6 ms·

So many comments about, "doesn't everyone know they do this?", and "everyone does this!" I say there should be an explicit difference between "running a platfo

So many comments about, "doesn't everyone know they do this?", and "everyone does this!" I say there should be an explicit difference between "running a platform", and "selling on a platform", and never should the two meet. By "platform" here, and in the context of selling stuff online or IRL, I mainly mean that the store should never compete with their suppliers ... it's madness and unethical. If everyone can get a piece of the pie, it makes for a healthier ecosystem. We should want the rising tide to lift more than one boat. And yes, I believe this should be regulated at the policy level. This of course has implications for other forms of "platforms", such as operating systems, APIs, and clouds; but I'll leave those discussions for another time ;)

dnissley 6y ago
Would this apply to physical platforms as well? E.g. Walmart and Target who also do similar things with similar data
- CodeCube 6y ago
  yes
replicatorblog 6y ago
So no private label products from Walmart, Target, Kroger, or CVS?
- CodeCube 6y ago
  ideally, no
- triceratops 6y ago
  Those are different. Explained elsewhere in the thread: https://news.ycombinator.com/item?id=22961009 https://news.ycombinator.com/item?id=22961009
entee 6y ago
The major question I don’t have a good answer to is, “Why is this different than brick and mortar store brands like Safeway signature?” Surely a part of is is placement, but Safeway could put own brand ketchup at the same level (and I think sometimes does) as Heinz and still wouldn’t sell the same volume. Amazon is clearly getting a big advantage here, I’m just curious about what the underlying dynamics are that allow them to be so much more successful in their context than it seems store brands are in other contexts.
- rahul003 6y ago
  Does it mean that the brand of Amazon is better than the likes of Safeway or Target who sell their own products to compete with more name brand ones? Or it could also be that the brands on Amazon such as the top voted comment here might be smaller brands without enough name recognition to gain the attention of a buyer.
- pge 6y ago
  I have wondered the same thing every time this question comes up. It seems the difference is that the companies that put products in grocery stores are very large companies that spend a huge amount on marketing themselves (e.g. P&G, General Mills). So, the "house brand" is less recognizable to consumers and sells at a discount to the known brand that is often a larger company than the grocery chain. The grocery stores need the name brands because shoppers come looking for them (and Safeway gets the benefit of all the marketing they do). In Amazon's case, they are serving as a distribution channel for many, many small brands, none of which are known as well as Amazon (whereas Kellogg's cereal is better known than Safeway). That changes the power dynamic in favor of Amazon.
  - chillacy 6y ago
    I had a friend who worked at a milk factory. They took their 2% organic milk and piped it into cartons with different labels: brand names as well as store brands, off to be sold at various price points. To his company it didn't matter at the end of the day if people bought the brand name or the store brand, it was all the same stuff.
  - 6y ago
philosopher1234 6y ago
This is a ban against vertical integration no? There are real efficiencies (apples entire premise) from owning and running the whole stack top to bottom.
- adrianmonk 6y ago
  It'd be a ban of any mixture of vertical integrating with not vertically integrating. Which in turn makes it tough to transition (either direction) between the two. So, Apple would be allowed to vertically integrate and make the chips, hardware, operating system, and applications for their products. But they'd have to stop selling Belkin chargers alongside Apple chargers at apple.com, and the iOS app store would have to contain either only Apple apps and no third-party ones or vice versa.
  - akamaozu 6y ago
    Mind explaining how this is a better situation?
    - CodeCube 6y ago
      It fixes a power imbalance that allows for the platforms to take advantage of their customers. A platform becoming dominant is insidious because it takes away the "choice" ... if you want to do business, you will probably have to engage with them, but as we see here, Amazon is taking advantage of the fact that they own the platform by taking their customers' (the sellers) data, and using it for themselves to put their customers out of business.
- deleted 6y ago
  [deleted]
darkerside 6y ago
Such a difficult thing to regulate. The instant you stop Amazon from selling on its own platform, they will open a subsidiary Amazon Retail, which is a favored customer on their platform. Whatever new regulation you can come up with, there will be armies of corporate lawyers ready to satisfy your requirements while still capturing that audience who is ready (and wants) to be captured by a platform-branded generic option.
- drc500free 6y ago
  This seems a bit defeatist. We've successfully regulated against vertical integration in the past.
  - smnrchrds 6y ago
    Yeah, just take a look at the financial sector. Your typical big investment bank has insider knowledge of a sizable percentage of the companies in the economy and separately, makes tons of trades. The two businesses are kept separate, no information exchanges between the two groups, no winks and nudges. If they get it wrong, they could go to jail. If it is possible to create a so-called firewall [0] within banks to avoid unfair advantage via insider trading, it is possible to create a firewall between the platform and seller divisions withing Amazon for a similar effect. [0] https://www.investopedia.com/terms/f/firewall.asp https://www.investopedia.com/terms/f/firewall.asp
    - jkestner 6y ago
      And yet we let politicians who have knowledge and even control over markets have direct investments. If a firewall can be implemented, fine, but I don’t see any great loss if we were to restrict the growth of a trillion-dollar company.
    - gautamcgoel 6y ago
