Amazon, revolutionizing, disrupting and redefining the healthcare industry

20

September

2024

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Amazon, the household name for e-commerce companies, has recently considered to enter the industry of healthcare. Amazon’s resources, which includes data platforms spread all over the world have identified individuals’ patterns in shopping and web searching. This feature consisting of personal health may be able to recognize a health risk for the patient and help them to get the fastest medical help they need. From getting online appointments with a doctor through Alexa to ordering medicine based on your health data. Getting this scenario may not be only a dream but a reality. 

Not only could Amazon make an impact in healthcare, but it is also conceivable for them to disrupt it. Amazon could for instance change how prescriptions are made. For example, with the supply chain, the supply chain of Amazon could have a lot of options to deliver medicine or prescriptions to their customers, through delivery or even pick-ups at stores. This instead of patients having to come to the pharmacy itself to get their medicine. Not only that, but with voice assistants like Alexa. Doctors could use audio to fill in prescription orders instead of writing an administrating it on paper or computer. These data integration abilities streamline everything for patients, especially for members that have amazon prime. This way Amazon Prime could offer lower prices for medicine, because their membership with prime, can lower medical costs for consumers because of the Prime subscription (El Khatib, 2022).  While Amazon, may be a small player at first in healthcare. Their distribution strategies could be crucial into becoming a dominant contender in the industry of healthcare.

Furthermore, Amazon has a lot of potential due to having the ability to offer product recommendations that could be personalized. Recently, Amazon had integrated Whole foods into their ecosystem, which could enhance consumer data. Healthcare data combined with personalized data, could make Amazon capable of offering the right recommendations for patients for things like, medicine, food or advice that could treat patients better or living a better life. In addition, with the technological advancement of the algorithm’s amazon has, they will be capable of detecting certain patterns in purchases and the health of patients that are very sick or terminally ill. These algorithms could provide reports and care to help patients getting better health and curing illness (Provost & Murray, 2022).

Amazon possesses an array of many technologies. for instance, Alexa and Prime are the main fundamental aspects into shifting Amazon from the e-commerce industry to combining e-commerce and healthcare. Fast delivery services and assistants like Alexa, might make it feasible for consumers from rural or developing areas to obtain the right healthcare. Patients for instance that live in places far away from the city may be able to use amazon to arrange appointments or order medicine. Furthermore, echo, another important feature of Amazon, has the possibility to streamline communication between consumers and hospitals. Another example of features amazon has is patients being able to use notifications to take medicine, this could strengthen the care for patients and lower costs of medical costs (Cutler, 2007), because there will not be a break in consistency due to possible forgetfulness.  All these innovations could not only help the patients better but also create a strong loyalty of the brand for Amazon. When all said and done, it raises the question. Is Amazon going to disrupt the healthcare industry, is it going to survive against the competitors and will Amazon be able to provide healthcare for those in need?

Cutler, D. M. (2007). The lifetime costs and benefits of medical technology. Journal of health economics, 26(6), 1081-1100.

El Khatib, M., Hamidi, S., Al Ameeri, I., Al Zaabi, H., & Al Marqab, R. (2022). Digital disruption and big data in healthcare-opportunities and challenges. ClinicoEconomics and Outcomes Research, 563-574.

Provost, L. P., & Murray, S. K. (2022). The health care data guide: learning from data for improvement. John Wiley & Sons.

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Amazon Alexa’s Rise and Fall: Will the New AI Overhaul Save Its Future?

19

September

2024

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Amazon Alexa, a smart voice assistant, revolutionised the way we interact with technology. Launched in 2014 with the Echo smart speaker, Alexa became accessible on Amazon devices, allowing users to control their homes, play music, or check the weather with simple voice commands. Alexa was immediately successful, with more than 100 million Alexa-enabled devices sold by 2018 (Gray, 2022).

