directions Amazon intends to dominate many industries in the United States. The company has transformed retail, logistics, book publishing, and Hollywood. However, the impact of what Amazon does through AWS may be greater. The company is undoubtedly the market leader in the huge shift to cloud computing, with three times the size of its closest competitor, Microsoft. Every day, when millions of people watch movies on Netflix or upload photos to Apple's iCloud (this service also runs on Amazon's machines), millions of people are already unwittingly engaging with AWS. Interaction.

Amazon CEO Jeff Bezos once called AWS an "unsolicited" idea. This service was born in the early 2000s. In order to launch new projects and features, retailers at the time needed to spend a lot of effort in assembling computer systems. Once it established its general-purpose computer infrastructure, Amazon realized that other companies needed similar capabilities. Now companies like Airbnb and General Electric actually rent computing from Amazon (also known as the "cloud" that uses it) instead of buying equipment to run the system themselves. Businesses can then store their information on Amazon's machines, extract data from it, and analyze it. For Amazon itself, the position of AWS has become crucial. With sales of $ 25 billion last year, this unit is Amazon's most profitable business.

Amazon said in a statement that it was "stupid and despicable" to describe it as open-pit mining software. It said it has made a significant contribution to the software industry and that its actions are in the best interests of its customers. Some tech companies say they have found more customers through AWS. Even some companies tangled with Amazon have grown. For example, Elastic went public last year and now has 1,600 employees. But in interviews with more than 40 current and former Amazon employees and their competitors, many said that the cost of Amazon's investment in AWS was invisible. They say it's hard to gauge how much of their business has been stolen by Amazon, or how the threat posed by Amazon has scared away potential investors. Many people asked for anonymity in order to speak, fearing that they would anger Amazon.

Four people familiar with the matter said that in February this year, seven software company CEOs held a meeting in Silicon Valley, where everyone discussed the issue of antitrust lawsuits against the giant. Their dissatisfaction echoed complaints from vendors using Amazon's shopping site: once Amazon became a direct competitor, it was no longer neutral. People familiar with the matter said that the reason these CEOs did not continue to take legal action was partly to worry that the process would take too long. Now regulators are reaching out to some of Amazon's software competitors. The House Judiciary Committee, which is investigating large tech companies, questioned some of AWS's practices in a letter this September. According to relevant officials, the FTC (United States Federal Trade Commission), which is also investigating Amazon, also questioned AWS competitors. Salil Deshpande, founder of venture capital firm Uncorrelated, says Amazon's approach to software startups is unsustainable. "It cuts off their money-making channels, it also forcibly seized control of the software and then attracted customers to use its own proprietary services," he said.

MariaDB CEO Michael Howard says AWS 'success is built on "open pit mining" of open source technologies. Ten years ago, when Amazon Web Services was just getting started, Amazon was struggling to make its profits sustainable. Startups then opened their arms to AWS. This allows them to save money because they no longer need to buy their own computing equipment, but only pay for what they use. Soon after, more and more companies flocked, and eventually Amazon's computing infrastructure ran more and more software. In 2009, Amazon set up a template to accelerate AWS growth. That year, AWS launched a service for managing databases, which are important software to help companies organize information. This database service from AWS was immediately welcomed by customers. But it does not run software developed by Amazon itself. Instead, the software came from a free sharing option (so-called open source). Open source software has few similarities in business. This is the equivalent of running a coffee shop that delivers coffee for free and hopes that everyone will spend some money on milk, sugar or pastries.

But open source is a tried-and-tested model developed by the software industry that can help quickly deliver technology to customers. The enthusiast community often comes up with sharable technology to make improvements and advertise its benefits. Open source companies generally make money by providing customer support later or by paying for plugins. In the beginning, technicians didn't pay much attention to what Amazon did with database software. Then in 2015, Amazon made another law, copying Elasticsearch and providing its own competitive services. This time, everyone noticed. Todd Persen said, "A company built a company around an open source product that everyone likes, and then suddenly a competitor just held their stuff to compete with them." To this end, he founded A software company that is not open source, so that Amazon "has no chance" to copy its work.

The open source software industry has repeatedly become the target of Amazon. When it copies and integrates software onto AWS, it doesn't require licenses and doesn't have to pay startups any fees for the work. This leaves many of these companies with few resources available because they can't suddenly start charging for free software. Some people changed their rules about software use, limiting Amazon and others who wanted to turn what they developed into paid services. Amazon has bypassed some of their rule changes. Last year, when Elastic, now moving to Silicon Valley, changed its software rules, Amazon said in a blog post that open source software companies attempted to "confuse water" by restricting access to certain users. Elastic CEO Shay Banon wrote at the time that Amazon had "covered up" its own behavior with "fake altruism." Elastic declined to allow Banon to be interviewed. Last year, MongoDB, a popular technology for organizing document data, announced that it would require any company managing its software as a web service to share its underlying technology for free. The move is widely seen as aimed at AWS because AWS does not publicly share its technology for creating new services.

AWS soon introduced its own technology that looks the same as MongoDB's old software, so that it does not need to obey the new requirements of the latter. This experience is MongoDB CEO Dev Ittycheria's number one topic this year when attending the dinner with the heads of six other software companies. Their conversation took place at the home of a venture capitalist in Silicon Valley, and later the style of painting turned a bit fierce: Should you publicly accuse Amazon of monopolistic behavior? According to people familiar with the matter, during the banquet attended by the heads of software companies Confluent and Snowflake, some CEOs said they were facing an unbalanced competitive environment. No one appealed in the end. Open source company MariaDB CEO Michael Howard said, "The success of AWS is based on open-pit mining of open source technology. He estimates that Amazon's income from running MariaDB software is five times its entire business income.

