Most recently, Amazon has gotten into healthcare—a $ 3.5 trillion industry—working to disrupt how we buy prescription drugs, pick and purchase health insurance plans, and more, by drawing on its supply chain and trove of personal background data that could easily be supplemented with real-time reports from health monitors in homes, hospitals, and doctors’ offices. 44 It is ambitions like this that have made Amazon possibly the deadliest of the killer apps in terms of sheer market power. No wonder that Jeff Bezos, with a net worth of $ 112 billion, has emerged the richest of the tech oligarchs—indeed, perhaps the richest person of all time.
Don’t be Evil by Rana Foroohar, pg 21-22
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Mark
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Mark
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Mark
Critics of Amazon don’t understand how popular it is
This is such an important point in Tim Carmody’s (highly recommended) Amazon newsletter. Not only is Amazon enormously popular but critics of the firm fail to understand the basis of this popularity, as opposed to the insight they have into the popularity of a firm like Apple:
One study last year showed that Amazon was the second most trusted institution in American life, behind only the military. If you only poll Democrats? Amazon is number one. People love Amazon. Most of them don’t know about and have never thought they needed a mesh router for their house. But they will now.
It suggests criticism of big tech could remain a marginal pursuit, embedded to the point of doxa within certain segments of the population while others remain oblivious to it. It also suggests the need for caution in how we treat ‘big tech’. It’s not a monolithic block and people have different relationships to these firms. I’ve assumed there’s a political value in using the designation, as it defines an issue in a way orientated towards action, but perhaps it’s a mistake while there’s a divergence in public affection between the firms in question.
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Mark
The duality of the platform: users and workers
There’s an interesting passage in Uberworked and Underpaid, by Trebor Scholz, in which he discusses the contrasting experience of Amazon Mechanical Turk by users and workers. From loc 719:
While AMT is profiting robustly, 11 it has –following the observations of several workers –not made significant updates to its user interfaces since its inception, and the operational staff appears to be overwhelmed and burned out. Turkers have written and shared various browser scripts to help themselves solve specific problems. While this is a wonderful example of mutual aid among AMT workers, it is also yet another instance of how the invisible labor of Turkers remains uncompensated. While people are powering the system, MTurk is meant to feel like a machine to its end-users: humans are seamlessly embedded in the algorithm. AMT’s clients are quick to forget that it is human beings and not algorithms that are toiling for them –people with very real human needs and desires.
It’s easy to slip into characterising platforms in terms of our familiar experiences of them as end-users. This is an important reminder that their user-friendly character is a contingent expression of the interests the corporation has in maximising user engagement, rather than anything intrinsic to the technology of the platform itself.
This is important for analytical reasons, but it’s also a crucial prop to the ideology of platform capitalism, sustaining an idea of platforms as user-friendly spaces which mediate interactions determined by external factors. As opposed to deeply rule-governed systems, with the content of those rules being determined by commercial imperatives. From loc 735:
Mechanical Turk starts to look even less positive when considering that in the case of labor conflicts, Bezos’s company remains strictly hands-off, insisting that AMT is merely providing a technical system. Why would they have anything to do with the labor conflicts occurring on the platform? This would be like Apple owning the factories in Shenzhen where its iPhones are assembled, but then rejecting any responsibility for the brutal work regimes and suicides of the workers in these factories because Foxconn controls daily operations.
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Mark
Algorithmic pricing predates online retail
From Misbehaving, by Richard Thaler, pg 134. Social norms hindered it in this instance. Why could the same not true be true of online retail?
The CEO of Coca-Cola also discovered the hard way that violating the norms of fairness can backfire. Douglas Ivester, aged fifty-two, appeared to be on his way to the job of chairman when he abruptly resigned after a push from several board members including legendary investor Warren Buffett. Although several actions contributed to his downfall, one speech in Brazil attracted the most attention. At a press conference, Mr. Ivester was asked about tests Coke was running with vending machines that could change price dynamically. He replied: “Coca-Cola is a product whose utility varies from moment to moment. In a final summer championship, when people meet in a stadium to have fun, the utility of a cold Coca-Cola is very high. So it is fair that it should be more expensive. The machine will simply make this process automatic.” As the Wall Street Journal stated in a story about his downfall, Mr. Ivester seemed to have a “tin ear.” An editorial cartoon captured the feelings of the general public perfectly with an image of a customer walking away from a Coke vending machine with a can in his hand, looking back to see an arm reaching out of the machine and picking his pocket.
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Dave Ashelman
I’m not sure where “Algorithms” comes in with this example. There was no “algorithm.” In this example, it was simply the axiomatic, 19th Century throwback to utility maximization. While there is a formula: Marginal Utility (x) divided by Price of (x) = Marginal Utility of (y) divided by Price of (y), that’s not an algorithm per se – it does not establish a set of mathematical “rules.” Instead, it relies purely on axioms: that which does not need to be proven. Marginal Utility establishes assumptions – not “rules.”