Credit: Amazon

Amazon’s goal with Alexa wasn’t to generate direct profit from the device itself, but to strengthen their ecosystem by encouraging users to make purchases on Amazon through it, boosting their revenue through engagement rather than device sales. Therefore, the devices were sold at a breakeven, at times even a loss. This strategy seemed promising, as within two years of rollout they had a billion user interaction a week. However, it turned out that voice assistants can only do a couple of tasks perfectly – set an alarm clock, play music or check the weather forecast – none of which generated revenue for Amazon (Naughton, 2022). 

Amazon tried to monetize Alexa by partnering with companies such as Domino’s or Uber to streamline the ordering process and receive a cut from the transaction, however, this failed to generate engagement. They also tried positioning Alexa as a ‘halo product,’ expecting users to spend more on Amazon even without voice shopping, but studies showed no meaningful financial impact from these users (Amadeo, 2022).

All of these failures lead to Amazon Alexa’s team to become the prime target of the biggest layoffs in the company’s history. What was once one of the company’s fastest-growing projects turned into the downfall of its largest hardware division, marking the failure of Amazon’s business model of selling devices at cost and relying on future purchases for revenue (Kim, 2019).

With losses from Alexa devices accruing to 25 billion dollars between years 2017 and 2021, it might seem reasonable to just discontinue the product. However, with more than 500 million Alexa-enabled devices globally, Alexa is a success – just not a money-making one (Mattioli, 2024). Therefore, the Amazon CEO, Andy Jassy, is giving Alexa another try, possibly the last one. 

Credit: Amazon
Credit: Amazon

A new version of Amazon Alexa, called ‘Remarkable Alexa,’ is rumoured to launch as soon as October 2024. Amazon is hopping on the AI train with this revamped product, powered by Anthropic’s Claude AI model. It will use AI to understand commands, set timers, answer questions and control home devices, similar to original Alexa, but now with the generative AI feature that would allow it to generate new responses instead of relying on pre-programmed answers (Diaz, 2024). 

Alexa could now create a bedtime story with their favourite imaginary character, customise recipes based on ingredients in your pantry or write an email for you. However, this does come at a price. Remarkable Alexa is no longer free, but will become a subscription model and carry a price tag of anywhere between $5 and $10 monthly. With estimated 100 million active users, even if a conservative estimate of 10% users paid the monthly subscription, Amazon would generate at least 600 million dollars in revenue yearly at the $5 price point (Diaz, 2024). 

Only time will tell if Remarkable Alexa can revive Amazon’s ambitions in the voice assistant market. With AI becoming increasingly used in everyday technology, Alexa’s transition to a subscription model could be a turning point, helping Amazon finally become profitable, or at least break-even in the sector. However, convincing users to pay for something that has long been free could be difficult. If successful, Remarkable Alexa could be Amazon’s key to unlocking the true potential of voice-assisted AI, but if it fails again, it might mark the end of an ambitious, but ultimately unsustainable experiment.

Would you pay for Remarkable Alexa? Let me know in the comments below.

References

Amadeo, R. (2022, November 21). Amazon Alexa is a “colossal failure,” on pace to lose $10 billion this year. Ars Technica. https://arstechnica.com/gadgets/2022/11/amazon-alexa-is-a-colossal-failure-on-pace-to-lose-10-billion-this-year/

Diaz, M. (2024, August 30). Amazon’s “Remarkable Alexa” upgrade to be powered by Anthropic’s Claude. ZDNET; ZDNET. https://www.zdnet.com/home-and-office/smart-home/amazons-remarkable-alexa-upgrade-to-be-powered-by-anthropics-claude/

Gray, C. (2022, April 20). How Amazon developed its famous virtual assistant, Alexa. Aimagazine.com. https://aimagazine.com/ai-applications/how-amazon-developed-its-famous-virtual-assistant-alexa

Kim, E. (2019, November 19). Amazon is gutting its voice assistant, Alexa. Employees describe a division in crisis and huge losses on “a wasted opportunity.” Business Insider. https://www.businessinsider.com/amazon-alexa-job-layoffs-rise-and-fall-2022-11?r=US&IR=T

Mattioli, D. (2024, July 22). Alexa Is in Millions of Households—and Amazon Is Losing Billions. The Wall Street Journal. https://www.wsj.com/tech/amazon-alexa-devices-echo-losses-strategy-25f2581a?

