Joost Bakker

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Once every while a new product with great potential appears on the markets. Most of the time a very enthusiastic team of entrepreneurs has been working hard on the product and are very happy to see that it starts taking off and sometimes even tends to start becoming disruptive. All goes great until a competitive product enters the market with similar features but for a way smaller price. And who is the competitor? Another start-up? No, it is Amazon who identified the promising future of the product and made their own version of it. At least this happened with June. A start-up who came up with a smart oven.

June made an oven that could be controlled over Wi-Fi, had a camera so you could keep an eye on your food from anywhere and eventually was controllable via Alexa (June, 2020). By smart-device standards, June ovens were a success. They became the market leader and raised four rounds of funding of which the latest was from Amazon Alexa Fund. Then, just a year after that, Amazon launched its own smart oven with very similar features, but at half the price (Albrecht, 2019). June found itself in direct competition with the world’s largest retailer, the owner of Amazon Alexa platform and its direct investor, who had to be financially updated regularly. Almost comical, but June is not the only company with such an experience. What advantages does Amazon have that enables them to act like this? And ultimately, is this fair play? And, are all start-ups doomed to end up in a nightmare like this?

The first thing Amazon must decide on is which new product market they want to start competing on. This is best decided based on big data and Amazon really is in the right position for such a decision. They know what products are searched for on their platform, have a lot of information about prices and customer behaviour in these markets. Pointing potentially profitable markets for the coming years might even be done all automatically by artificial intelligence (Ward, 2020).

The second thing that must be done is creating the product, wherefore a lot of money is needed. This is not a problem for Amazon as they have an incredible high free cash flow, due to Amazon selling a lot of products before they pay them themselves and also the high successes of AWS, Amazon’s cloud services with high margins (Newshublab, 2020). Therefore, the cost of gathering money to develop a product is almost zero.

Then, the third step, selling the product. It should not really surprise anyone that Amazon has a competitive advantage when it comes to selling stuff. Amazon has already a huge platform with very good traffic. Moreover, they can get advertisement space for free, where other companies would have to pay big money for.

Summarizing, Amazon gets Market research, capital and Marketing & Sales almost for free. At least they pay way less than other companies like the start-up June does. Therefore, Amazon can easily undercut their competitors in the fourth section: price. But it goes even deeper. Amazon can easily sell products without profit or even at a loss (for a time) to eliminate competition.

These things all add up to an unfair way of competing and, although I admire how smart Amazon plays it, I think it is time to probably split up Big Tech firms like Amazon to avoid scenario’s like these. Business Insider posted just today a short article about the fact that this debate is alive in the American politics at the moment of speaking (Hamilton, 2020).

Before I leave you guys with some questions to think about, I’ll share a screenshot I took from a YouTube comment section, that shows that June is not the only company that is victimized (TechAltar, 2019):

Comment Section

What do you guys think about circumstances like these? And what would be the solution according to you?

I look forward to hearing from you and like to thank you for reading this blog post.

References:

Albrecht, C. (2019, September 26). Amazon Announces its Own Alexa Enabled Smart Oven. The Spoon. https://thespoon.tech/amazon-announces-its-own-alexa-enabled-smart-oven/

Hamilton. (2020, October 6). Democrats and Republicans are tussling over whether big tech should be broken up, according to a leaked GOP memo. Business Insider. https://www.businessinsider.com/democrat-republican-antitrust-break-up-big-tech-2020-10?international=true&r=US&IR=T

June. (2020). June Oven. June.Com. https://juneoven.com/the-oven

Newshublab. (2020, January 31). What is Amazon’s tiny profits, explained. https://newshublab.com/index.php/2020/01/31/what-is-amazons-tiny-profits-explained/

TechAltar. (2019, November 7). Amazon’s playbook for crushing startups [Video]. YouTube. https://www.youtube.com/watch?v=ojGveiE51Hk

Ward, M. (2020, January 2). Amazon: The Company Consuming Consumers. Matt Ward. https://mattward.io/amazon-the-company-consuming-consumers/

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Fake news is a “hot topic” for the last few years, although fake news itself is way older than that. Lee (2019) states that the phenomenon is around for 125 years, but recently took a new meaning. The rise of the internet as a source of information and the fact that literally, everybody can post content online to reach an audience is debit to the enormous increase in fake news, as well as to the impact it has by the way it can be spread very rapidly through social media channels like Facebook and Twitter. Most people do not read more accurately due to the information overload they receive daily, skim reading seems to be the new normal, and quite a lot of people still automatically tend to believe most of what is written with a certain kind of authority (Wolf, 2018). Fortunately, some people are aware of the dangers of disinformation that are spreading and are actively checking multiple sources to see before they believe.

If, for example, the president said something controversial according to a fake news source, one could check the videos of the presidents’ speech for themselves to see and hear if he said something like that indeed, and if so, in which context. It takes a little effort, but things can be checked relatively easily. This changes with the upcoming of Deepfakes, fake video’s that are edited by a particular subset of artificial intelligence (deep learning), hence the name (Roughol, 2019). The AI uses real images of humans to learn to create fake images of humans, more realistically than any other technique you’ve seen before (Scott, 2019).

See if anything looks off to you in this short scene of The Matrix:

Scott (2019) shows that the current state of the technique still reveals to the trained eye that something is not completely genuine, but this might change with technological advancements. The same thing can be done with audio. Nowadays, only a very short recording of a voice is needed to replicate a voice with bewildering accuracy. According to Ongweso (2019), some thieves used synthetic audio with which the voice of a CEO was imitated, to make his subordinate transfer around a quarter million dollars to a secret Hungarian bank account. Imagine what damage this can do, in many ways (think about the upcoming elections), especially in combination with video. Low awareness of possibilities of techniques like these is very dangerous, but even if awareness is high, if there is no good way to detect deepfakes, it will be very problematic anyhow and at the moment the capacity to generate Deepfakes is proceeding much faster than the ability to detect them (Galston, 2020).

I could go on talking about this, but I’ll end this blog by a quote from Scott (2019) who is very sceptical about the technological advancements we’ve made in the last years:

“Political operatives will use behavioural and persuasion algorithms that the average user is oblivious to. Add to this a layer of Deepfake videos and Deepfake audio that could collapse our ability to tell the difference between fake and real, and you get the perfect storm of psychological, cultural, and political chaos.”

Do you think we are close to that chaos?

References:
Galston, W. A. (2020, May 6). Is seeing still believing? The deepfake challenge to truth in politics. Brookings. https://www.brookings.edu/research/is-seeing-still-believing-the-deepfake-challenge-to-truth-in-politics/
Lee, T. (2019). The global rise of “fake news” and the threat to democratic elections in the USA. Public Administration and Policy, 22(1), 15–24. https://doi.org/10.1108/pap-04-2019-0008
Ongweso, E. (2019, September 5). Thieves Used Audio Deepfake of a CEO to Steal $243,000. VICE. https://www.vice.com/en_us/article/d3a7qa/thieves-used-audio-deep-fake-of-a-ceo-to-steal-dollar243000
Roughol, I. (2019, July 3). The real danger of deepfakes. LinkedIn. https://www.linkedin.com/pulse/real-danger-deepfakes-isabelle-roughol
Scott, G. (2019, September 8). DeepFake and the Future of Reality. Gray Scott. https://www.grayscott.com/futuristic-now//deepfake-and-the-future-of-reality
Wolf, M. (2018, December 20). Skim reading is the new normal. The effect on society is profound. The Guardian. https://www.theguardian.com/commentisfree/2018/aug/25/skim-reading-new-normal-maryanne-wolf

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