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Comment by berkes | Hacker News Reader

This reeks of spinning a story by AWS in the hopes to avoid measures from anti-monopoly authorities.

Off course a company will deny that they are a monopoly (or cartel etc). They'll keep pointing out their competition to these authorities. Ironically, the investor relations of such companies often point at the same data, to tell their investors how big their moat is and how insignificant their competion.

I'll believe this change is really happening when AMZN starts reporting decline in their AWS gross returns. Is this declining?

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This is just how antitrust works. The regulator defines a market, usually fairly reasonably, but sometimes incorrectly. Then the regulator points out you have massive market concentration and tries to do something about it. Then the company(ies) that hold that market power lie out their arse/otherwise creatively redefine the market so it looks like it's under a threshold that would require action. Then this goes round and round in the courts for years until someone gets fined, the regulator goes away and the guy who was leading the charge at the regulator gets a cushy job at the big co or related co or starts a law firm specializing in fighting against what he was previously fighting for.

Having a moat has nothing to do with anti-trust. A platform like AWS is incredibly difficult to switch off of regardless of market share.

Production workloads are incredibly difficult to move, regardless of location.

It does have overlap though.

The article is about an anti-trust body researching whether that moat is not too much of a monopoly:

> In a summary of evidence given to UK watchdog, the Competition and Markets Authority (CMA), AWS denies that customers face any difficulty in switching from its platform.

In what way is AWS a monopoly. They have a ton of competition in every aspect of their business.

The FTC is actively engaging in a monopoly case against Amazon: the organization whose job it is to break up monopolies certainly believes them to be one

https://www.ftc.gov/news-events/news/press-releases/2023/09/...

Edit: Amazon, not AWS. Sorry for the confusion!

The description on that page is entirely about the Amazon store business not AWS.

Oh hell, this is why posting after an overnighter is a bad idea

Personally, I agree with you.

That said, the current argument is that because AWS is part of Amazon at large, it can gain undue advantage by being subsidized by other organizations in Amazon, and forgo profits in order to gain a controlling share in an industry.

This is basically Lina Khan's whole argument [0]

I personally don't subscribe to this argument as a major reason for AWS's dominance compared to Azure in the early 2010s was because of stronger execution (lots of training sessions, evangelization, some truly cutting edge architecture) and better product-market fit, but Hipster Anti-Trust assumes a bunch of smallish companies competing with each other can result in a similar outcome (hence why VCs like Thiel, Horowitz, and Andressen tended to support scholars affiliated to the New Brandeis Movement)

[0] - https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.p...

But you could say the exact same thing about Azure, GCP, Oracle cloud and others.

Hence why I said I personally don't agree with the New Brandeis Movement argument, and is something that Amazon's lawyers will absolutely bring up.

Some of the more "fundamentalist" members of that movement want de facto single product companies, with little to no consolidation/M&A.

Hypothetically good if you assume small players can compete optimally, but in action this absolutely means significant inefficiencies, at least in the tech industry because all small players inevitabely try to become large players in order to optimize on margins via economies of scale.

Lol. I hope this is sarcasm. They have zero competition and 100% lockins. I would say AWS is a national threat at this point.

Their market share is 32%? Both Google Cloud and Azure are very large.

No, AWS market share is 99%. Go to any conference regarding cloud ever. Vendors just laugh at GCP, what a joke. Azure mayyybe 2%.

https://www.hava.io/blog/2024-cloud-market-share-analysis-de...

Look at market share and ease of switching cloud service providers. A rule of thumb is that if you own more than 50% and can dictate prices, you might be a monopoly.

They own 32%

Source, please?

> A rule of thumb is that if you own more than 50% and can dictate prices, you might be a monopoly.

I guess the UK has different laws, but here in the US it works like this:

* 50% and below means you are definitely not a monopoly unless there is some weird set of facts than SCOTUS couldn't imagine the last time they considered monopolies.

* At some threshold around 60-70% you might be a monopoly, but market share alone isn't enough to prove that.

* Around 90% you are presumed to be a monopoly unless you can provide some very good evidence why you are not.

The cost of switching is just too high. This is true for their "competion" too.

We can see this when researching the books as published to shareholders. When AWS was the "sole" player (first mover advantage) they had insane margins. Then competition stood up: GCP, Azure etc. And grew. Their margin has staid the same. And is roughly similar to that of GCP and Azure. Which means they either have secret gentlements agreement over pricing (highly illegal, not likely, the risk is just too high) or there's other mechanisms at play that allow them to keep dictating the price.

Cost of switching is very likely such a mechanism. They lure you "on board" then once you start feeling the pain of the high margins, there's simply no way you can move to a competitor with lower margins - either that competitor isn't one really (Digital Ocean, OVH, Linode) or these competitors aren't competing on your margin (GCP, Azure) and have similar margins.

The issue with the “cost of switching” line of reasoning is that it’s not possible to offer the services that AWS, GCP, Azure do, without having a high cost of switching.

As a baseline, moving production workloads that run entirely on VPS or physical servers between datacenters is already a very high cost/high effort task.

Anything you do to make the architecture more complicated is going to increase those costs.

All AWS (and co) did was offer a platform for building complicated architectures. The market response was overwhelmingly positive, and entire new engineering disciplines sprung up around managing and building these new complicated architectures.

Migrating them is typically rather difficult and high cost, but everybody knew this from the beginning, and this is what the customers want. The PaaS providers could maybe do something here or there to make it easier, but there’s nothing they can do to address the fundamental problem.

The parent article literally says > In a summary of evidence given to UK watchdog, the Competition and Markets Authority (CMA), AWS denies that customers face any difficulty in switching from its platform.

This CMA was investigating amazon's possible monopoly on cloud. So, this whole thing started rolling exactly because authorities are asking the exact same questions as you "In what way is AWS a monopoly." and in doing so, see enough leads to at least ask for reports and AWS's reply.

it's not, it's an oligopoly. In corporate it's basically them, microsoft, kind of google and then a tiny sliver of the market is filled with a whole bunch of wannabes.

> I'll believe this change is really happening when AMZN starts reporting decline in their AWS gross returns. Is this declining?

Declining revenues isn't the sign of not being a monopoly. How is AWS actually a monopoly?

> How is AWS actually a monopoly?

Like, is Azure not a thing? GCP? Hetzner? DigitalOcean? etc.

The parent article is about the CMA researching whether AWS is a monopoly and the answer to that from AWS.

> Declining revenues isn't the sign of not being a monopoly.

Thats a definition thing, though. Monopoly can mean a lot, depending on which side you are defending.

In this case I meant that AWS had insane margins when they were the only player - first mover advantage etc. But those margins didn't decline when their "competition" started becoming serious. In fact, if you look at their shareholder reports, AWS, GCP, Azure etc all have similar margins now, and AWS's didn't decline.

This tells us not if there's a monopoly. But it does tell us that there's no competion on margin/price.

Bu, what I meant was that if "on prem is a true competitor to AWS" we'd see their gross profits decline, as people are moving off AWS. And if we don't see this happening, than it's not a true competitor.

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