Naughton, J. (2022, November 26). Alexa, how did Amazon’s wrong call on voice assistants tee up a $10bn loss? | John Naughton. The Guardian. https://www.theguardian.com/commentisfree/2022/nov/26/alexa-how-did-amazons-voice-assistant-rack-up-a-10bn-loss

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Keep calm and Amazon

30

September

2021

No ratings yet.
Source: https://internetofbusiness.com/amazon-unveils-its-new-alexa-smart-home-car-devices/

These days, consumers are flooded with smart devices for the home. Like Google, there is Amazon, which certainly can deliver good products, too. Following this trend, Amazon is expanding the functions related to personalization of its smart devices to make them more useful (Hautala, 2021). As a user, you can either be happy about this or not. Both the Ring security cameras and Alexa smart speakers are known, for example, for tracking users and their surroundings (Hautala, 2021). Amazon wants to change this by not collecting all the personal data.

Amazon recently revealed updates for both Ring and Echo products that result in incremental improvement in user privacy (Hautala, 2021). As opposed to storing data in Amazon’s cloud, the bottom line is that people will feel more comfortable when their personal information is processed on its security cameras and smart devices.

Users of the smart devices have the option to store and process information locally, meaning that the data will remain on their devices (Hautala, 2021). However, the question is how trustworthy you consider the devices to be as a user. People who are very keen on privacy are on distance from these types of devices, so the new features will not provide a solution about devices that can always keep an eye on you (Hautala, 2021).

Personally, I believe that privacy is indeed a big factor when considering smart devices, but I do reflect on how prominently I want to place the privacy factor in my life. Using Amazon as an example, as opposed to an Alexia speaker I am likely to buy devices that relate to home security, for example Ring.

Now that Amazon is introducing the option to store data locally, knowing that information is still being captured, I am curious to know to what extent you want to make your home smart and whether privacy is a big factor for you to consider if you actually want to buy smart devices.

Reference

Hautala, L. (2021, September 29). Amazon unwraps privacy features as it tries to roll deeper into your home. CNET. https://www.cnet.com/home/smart-home/amazon-rolls-out-privacy-features-as-it-tries-to-get-deeper-into-your-house/

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Grab and Go stores, but then literally

20

September

2021

5/5 (1)
Author: Jesper Goudswaard, 20/09/2021

Nowadays, almost every major supermarket chain offers the opportunity to pay at self-service checkouts.  Self-service checkouts use less space than registers, have reduced wait times compared to cashier lanes, and need fewer staff members to be controlled. A downside is an increase in shoplifting (Schmidt-Jacobsen, n.d.). Unfortunately, there is no alternative that offers at least the same convenience with almost zero shoplifting.. or is there?

You may have heard of it already, but Amazon has already opened 28 stores with so-called ‘Just walk out’ technology (Statista, 2021). They are called Amazon Go or Amazon Go Grocery stores. By scanning a QR code in the Amazon app on your phone, you get access to the store. Whenever you take an item from the shelf, the app automatically adds the item to your virtual shopping cart. When the customer changes their mind and puts the item back, the app will update the virtual shopping cart automatically. After you have gathered all the desired products, you can just leave the store and you will be billed for the products that you have taken via the app (Cheng, 2019).

So, how does this ‘Just walk out’ technology work? Amazon is using a combination of deep learning, computer vision, and sensor fusion. To get a better understanding of these technologies, I will explain each technology briefly. Deep learning is the creation of machines that use techniques inspired by the human brain’s ability to learn (Mandal, Mehta & Mishra, 2017). It is used to recognize objects, in Amazon’s occasion customers and products. However, just deep learning alone will not recognize anything that happens in the store. That is when computer vision comes into play. It mimics the human vision to look, discover, and method images (Mandal et al., 2017). This is done with the help of hundreds of sensors in the store that register every movement. Sensor fusion is the technology that tracks the movement of customers when cameras cannot register the movement, for example, because the visual input is blocked by another customer. This is done by the combination of accelerometers and gyroscopes in the customer’s mobile phone that together registers the location (Mandal et al., 2017). This technology is so accurate that shoplifting is almost impossible. Apart from that, even when a customer puts an item back on the wrong shelf, the technology will register that action and the customer will not be charged for that product (Cheng, 2019).