AWS Vice President Andi Gutmans said that some companies want to be the "only" company to profit from open source projects. He said that Amazon "is committed to ensuring that open source projects remain truly open, and whether customers choose AWS or not, customers can choose how to use specific open source software." By 2012, when AWS held its first developer conference, Amazon did not Then there is the only big player in cloud computing. Microsoft and Google have also launched their own competing platforms. In response, Amazon introduced more software services that made AWS indispensable. Since then, Amazon has begun adding AWS services at an alarming rate, from 30 in 2014 to around 175 in December this year. It also has a built-in home advantage: simplicity and convenience. Customers can add new AWS services with one click and manage them with the same system. Newly added services will be counted into the same bill, and using non-Amazon services on AWS will be more complicated. Now when customers log in to AWS, they see a home page called the admin console. The center of the page lists about 150 services. All are AWS's own products.

If you enter "MongoDB", the search results will not extract information about the MongoDB service. Instead, it would recommend Amazon's "MongoDB-compatible" products. Even if customers choose a non-Amazon option, the company sometimes continues to market its products. When someone creates a new database, they see an ad about Amazon's own technology, Aurora. If they choose another product, Amazon will still highlight their options as "recommended." Gutmans said that AWS works closely with many companies to integrate their products "as seamlessly as possible." Amazon's AWS Developer Conference is now one of the world's largest technology events, attracting thousands of people to Las Vegas every year.

The focus of the conference was on the new services Jassy demonstrated during his presentation. Since new features introduced by AWS often cause trouble for some startups, this speech has earned the nickname "red wedding", and those familiar with "Game of Thrones" know that it was a bloody incident.

Duckbill Group's Corey Quinn said, "No one knows who will be killed next." He usually helps businesses manage AWS bills and runs a mailing list called "Last Week in A.W.S.". At last year's conference, Amazon introduced a new tool-Amazon CloudWatch Logs Insights-to help customers analyze information about their services. Daniel Vassallo, a former AWS software engineer who helped develop the product, said that AWS executives want to enter the market, but worry that it will make people think that Amazon is eyeing Splunk. The latter provides similar tools and is also one of the gold owners of AWS. AWS Vassallo said that so Amazon previewed its new product to Splunk before the meeting and agreed not to release the product during Jassy's presentation. Vassallo, who left Amazon in February this year, said: "Splunk they don't look very happy. But we continue to work on it." Splunk said it had a "strong partnership" with AWS and declined to comment further.

Amazon has also made rules for its developer conference. Companies that paid tens or hundreds of thousands of dollars for their booths said they had to submit their banner ads, brochures and press releases to Amazon for review and approval. According to an AWS document published in August explaining the marketing guidelines of the companies it works with, Amazon bans the use of certain words or phrases, such as not being "multi-cloud", which means supporting two or more cloud platforms. An Amazon spokesman said the practice has stopped. The guidelines also require that companies claim to be "best," "first," "only," "leader," or whatever, unless proven to be not by independent research.

Saket Saurabh, CEO of startup Nexla, said he has reservations about working with Amazon. Redis Labs, founded in Tel Aviv, Israel in 2011, is dedicated to the management of the free software Redis. You can use this software to quickly organize and update data. Amazon soon offered a similar paid service. Although this created a strong competitor for Redis Labs, Amazon's move in turn validated Redis technology. Since then, the startup has raised $ 150 million in funding, which fully illustrates the relationship between many software companies and Amazon that "I can't live with you but can't live without you." According to estimates by former employees of Redis Labs, Amazon generates $ 1 billion in revenue each year through Redis technology, which is at least 10 times the revenue of Redis Labs. They said that Amazon is also trying to rob its employees and use high discounts to pry into the corner of Redis Labs.

AWS offers discounts to customers who promise to spend at least a certain amount, but the money spent on AWS 'own services and competitors' services is not treated the same. Up to 50 cents off the $ 1 purchase of external services. According to AWS customers, the discount does not apply to non-Amazon products. And if customers still choose Redis Labs through AWS, Redis Labs must return 15% of their revenue to Amazon. The former employee said that Amazon's attempt to hire Redis Labs employees became so aggressive that the latter's executives deleted some online resumes of their own technicians. A Redis Labs spokesman said the startup didn't remember it. Former employees say that some Redis Labs executives have considered antitrust lawsuits against Amazon this year. Others are hesitant because 80% of the startup's revenue comes from AWS customers. Leena Joshi, former vice president of marketing at Redis Labs, said: "This is a love-hate relationship. On the one hand, most of our customer business runs on AWS, so it is in our interest to integrate tightly with them. At the same time, we know They are stealing our business. "

Redis Labs declined to comment on its own revenue or AWS actions. It said Amazon provided "important services." Not every company views AWS as a threat. Ali Ghodsi is the CEO of Databricks, a startup that analyzes data using artificial intelligence. He said AWS salespeople have improved their company's product sales. "I don't see them using ghost tricks to stop us," he said. However, Saket Saurabh, CEO of Nexla, a California startup with 14 employees, said he has reservations about Amazon. In August of this year, Amazon began offering data processing and monitoring services that compete with Nexla. Investors warned him not to share too much information with the giant. But Saket Saurabh said he had signed a cooperation agreement with Amazon this September. why? Because Amazon's huge sales team allows his data processing and monitoring services to reach a wide audience. "What choices can we have?" He said.