MESSAGE
| DATE | 2019-12-15 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [Hangout - NYLXS] Strip mining everythiong
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While you were busy watching the Impeachment Circus, something important
was actually happening in the world..
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https://www.nytimes.com/2019/12/15/technology/amazon-aws-cloud-competition.html
SEATTLE — Elastic, a software start-up in Amsterdam, was rapidly
building its business and had grown to 100 employees. Then Amazon came
along.
In October 2015, Amazon’s cloud computing arm announced it was copying
Elastic’s free software tool, which people use to search and analyze
data, and would sell it as a paid service. Amazon went ahead even though
Elastic’s product, called Elasticsearch, was already available on Amazon.
Within a year, Amazon was generating more money from what Elastic had
built than the start-up, by making it easy for people to use the tool
with its other offerings. So Elastic added premium features last year
and limited what companies like Amazon could do with them. Amazon
duplicated many of those features anyway and provided them free.
In September, Elastic fired back. It sued Amazon in federal court in
California for violating its trademark because Amazon had called its
product by the exact same name: Elasticsearch. Amazon “misleads
consumers,” the start-up said in its complaint. Amazon denied it had
done anything wrong. The case is pending.
Not since the mid-1990s, when Microsoft dominated the personal computer
industry with Windows, has a technology platform instilled such fear in
competitors as Amazon is now doing with its cloud computing arm. Its
feud with Elastic illustrates how it brandishes power in that technical
world.
While cloud computing may appear obscure and geeky, it underlies much of
the internet. It has grown into one of the technology industry’s largest
and most lucrative businesses, offering computing power and software to
companies. And Amazon is its single-biggest provider.
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.
All of this has fueled scrutiny of Amazon and whether it is abusing its
market dominance and engaging in anticompetitive behavior. The company’s
tactics have led several rivals to discuss bringing antitrust complaints
against it. And regulators and lawmakers are examining its clout in the
industry.
“People are afraid that Amazon’s ambitions are endless,” said Matthew
Prince, chief executive of Cloudflare, an A.W.S. competitor that
protects websites from attacks.
A.W.S. is just one prong of Amazon’s push to dominate large swaths of
American industry. The company has transformed retailing, logistics,
book publishing and Hollywood. It is rethinking how people buy
prescription drugs, purchase real estate and build surveillance for
their homes and cities.
But what Amazon is doing through A.W.S. is arguably more consequential.
The company is the unquestioned market leader — triple the size of its
nearest competitor, Microsoft — in the seismic shift to cloud computing.
Millions of people unknowingly interact with A.W.S. every day when they
stream movies on Netflix or store photos on Apple’s iCloud, services
that run off Amazon’s machines.
Jeff Bezos, Amazon’s chief executive, once called A.W.S. an idea “no one
asked for.” The service began in the early 2000s when the retailer
struggled to assemble computer systems to start new projects and
features. Once it built a common computer infrastructure, Amazon
realized other companies needed similar capabilities.
Now companies like Airbnb and General Electric essentially rent
computing from Amazon — otherwise known as using the “cloud” — instead
of buying and running their own systems. Businesses can then store their
information on Amazon machines, pluck data from them and analyze it.
For Amazon itself, A.W.S. has become crucial. The division generated $25
billion in sales last year — roughly the size of Starbucks — and is
Amazon’s most profitable business. Those profits enable the company to
plow money into many other industries.
In a statement, Amazon said the idea that it was strip-mining software
was “silly and off-base.” It said it had contributed significantly to
the software industry and that it acted in the best interest of customers.
Some tech companies said they had found more customers through A.W.S.;
even some companies that have tangled with Amazon have grown. Elastic,
for instance, went public last year and now has 1,600 employees.
But in interviews with more than 40 current and former Amazon employees
and those of rivals, many said the costs of what the company was doing
with A.W.S. were hidden. They said it was hard to measure how much
business they had lost to Amazon, or how the threat of Amazon had turned
off would-be investors. Many spoke on the condition of anonymity for
fear of angering the company.
In February, seven software chief executives met in Silicon Valley and
discussed bringing an antitrust lawsuit against the giant, said four
people with knowledge of the gathering. Their grievances echoed a
complaint by vendors who use Amazon’s shopping site: Once Amazon becomes
a direct competitor, it is no longer a neutral party.
The C.E.O.s did not press forward with a legal action, partly out of
concern that the process would take too long, the people said.
Now regulators are approaching some of Amazon’s software rivals. The
House Judiciary Committee, which is investigating the big tech
companies, asked Amazon in a September letter about A.W.S.’s practices.
The Federal Trade Commission, which is also investigating Amazon, has
questioned A.W.S. competitors, according to officials at two software
companies who were called in but were not authorized to discuss the matter.