However, as disruptive as this concept might look, Amazon has not yet reached the 3000 stores they intended to have by 2021 (Statt, 2018). One possible explanation is the costs of the technology. According to Focal Systems (2019), the system will not prove a break-even in a large-format grocery store compared to operating the front-end with cashiers until after 2040. For now, Amazon should therefore stick with smaller stores.

What do you think about the technology and do you think we will see this much more often in the near future? Let me know in the comments.

References: https://www.researchgate.net/publication/315380585_JUST_WALK_OUT_TECHNOLOGY

https://www.theverge.com/2018/9/19/17880530/amazon-go-cashier-less-stores-new-locations-2021

https://sprintingretail.com/blog/retail-self-checkout-systems/

https://www.forbes.com/sites/andriacheng/2019/01/13/why-amazon-go-may-soon-change-the-way-we-want-to-shop/?sh=7e652bb56709

https://www.pocket-lint.com/gadgets/news/amazon/139650-what-is-amazon-go-where-is-it-and-how-does-it-work

https://www.statista.com/statistics/1155873/amazon-store-openings-number/

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Big tech in big trouble?

10

October

2020

No ratings yet. The American house of representatives has concluded that big tech companies such as Facebook, Apple, Google, and Amazon have misused their dominant position on a big scale. Hence, that is the reason that the American commission advocated for the split of Big Tech companies alike. However, what exactly did these tech giants do wrong?

The digital business model of tech giants

With regard to digital business models, the observation can be made that these big tech companies (Apple, Google, Amazon, and Facebook) are ecosystem drivers as they provide a platform to conduct business (Weil & Woerner, 2020). Furthermore, they have complete knowledge about their customer by the amounts of data they generated about their customers. It is interesting to see that certain of these technology companies (such as Amazon) gained significance by disrupting the market while pursuing a long-tail strategy (Hillesund, 2007).

The problem

The commission deems to prove that Google (regarding search engines) and Facebook (concerning Social Media) became monopolists through unauthorized practices. Furthermore, researchers claim that Amazon and Apple have “lasting and significant market power” that they partly forced by locking out competition through their platforms (De Tijd, 2020). The logical consequence is that competitors are discouraged to innovate. Thereafter, the privacy position of consumers is jeopardized by the dominant position of a handful of tech companies.  It also becomes more difficult to find truthful news if only a few big companies are the spreaders of it.

Examples of wrongdoings

The report claims that Amazon frequently uses third-party sellers to assist in improving and selling their own products. Apple uses its presiding market position to benefit its own applications and hamper those made by rivals. Facebook preserved its monopoly through a chain of anti-competitive business practices. Specifically, it bought up potential rivals such as Instagram. The report states that Google had demanded smartphone manufacturers using its Android operating system should install Google’s chrome as its standard web browser (www.ft.com, 2020).

It can be concluded that Big tech companies did not always use the right means to obtain their market position. Obviously, the big tech companies have responded in a disapproving manner (RTL Nieuws, 2020). This raises some questions for me to you, the reader.

 

Do you think the report was fair and just? Do you think it is beneficial to society that these tech companies have so much market power? If sanctions are imposed, do you think these tech companies should be split up or do you think other sanctions must come into place? Which other sanctions should come into place?

—

De Tijd. (2020). Amerikaanse commissie pleit voor opsplitsing Big Tech. [online] Available at: https://www.tijd.be/ondernemen/technologie/amerikaanse-commissie-pleit-voor-opsplitsing-big-tech/10256341.html [Accessed 10 Oct. 2020].

Hillesund, T. (2007). Reading Books in the Digital Age subsequent to Amazon, Google and the long tail. First Monday. [online] Available at: http://hdl.handle.net/11250/184283 [Accessed 10 Oct. 2020].