      Do you believe that investment banks actually respect the principle of a level playing field? Given the widespread fraud revealed during the 2008 financial crisis, I find that a more plausible scenario is the banks pay lip service to the idea of a level playing field and make a show of instituting a firewall, but in practice the firewall leaks information like a sieve, which the banks ruthlessly exploit for profits. The bigger the bank, the more clients they have, hence the more information they have, hence the higher the chance for insider trading and big profits.
URSpider94 6y ago
So, force all retail stores to divest their house brands, which they have been selling without complaint as long as I’ve been alive?
- CodeCube 6y ago
  yes
- triceratops 6y ago
  Those are different. Explained elsewhere in the thread: https://news.ycombinator.com/item?id=22961009 https://news.ycombinator.com/item?id=22961009
  - URSpider94 6y ago
    That seems like a distinction without a difference. Yes, Safeway owns inventory of branded merchandise that's on their shelves, but in modern retail, they probably don't own more than a couple of weeks of inventory. And, in modern retail, it's highly likely that branded vendors (like Coke and Pepsi) have very complex relationships with retailers that include co-op fees for marketing, premiums paid for end-cap placement and special displays, and bonuses for hitting certain volumes.
shim__ 6y ago
> And yes, I believe this should be regulated at the policy level. But why? Nobody is forcing you to use AWS, there in fact heaps of similar services around which at first glance don't share have said problem.
- arrosenberg 6y ago
  Amazon has a dominant position in the marketplace and it is leveraging it in a blatantly anti-competitive manner. As a country we have consistently decided that smaller and decentralized is better - there is no compelling reason to allow Amazon to keep borging small businesses.
- SeeTheTruth 6y ago
  Because "consumer choice" isn't a practical and full response to corporate abuse of power. Regulation is complete - if it's a well written regulation it works. "Nobody is forcing you" misses the point.
TulliusCicero 6y ago
Nah, the way Amazon runs right now is pretty beneficial to me as a consumer. Having access to Amazon stuff and third party stuff in one place is nice.
jkestner 6y ago
Elizabeth Warren's plan does just this by designating such companies as “platform utilities”: https://medium.com/@teamwarren/heres-how-we-can-break-up-big-tech-9ad9e0da324c https://medium.com/@teamwarren/heres-how-we-can-break-up-big... I agree a diverse marketplace is a healthy one, and that requires intervention since clearly the initial rules are not enough. Some like to pretend that free markets are only negatively impacted by regulation, and only positively impacted by its participants.
choward 6y ago
App stores are the same thing since most companies with app stores have their own apps. They can decide when the right time is to build their own version of something that's popular and promote it in their app store.
- friendlybus 6y ago
  Microsoft was trying to do this and it led to antitrust cases. The browser wars ended with windows forced open to multiple default browsers.
nickik 6y ago
> I say there should be an explicit difference between "running a platform", and "selling on a platform", and never should the two meet. Its a free market, you can do what you want as long as costumers like it. Valve makes its own games and the platform. There are other example where this is true. Should SpaceX not be allowed to launch Starlink. Falcon 9 is a platform, and Starlink is selling the product that you get threw this platform. Maybe not a perfect example, but one could equally make a argument about that as well. All of these things are pretty artificial opinion based market restrictions, and everybody want to create different rules based on different was to evaluate this question for every market business and so on. So you would make totally different choices about what is a platform and what isn't. If my company has a product and then opens up the underlying API, is my product now illegal? For me this is all nonsense, why not just have both the suppliers, consumers and everybody else involved make choices based on what they think is best. Why do you know better of how to define these terms and what evidence is there that when you force a separation it is better at 'raising all boats'. There is no evidence to prove that in the majority of cases. In the example of Steam they lost many games because suppliers didn't want to deal with them. Microsoft SQL now runs on Linux because people didn't want to us Windows. In all of those cases, costumers and suppliers are perfectly capable at making those decisions for themselves and then the company has to make choice how adjust to this situation. Why any of this is bad, is totally unclear to me. Its easy to say 'see this one bad example' and the ignore a huge amount of efficiency gained by vertical integration. The idea that we have bureaucrats to have control over every single vertical integration decision by every company is pretty insane dream to me. This reminds me of 'Indian Socialism' where you had to fill out a application for every market each company wanted to get into and the of course super smart regulator would then make sore that the 'correct' amount of companies were in each market. Of course as always there was tons of regulatory capture and corruption to say who got a permit and who didn't. Witch is basically the same pickle you want to get into, just with 100x more detailed determination about ever companies internal structure as well. A recipe for disaster if you ask me. The idea of enlightned regulator who for each choice of each company on each level can figure if that decision is correct for 'the global population' is a total fantasy. Neither can they do it, nor would their intensives to do it actually be for the good of 'the global population'.

dnissley 6y ago

Would this apply to physical platforms as well? E.g. Walmart and Target who also do similar things with similar data

CodeCube 6y ago
yes

replicatorblog 6y ago

So no private label products from Walmart, Target, Kroger, or CVS?