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.
‘Strip Mining’
When Amazon Web Services began last decade, Amazon was struggling to
turn a consistent profit. A service to provide computing power seemed
like a distraction.
Yet start-ups embraced A.W.S. They saved money because they did not need
to buy their own computing equipment, while spending only on what they
used. Soon more companies flocked to Amazon for computing infrastructure
and, eventually, the software that ran on its machines.
In 2009, Amazon established a template for accelerating A.W.S.’s growth.
That year, it 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.
Open-source software has few parallels in business. It is akin to a
coffee shop giving away coffee on the hopes that people spend on milk or
sugar or pastries.
But open source is a tried and true model nurtured by the software
industry to get technology to customers quickly. A community of
enthusiasts often springs up around the shareable technology,
contributing improvements and spreading the word about its benefits.
Traditionally, open-source companies later earn money for customer
support or from paid add-ons.
Technologists initially paid little attention to what Amazon had done
with database software. Then in 2015, Amazon repeated the maneuver by
copying Elasticsearch and offering its competing service.
This time, heads turned.
“There was a company that built a business around an open-source product
that people like using and, suddenly, they have a competitor using their
own stuff against them,” said Todd Persen, who started a non-open-source
software company this year so there was “zero chance” that Amazon could
lift his creations. His previous start-up, InfluxDB, was 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. Some instead
changed the rules around how their wares could be used, restricting
Amazon and others who want to turn what they have created into a paid
service.
Amazon has worked around some of their changes.
When Elastic, now based in Silicon Valley, shifted the rules for its
software last year, Amazon said in a blog post that open-source software
companies were “muddying the waters” by limiting access to certain users.
Shay Banon, Elastic’s chief executive, wrote at the time that Amazon’s
actions were “masked with fake altruism.” Elastic declined to make Mr.
Banon available for an interview.
Last year, MongoDB, a popular technology for organizing data in
documents, also announced that it would require any company that manages
its software as a web service to freely share the underlying technology.
The move was widely viewed as a hedge against A.W.S., which does not
openly share its technology for creating new services.
A.W.S. soon introduced its own technology with the look and feel of
MongoDB’s older software, which did not fall under the new requirements.
That experience was top of mind this year when Dev Ittycheria, MongoDB’s
chief executive, attended the dinner with the heads of six other
software companies. Their conversation, held at the home of a Silicon
Valley venture capitalist, shifted to something drastic: whether to
publicly accuse Amazon of behaving like a monopoly.
At the meal, which included the heads of the software firms Confluent
and Snowflake, some of the C.E.O.s said they faced an uneven playing
field, according to the people with knowledge of the gathering. No
complaint has materialized.
“A.W.S.’s success is built on strip-mining open-source technology,” said
Michael Howard, chief executive of MariaDB, an open-source company. He
estimated that Amazon made five times more revenue from running MariaDB
software than his company generated from all of its businesses.
Andi Gutmans, an A.W.S. vice president, said some companies wanted to be
“the only ones” to make money off open-source projects. He said Amazon
was “committed to making sure that open-source projects remain truly
open and customers get to choose how they use that open-source software
— whether they choose A.W.S. or not.”
By the time A.W.S. held its first developer conference in 2012, Amazon
was no longer the only big player in cloud computing. Microsoft and
Google had introduced competing platforms.
So Amazon unveiled more software services to make A.W.S. indispensable.
In a speech at the event, Andy Jassy, the head of A.W.S., said it wanted
to “enable every imaginable use case.”
Amazon has since added A.W.S. services at a blistering pace, going from
30 in 2014 to about 175 as of December. It also built in a home-field
advantage: simplicity and convenience.
Customers can add new A.W.S. services with a single click and use the
same system to manage them. The new service is added to the same bill
and requires no extra permission from a finance or compliance department.
In contrast, using a non-Amazon service on A.W.S. is more complicated.
Today when a customer logs onto A.W.S., they see a home page called the
management console. At the center is a list of about 150 services. All
are A.W.S.’s own products.
When someone types “MongoDB,” the search results do not fetch
information for MongoDB’s service on A.W.S.; it instead suggests an
offering from Amazon that is “compatible with MongoDB.”
Even after a customer has selected a non-Amazon option, the company
sometimes continues pushing its own product. When someone creates a new
database, they are presented an ad for Amazon’s own technology called
Aurora. If they pick something else, Amazon still highlights its option
as “recommended.”
Mr. Gutmans said A.W.S. worked closely with many companies to integrate
their offerings “as seamlessly as possible.”
Banning Words
Amazon’s A.W.S. developer conference is now one of the world’s biggest
technology events, drawing tens of thousands of people to Las Vegas
every year.