RTL Nieuws. (2020). Commissie VS wil techreuzen opsplitsen: Big Tech is te machtig. [online] Available at: https://www.rtlnieuws.nl/tech/artikel/5188715/commissie-vs-pleit-voor-opsplitsen-big-tech [Accessed 10 Oct. 2020].

Weil, P. Woerner, S.L. (2015). Thriving in an Increasingly Digital Ecosystem. [online] MIT Sloan Management Review. Available at: http://mitsmr.com/1BkdvAq [Accessed 10 Oct. 2020].

www.ft.com. (2020). Subscribe to read | Financial Times. [online] Available at: https://www.ft.com/content/ccf00858-30a2-49d3-9ae9-7db3f58773b0 [Accessed 10 Oct. 2020].

 

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Amazon Explore – Are Virtual 1-On-1 Live-streams the Future?

6

October

2020

No ratings yet.

Bored at home? Wanderlust due to the COVID19 travel restrictions? Or just keen to explore/learn something new? Did you answer one of those questions with yes? If you did, I might have found something interesting for you: ‘Amazon Explore’

Amazon (2020) just launched the beta and describes its new service as an interactive live-streaming platform that offers 1-on-1 experiences around the world. The so-called ‘experiences’ are 30-60-minute 1-on-1 live sessions with a host. The host is the person offering a specific experience. The experiences are worldwide and split into three different categories: ‘culture & landmarks’, ‘learning & creativity’, and ‘shopping’. They start at around $10 and can get quite expensive (the most expensive one I found was a tour through Prague’s Old Town for $210). And the best thing is… you can become a host yourself.

Okay, all jokes aside… and sorry for the ad. Now back to business: why do you think amazon launched a service like that? I would say that the reasons are quite obvious. I am sure that all of you watched a live-stream before. And if you did, I guess you are part of the 63% of the population aged 18-34 who enjoy watching live-stream content daily, making it (unsurprisingly) one of the most popular types of online content (Stanimirovic, 2020). Facebook, Instagram, YouTube, Twitch (also owned by Amazon), TikTok… you name it. Live-streams can be found (almost) everywhere nowadays. Accompanied by the current COVID19 pandemic, I think that its popularity will further increase. During the first COVID19 lockdown, for example, all aforementioned providers experienced exponential growth in their view counts (Stephen, 2020). I guess that’s why it is hardly surprising that the value of the live-streaming market is estimated to increase to almost $70 billion by the end of next year (Stanimirovic, 2020).

A new market? Whereas normal live-stream providers only offer one-to-many live experiences, amazon sees potential in personalized 1-on-1 experiences. And it is not the first ‘big’ company that wants to take advantage of small-scale virtual experiences. Due to COVID19 and its restrictions earlier this year, Airbnb and ClassPass (a fitness company) had to rethink their business models and launched similar services: Airbnb launched ‘virtual travel experiences’ and ClassPass personal ‘online classes’ (Porter, 2020).

I think that it has potential and can certainly benefit from network effects (more users=more value). And I am convinced that there are people out there attracted to those personalized 1-on-1 virtual experiences (if you check the stats of regular live-streaming). However, I will NOT try this service as I simply prefer real-world experiences. What about you? Would you try ‘amazon explore’?

 

References:

Amazon, (2020). [online] Available at: <https://www.amazon.com/b?ots=1&slotNum=2&imprToken=ecba6fd0-a6fc-ca8b-5b2&node=19424628011&ref=srk_stf_hro_lrn&tag=theverge02-20&ascsubtag=%5B%5Dvg%5Be%5D21259036%5Bt%5Dw%5Bd%5DD> [Accessed 6 October 2020].

Porter, J., (2020). Amazon Starts Offering Virtual Classes And Sightseeing Tours Via New Explore Platform. [online] The Verge. Available at: <https://www.theverge.com/2020/9/30/21494995/amazon-explore-virtual-classes-sightseeing-shopping-online-experiences> [Accessed 6 October 2020].

Stanimirovic, (2020). The Impact Of Live Streaming On Today’S Growingly Digital World. [online] BRIDTV. Available at: <https://www.brid.tv/how-live-streaming-is-changing-the-world-as-we-know-it/> [Accessed 6 October 2020].