CodeCube 6y ago
ideally, no
triceratops 6y ago
Those are different. Explained elsewhere in the thread: https://news.ycombinator.com/item?id=22961009 https://news.ycombinator.com/item?id=22961009

entee 6y ago

The major question I don’t have a good answer to is, “Why is this different than brick and mortar store brands like Safeway signature?” Surely a part of is is placement, but Safeway could put own brand ketchup at the same level (and I think sometimes does) as Heinz and still wouldn’t sell the same volume. Amazon is clearly getting a big advantage here, I’m just curious about what the underlying dynamics are that allow them to be so much more successful in their context than it seems store brands are in other contexts.

rahul003 6y ago
Does it mean that the brand of Amazon is better than the likes of Safeway or Target who sell their own products to compete with more name brand ones? Or it could also be that the brands on Amazon such as the top voted comment here might be smaller brands without enough name recognition to gain the attention of a buyer.
pge 6y ago
I have wondered the same thing every time this question comes up. It seems the difference is that the companies that put products in grocery stores are very large companies that spend a huge amount on marketing themselves (e.g. P&G, General Mills). So, the "house brand" is less recognizable to consumers and sells at a discount to the known brand that is often a larger company than the grocery chain. The grocery stores need the name brands because shoppers come looking for them (and Safeway gets the benefit of all the marketing they do). In Amazon's case, they are serving as a distribution channel for many, many small brands, none of which are known as well as Amazon (whereas Kellogg's cereal is better known than Safeway). That changes the power dynamic in favor of Amazon.
- chillacy 6y ago
  I had a friend who worked at a milk factory. They took their 2% organic milk and piped it into cartons with different labels: brand names as well as store brands, off to be sold at various price points. To his company it didn't matter at the end of the day if people bought the brand name or the store brand, it was all the same stuff.
- 6y ago

philosopher1234 6y ago

This is a ban against vertical integration no? There are real efficiencies (apples entire premise) from owning and running the whole stack top to bottom.

adrianmonk 6y ago
It'd be a ban of any mixture of vertical integrating with not vertically integrating. Which in turn makes it tough to transition (either direction) between the two. So, Apple would be allowed to vertically integrate and make the chips, hardware, operating system, and applications for their products. But they'd have to stop selling Belkin chargers alongside Apple chargers at apple.com, and the iOS app store would have to contain either only Apple apps and no third-party ones or vice versa.
- akamaozu 6y ago
  Mind explaining how this is a better situation?
  - CodeCube 6y ago
    It fixes a power imbalance that allows for the platforms to take advantage of their customers. A platform becoming dominant is insidious because it takes away the "choice" ... if you want to do business, you will probably have to engage with them, but as we see here, Amazon is taking advantage of the fact that they own the platform by taking their customers' (the sellers) data, and using it for themselves to put their customers out of business.
deleted 6y ago
[deleted]

darkerside 6y ago

Such a difficult thing to regulate. The instant you stop Amazon from selling on its own platform, they will open a subsidiary Amazon Retail, which is a favored customer on their platform. Whatever new regulation you can come up with, there will be armies of corporate lawyers ready to satisfy your requirements while still capturing that audience who is ready (and wants) to be captured by a platform-branded generic option.

drc500free 6y ago
This seems a bit defeatist. We've successfully regulated against vertical integration in the past.
- smnrchrds 6y ago
  Yeah, just take a look at the financial sector. Your typical big investment bank has insider knowledge of a sizable percentage of the companies in the economy and separately, makes tons of trades. The two businesses are kept separate, no information exchanges between the two groups, no winks and nudges. If they get it wrong, they could go to jail. If it is possible to create a so-called firewall [0] within banks to avoid unfair advantage via insider trading, it is possible to create a firewall between the platform and seller divisions withing Amazon for a similar effect. [0] https://www.investopedia.com/terms/f/firewall.asp https://www.investopedia.com/terms/f/firewall.asp
  - jkestner 6y ago
    And yet we let politicians who have knowledge and even control over markets have direct investments. If a firewall can be implemented, fine, but I don’t see any great loss if we were to restrict the growth of a trillion-dollar company.
  - gautamcgoel 6y ago
    Do you believe that investment banks actually respect the principle of a level playing field? Given the widespread fraud revealed during the 2008 financial crisis, I find that a more plausible scenario is the banks pay lip service to the idea of a level playing field and make a show of instituting a firewall, but in practice the firewall leaks information like a sieve, which the banks ruthlessly exploit for profits. The bigger the bank, the more clients they have, hence the more information they have, hence the higher the chance for insider trading and big profits.