The highlight is a speech from Mr. Jassy where he showcases new
services. Because a new A.W.S. feature often spells hardship for some
start-up, the presentation has earned the nickname “The Red Wedding,” a
bloody event in a “Game of Thrones” episode.
“Nobody knows who is going to get killed next,” said Corey Quinn of the
Duckbill Group, who helps companies manage their A.W.S. bills and writes
a newsletter called “Last Week in A.W.S.”
At last year’s conference, Amazon unveiled a new tool — Amazon
CloudWatch Logs Insights — to help customers analyze information about
its services.
Daniel Vassallo, a former A.W.S. software engineer who helped develop
the product, said executives wanted to go after the market, but were
worried it would look like Amazon was targeting a company called Splunk,
which offers a similar tool and is also a major spender with A.W.S.
So Amazon previewed its new product to Splunk before the conference and
agreed not to announce it during Mr. Jassy’s speech, Mr. Vassallo said.
“They weren’t particularly happy. Who would be?” Mr. Vassallo, who left
Amazon in February, said of Splunk. “But we still went ahead and did it
anyway.”
Splunk said it had a “strong partnership” with A.W.S. and declined to
comment further.
Amazon has also created rules for its developer conference. Companies
that pay tens of thousands or hundreds of thousands of dollars for a
booth said they must submit their banners, pamphlets and news releases
to Amazon for approval.
According to an A.W.S. document from August explaining marketing
guidelines for companies it works with, Amazon bans certain words or
phrases, such as “multi-cloud,” the concept of using two or more cloud
platforms. An Amazon spokesman said it had stopped this practice.
Companies are also instructed to strike claims about being “the best,”
“the first,” “the only,” “the leader,” unless substantiated by
independent research.
‘Love-Hate Relationship’
Redis Labs was founded in 2011 in Tel Aviv, Israel, to build a business
around managing a free software called Redis, which people use to
organize and update data quickly. Amazon soon offered a competing paid
service.
While that created a formidable rival to Redis Labs, Amazon’s move also
validated Redis technology. The start-up has since raised $150 million,
exemplifying the can’t-live-with-can’t-live-without relationship that
many software companies have with Amazon.
Former Redis Labs employees estimate that Amazon generates as much as $1
billion a year from Redis technology — or at least 10 times more revenue
than Redis Labs. They said Amazon also tried to poach its staff and
undercut it with hefty discounts.
A.W.S. offers a discount to customers who commit to spending at least a
certain amount with it, but it does not treat money spent on A.W.S.’s
own services and rival services equally. Spending on outside services
counts as only 50 cents on the dollar toward the balance. And discounts
do not apply to non-Amazon products, according to A.W.S. customers.
If a customer still chooses Redis Labs through A.W.S., Redis Labs is
required to kick back around 15 percent of its revenue to Amazon.
At one point, Amazon’s attempts to hire Redis Labs employees became so
aggressive that executives removed some online biographies of its
technical staff, said the former employees. A Redis Labs spokesman said
the start-up had no recollection of that.
Some Redis Labs executives considered bringing an antitrust action
against Amazon this year, the former employees said. Others balked
because 80 percent of the start-up’s revenue came from customers on A.W.S.
“It was a love-hate relationship,” said Leena Joshi, a former vice
president of marketing at Redis Labs. “On one hand, most of our
customers ran on A.W.S. so it was in our interest to be tightly
integrated with them. At the same time, we knew they were taking away
our business.”
Redis Labs declined to comment on its revenues or A.W.S. actions. It
said Amazon offered “important services.”
Not every company views A.W.S. as a threat. Ali Ghodsi, chief executive
of Databricks, a San Francisco start-up that uses artificial
intelligence to analyze data, said A.W.S. salespeople have lifted sales
of his company’s products.
“I don’t see them using shenanigans to stop us,” he said.
But Saket Saurabh, chief executive of Nexla, a 14-person start-up in
Millbrae, Calif., said he had reservations about Amazon.
In August, Amazon began a service for processing and monitoring data
that competes with Nexla. Investors warned him about sharing too much
information with the giant.
Mr. Saurabh went ahead anyway and signed his company up to work with
Amazon in September. The reason? Amazon’s giant sales teams can give
Nexla access to a vast audience.
“What choice do we have?” he said.
--
So many immigrant groups have swept through our town
that Brooklyn, like Atlantis, reaches mythological
proportions in the mind of the world - RI Safir 1998
http://www.mrbrklyn.com
DRM is THEFT - We are the STAKEHOLDERS - RI Safir 2002
http://www.nylxs.com - Leadership Development in Free Software
http://www.brooklyn-living.com
Being so tracked is for FARM ANIMALS and extermination camps,
but incompatible with living as a free human being. -RI Safir 2013
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