Stephen, B., (2020). The Lockdown Live-Streaming Numbers Are Out, And They’Re Huge. [online] The Verge. Available at: <https://www.theverge.com/2020/5/13/21257227/coronavirus-streamelements-arsenalgg-twitch-youtube-livestream-numbers> [Accessed 6 October 2020].

 

 

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Will tomorrow’s smart living room be a spy in your house?

16

October

2019

5/5 (1) Nowadays, smart home devices are becoming more and more popular among households. In the future, around 30 million U.S. households will add smart home technology to their house (Mordorintelligence, 2019). Furthermore, the growth rates of smart home markets in North America and Europe are prospected to be high. Tech giants like Google and Amazon have brought different types of smart home devices on the market, that are most often voice-controlled devices. Examples are Google Home and Amazon Echo (Alexa). These devices are driven by IoT (Internet of Things), in which the smart home device is interconnected with all kinds of other devices in your home. These days, smart home devices are connected to your TV, music system, thermostat, doorbells, and in the near future with your fridge, oven, and kettle (Luimstra, 2019). These will be all controllable with simple questions and commands given by the customer.

Obviously, the implementation of a smart home device could give the customer various advantages. At first, the customer will be given more convenience in and outside the house. Several devices in your household will be more easily being controlled, often with small voice commands. Whether you want to know the best route to your destination when leaving your house, or you want to arrive in a house that’s heated up, or you want to know what movie to watch after the serie you’re almost done with: it’s all possible with a smart home device (Marr, 2019). Secondly, since many voice-assisted home devices are connected with your energy regulator, smart home devices are an ideal way to save on your future energy expenses. According to your preferences, preprogrammed temperatures and lighting schedules can be implemented, which are also easy to modify after. Lastly, smart home devices tend to increase the safety of your house. Smart doorbells are able to livestream the person that’s at your door, which gives a customer more information about people with possible bad intentions (Luimstra, 2019).

However, the safety of smart home devices (and mainly the voice-controlled ones) has been criticised lately. All information that smart home devices need are saved in the cloud (Marr, 2019). While this is convenient, it also creates an easy point for abuse of your personal information. Voice-assistant devices are known to be easily activated by a so-called ‘wake word’, like the word ‘Alexa’ for Amazon’s voice assistant (Karch, 2019). If activated, all information is recorded and saved in the cloud, and is therefore also accessible for hackers or other wrongdoers. Furthermore, the smart home devices have voices that are increasingly sounding like a normal human voice (Weinberger, 2019). Since we emotionally attach value to voices, this could become a problem when a voice-controlled smart home device will talk to outsiders or family people. So, while the positive aspects of smart home devices are obviously present, its negative threats related to security and trust into these systems may not be neglected. Will voice-controlled smart home devices become almost 100% safe? Are we able to distinguish between voices of smart home devices and the voice of one of our relatives? These question are ripe for future discussion.

References:
Karch, M. (2019). Is Your Smart Device Spying on You? How Can You Stop It?. [online] Lifewire. Available at: https://www.lifewire.com/is-your-smart-device-spying-on-you-4141166 [Accessed 15 Oct. 2019].

Luimstra, J. (2019). De slimme IoT-huiskamer: groot goed, of potentiële spionage?. [online] Sprout. Available at: https://www.sprout.nl/artikel/technologie/de-slimme-iot-huiskamer-groot-goed-potentiele-spionage [Accessed 15 Oct. 2019].

Marr, B. (2019). The 7 Most Dangerous Technology Trends In 2020 Everyone Should Know About. [online] Forbes.com. Available at: https://www.forbes.com/sites/bernardmarr/2019/09/23/the-7-most-dangerous-technology-trends-in-2020-everyone-should-know-about/#16a928687780 [Accessed 15 Oct. 2019].

Mordorintelligence. (2019). Smart Homes Market | Growth, Trends, and Forecast (2019 – 2024). [online] Available at: https://www.mordorintelligence.com/industry-reports/global-smart-homes-market-industry [Accessed 15 Oct. 2019].