URSpider94 6y ago

So, force all retail stores to divest their house brands, which they have been selling without complaint as long as I’ve been alive?

CodeCube 6y ago
yes
triceratops 6y ago
Those are different. Explained elsewhere in the thread: https://news.ycombinator.com/item?id=22961009 https://news.ycombinator.com/item?id=22961009
- URSpider94 6y ago
  That seems like a distinction without a difference. Yes, Safeway owns inventory of branded merchandise that's on their shelves, but in modern retail, they probably don't own more than a couple of weeks of inventory. And, in modern retail, it's highly likely that branded vendors (like Coke and Pepsi) have very complex relationships with retailers that include co-op fees for marketing, premiums paid for end-cap placement and special displays, and bonuses for hitting certain volumes.

shim__ 6y ago

> And yes, I believe this should be regulated at the policy level. But why? Nobody is forcing you to use AWS, there in fact heaps of similar services around which at first glance don't share have said problem.

arrosenberg 6y ago
Amazon has a dominant position in the marketplace and it is leveraging it in a blatantly anti-competitive manner. As a country we have consistently decided that smaller and decentralized is better - there is no compelling reason to allow Amazon to keep borging small businesses.
SeeTheTruth 6y ago
Because "consumer choice" isn't a practical and full response to corporate abuse of power. Regulation is complete - if it's a well written regulation it works. "Nobody is forcing you" misses the point.

TulliusCicero 6y ago

Nah, the way Amazon runs right now is pretty beneficial to me as a consumer. Having access to Amazon stuff and third party stuff in one place is nice.

jkestner 6y ago

Elizabeth Warren's plan does just this by designating such companies as “platform utilities”: https://medium.com/@teamwarren/heres-how-we-can-break-up-big-tech-9ad9e0da324c https://medium.com/@teamwarren/heres-how-we-can-break-up-big... I agree a diverse marketplace is a healthy one, and that requires intervention since clearly the initial rules are not enough. Some like to pretend that free markets are only negatively impacted by regulation, and only positively impacted by its participants.

choward 6y ago

App stores are the same thing since most companies with app stores have their own apps. They can decide when the right time is to build their own version of something that's popular and promote it in their app store.

friendlybus 6y ago
Microsoft was trying to do this and it led to antitrust cases. The browser wars ended with windows forced open to multiple default browsers.

nickik 6y ago

> I say there should be an explicit difference between "running a platform", and "selling on a platform", and never should the two meet. Its a free market, you can do what you want as long as costumers like it. Valve makes its own games and the platform. There are other example where this is true. Should SpaceX not be allowed to launch Starlink. Falcon 9 is a platform, and Starlink is selling the product that you get threw this platform. Maybe not a perfect example, but one could equally make a argument about that as well. All of these things are pretty artificial opinion based market restrictions, and everybody want to create different rules based on different was to evaluate this question for every market business and so on. So you would make totally different choices about what is a platform and what isn't. If my company has a product and then opens up the underlying API, is my product now illegal? For me this is all nonsense, why not just have both the suppliers, consumers and everybody else involved make choices based on what they think is best. Why do you know better of how to define these terms and what evidence is there that when you force a separation it is better at 'raising all boats'. There is no evidence to prove that in the majority of cases. In the example of Steam they lost many games because suppliers didn't want to deal with them. Microsoft SQL now runs on Linux because people didn't want to us Windows. In all of those cases, costumers and suppliers are perfectly capable at making those decisions for themselves and then the company has to make choice how adjust to this situation. Why any of this is bad, is totally unclear to me. Its easy to say 'see this one bad example' and the ignore a huge amount of efficiency gained by vertical integration. The idea that we have bureaucrats to have control over every single vertical integration decision by every company is pretty insane dream to me. This reminds me of 'Indian Socialism' where you had to fill out a application for every market each company wanted to get into and the of course super smart regulator would then make sore that the 'correct' amount of companies were in each market. Of course as always there was tons of regulatory capture and corruption to say who got a permit and who didn't. Witch is basically the same pickle you want to get into, just with 100x more detailed determination about ever companies internal structure as well. A recipe for disaster if you ask me. The idea of enlightned regulator who for each choice of each company on each level can figure if that decision is correct for 'the global population' is a total fantasy. Neither can they do it, nor would their intensives to do it actually be for the good of 'the global population'.