Mr. Ivester was simply following the (algebraic) utility maximization formula that had (probably) been taught to him in business school, which had been taught since at least the Marginal Revolution.
This may be an ontological difference, however, in my work in Economic Sociology, I find that the “play book” of economics (especially as a tool of legitimization by neoliberalism) is important for Sociologists to parse. While Sociology (rightly) looks at social location & social forces, Homo Economicus has no social location, and is never impacted by the social. Is Homo Economicus real? Of course not – but it is the protagonist in the economics & neoliberal “play book” that has an extreme impact in everyday life.
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anacanhoto
Interesting question.
Maybe because this case of price discrimination was very visible, and online is less so? For instance, even if I know that most people on a plane paid a price different to the one I paid, I have no way of knowing if I paid more or less than them.
I think it also depends on how much control you think you have. So, in the case of the plane tickets, I know that if I had booked earlier, I too could have got a lower price. But I chose not to. Which is why the ‘pink tax’ is so infuriating (in my view, of course).
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Mark
That interesting, I guess the key question is if social norms can trump technological possibility, what factors make it likely that this will or won’t happen in each case? The opacity of online shopping is definitely the key one I think. Really interesting point about control, will think further
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Mark
Surely the algorithm are the rules which govern the variable pricing? I’d line to read more about how the machine actually worked
V interesting thanks & now agree, am enjoying Thaler’s book on history of behavioural economics more than I anticipated. Interesting overlaps with sociological critiques of classical economics.
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Mark
The Coming Monopolies of Digital Capitalism
From Humans Need Not Apply, by Jerry Kaplan, pg 101-102:
there’s another reason the financial markets value the company at more than six hundred times earnings (2013), when the average is around twenty times earnings: they look forward to the inevitable time when the company extracts monopoly prices after locking in its customers and scorching the earth of competitors. And this is as it should be. Shoppers aren’t stupid; they will go where they get the best all-around deal, including convenience, service, and other factors. They aren’t concerned with whether their short-term purchasing behavior may restructure the retailing landscape to the detriment of future consumers any more than the original residents of Easter Island worried about whether the trees they chopped down for firewood might contribute to a desolate, bleak landscape for their descendants.
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Mark
the acceleration of consumption
Ironically, I had to wait to take a picture of this after initially seeing it, as it was on a billboard that rotates every 10 seconds:
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Mark
the best of bezos: the vitriolic putdowns of the amazon ceo
From The Everything Story by Brad Stone:
- “I don’t know if you guys don’t have high standards or if you just don’t know what you’re doing”
- “If that’s our plan, I don’t like our plan”
- “Are you lazy or just incompetent?”
- “Does it surprise you that you don’t know the answer to that question?”
- “Why are you ruining my life?”
- “If I hear that idea again, I’m gonna have to kill myself”
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Mark
the pleasures of knowing where you stand
From page 75 of Brad Stone’s excellent book The Everything Store:
In early 1998, Bezos was closely involved with a department called Personalization and Community, which was geared toward helping customers discover books, music, and movies they might find interesting. That May, he surveyed what was then Amazon’s Hot 100 bestseller list and had an epiphany— why not rank everything on the site, not just the top sellers? “I thought, ‘Hey, why do we stop at a hundred? This is the Internet! Not some newspaper bestseller list. We can have a list that goes on and on,’ ” he told the Washington Post. 2 The notion was not only to create a new kind of taxonomy of popularity but also to give authors, artists, and publishers a better idea of how they were doing— and to cater to some of their more neurotic impulses. “Bezos knew sales rank would be like a drug to authors,” says Greg Linden, an early Amazon engineer. “He insisted that it change whenever a new order came in.” That was not a trivial challenge. Amazon’s overloaded servers were already stretched to the limit, and its Oracle database software was not designed to handle the increasing loads generated by the swelling audience of the Web. Engineers ended up fudging it, taking snapshots of sales data and pushing new rankings to the website every few minutes. The service, called Amazon Sales Rank, was introduced in June to the consternation of not only authors, who began compulsively checking their rankings at all hours of the day and night, but also their spouses and more than a few wary editors and publishers. “I understand how addictive it can be, but maybe they could spend their time more productively, like, maybe, writing a new book,” veteran editor John Sterling said.
That was not a trivial challenge. Amazon’s overloaded servers were already stretched to the limit, and its Oracle database software was not designed to handle the increasing loads generated by the swelling audience of the Web. Engineers ended up fudging it, taking snapshots of sales data and pushing new rankings to the website every few minutes. The service, called Amazon Sales Rank, was introduced in June to the consternation of not only authors, who began compulsively checking their rankings at all hours of the day and night, but also their spouses and more than a few wary editors and publishers. “I understand how addictive it can be, but maybe they could spend their time more productively, like, maybe, writing a new book,” veteran editor John Sterling said.
Mark, 
Dave Ashelman are discussing. 
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