Weinberger, D. (2019). Can We Trust Machines that Sound Too Much Like Us?. [online] Harvard Business Review. Available at: https://hbr.org/2019/05/can-we-trust-machines-that-sound-too-much-like-us [Accessed 15 Oct. 2019].

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Could Google, Apple, Facebook or Amazon make you knock on a stranger’s door?

3

October

2019

No ratings yet. Big surprise… Yes! They can. They already made millions of people doing this. But what is really happening here?

When I was watching a video of Roger McNamee (former mentor of Mark Zuckerberg) and Edward Roussel (Dow Jones Chief Innovation Officer) at the Digital Marketing Exposition and Conference they pointed out that Pokemon Go was basically the first indirect test of Google trying to manipulate and steer human behavior in an utterly new way. People that were/are using the Pokemon Go app were indeed knocking on doors of strangers, since they really badly wanted that very special Pokemon that was located in the garden of their neighbors. Next to that, the makers of this app could even make you go into a school or a Starbucks etc. You see the point.

Every hour, big companies receive tonnes of data about us and our behavior. But still I hear people say: “I don’t care what companies do with my data”, and that made me think. It is of course really convenient to have apps in your life that support you in the best way possible, like Google maps that knows exactly where your home and work address is and therefore this app can help you to quickly navigate to those places. Or even one step further, Google tracks your location and sees exactly where you are at any time, but for you as a user it’s also great to see where you have been.. This information is not new, but it keeps me thinking of how much data big established companies actually receive, for example, Walmart collects more than 2.5 petabytes of data every hour from its customer transactions (McAfee et al, 2012), and probably that has more than doubled as of today.

But what actually got my attention was the fact that big established firms can go one step further: they can make you move in a physical way! This could really be a very effective means for digital marketing right? So by gamifying processes (like the Pokemon Go app) you can actually manipulate human behavior. But if that’s possible, what will happen in the long run?

There are roughly four companies in the world that control most of our data, but just imagine what they can do with all of that information. For example, the Oxfort Internet Institute (2019) found out that manipulation on social media has got worse – “rising numbers of governments and political parties making cynical use of social media algorithms, automation and big data to manipulate public opinion at scale.” Striking facts, and we also haven’t forgotten the Cambridge Analytica scandal in recent history. Hub firms are big enough, they don’t need others (Iansiti & Lakhani, 2017), they can make you do a lot in the future… like moving you to a special location with an exclusive ceremony to get your iPhone one day earlier than the official release date as part of you being loyal to brand. Just a random idea, but there are endless possibilities.

I think we should be way more careful in how we share our data across platforms, since it can be of real monetary value for such companies, confirmed by the fact that companies pay a lot for valuable data. And as Roger McNamee (video) pointed out, “we shouldn’t view data as an asset and we shouldn’t be able to buy and sell your own data,  it is part of your bodily organ.”

What do you think about these risks of big firms going steps further in terms of what they do with your data and what should we do to get our customer power back?

If you have some spare time, here is the video:

References: 

McAfee, A., Brynjolfsson, E., Davenport, T. H., Patil, D. J., & Barton, D. (2012). Big data: the management revolution. Harvard business review, 90(10), 60-68.

Iansiti, M., & Lakhani, K. R. 2018. Managing our hub economy. Harvard Business Review, 96(1), 17-17.

TechCrunch. (2019). Voter manipulation on social media now a global problem, report finds – TechCrunch. [online] Available at: https://techcrunch.com/2019/09/26/voter-manipulation-on-social-media-now-a-global-problem-report-finds/ [Accessed 22 Sep. 2019].

YouTube. (2019). Big tech under observation – after years of watching us, is now being watched | 2019. [online] Available at: https://www.youtube.com/watch?v=6aM55qkIt14 [Accessed 14 Sep. 2019].

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Are Antitrust Laws Fit to Fight Tech Giants from Killing Tradition Businesses?

18

September

2019

No ratings yet. Are today’s antitrust laws fit for the new business models? Major tech giants, such as Facebook, Amazon, and Apple have been the subject of several antitrust investigations. The list of fines resulting from these investigations are ranging from a €110 million fine for Facebook due to misleading information about the WhatsApp takeover (European Commission, 2017), to a $4.34 billion fine on Google for misusing Android software to hold off competition (D’Onfro, 2018). U.S. Lawmakers are hence urging ‘aggressive action’ from regulators on the big tech giants (McCabe, 2019).

In order to understand what has changed in recent years’ business models, let us make a comparison between Amazon and a traditional supermarket. Supermarkets, equal to other forms of retailing, have lower profit margins compared to other industries, on average ranging from 0.5% to 3.5%. That is why supermarkets, such as Wal-Mart, are focused on gaining a high sales volume (Ross, 2019). Amazon, on the contrary, has a staggering $141.3 billion in international sales via its web shop with an operating income of $7.2 billion, nearly 5% profit margin. Although this profit margin is slightly higher than the retailers average, 5% profit margin is nothing to panic about. However, Amazon also has another operation namely, Amazon Web Service (AWS). AWS has grown to a $26 billion revenue in 2018, with an operating income of $7.3 billion, creating a 28% profit margin on its webservice (Frankenfield, 2019). Consequently, while supermarkets are struggling with their 0.5% to 3.5% profit margin, AWS makes a 28% profit margin. This $7.3 billion can be used by amazon to finance its other operations, such as retailing, while Wal-Mart needs to make money solely on its retail operations. Amazon is now competing with Wal-Mart with its Amazon Go operations, a supermarket chain without any checkouts. The difference is, however, Wal-Mart needs to make a profit to survive, while Amazon Go does not. They could potentially lower their prices without risking the future of their business, but would they do that?

The answer is yes. As an example, diapers.com has been the victim of a price war with Amazon rapidly lowering its prices on Amazon’s diapers. This price war resulted from diapers.com refusing a takeover bit made by Jeff Bezos, CEO of Amazon. Diapers.com was forced to sell its diapers at a loss (Lecher, 2019). What might look as predatory pricing, which is anti-competitive, misses one component: Amazon does not have to increase its prices after their competitors went out of business. That is why Amazon can perform this strategy without too many troubles, caused by market watchdogs. According to Baumol (1979), companies are not allowed to increase its prices within a five-year period after their competitors run out of business. Subsequently, businesses would be discouraged to commit in any form of predatory pricing. Nevertheless, since Amazon can finance this pricing strategy with its other operations, such as AWS, they can play the long game. The Federal Trade Commission (FTC), responsible for fighting antitrust, is therefore having a hard time prosecuting big tech giants with this ‘new’ business model for predatory pricing.

Should we thus change the rules of the game regarding antitrust to give market watchdogs, such as the FTC, more tools to prevent antitrust breaches. As Khan (2016) stated: “this Note argues that the current framework in antitrust – specifically its pegging competition to “consumer welfare,” defined as short-term price effects – is unequipped to capture the architecture of market power in the modern economy.” The so called: Antitrust Paradox, requires antitrust laws to increasingly secure the economies welfare over the short-term consumer welfare. If lawmakers do not act now, we might end up with Amazon Go being America’s only supermarket.

 

References

Baumol, W.J., 1979. Quasi-permanence of price reductions: A policy for prevention of predatory pricing. The Yale Law Journal, 89(1), pp.1-26.

Khan, L.M., 2016. Amazon’s antitrust paradox. Yale LJ, 126, p.710.

 

*All websites were viewed on 18 September 2019.

D’Onfro, J. 2018: https://www.cnbc.com/2018/07/18/googles-5-billion-fine-what-you-need-to-know.html

European Commission, 2017: https://europa.eu/rapid/press-release_IP-17-1369_en.htm

Frankenfield, J. 2019: https://www.investopedia.com/how-amazon-makes-money-4587523

Lecher, C. 2019: https://www.theverge.com/2019/5/13/18563379/amazon-predatory-pricing-antitrust-law

McCabe, D. 2019: https://www.nytimes.com/2019/09/17/technology/senate-antitrust-tech-hearing.html

Ross, S. 2019: https://www.investopedia.com/ask/answers/071615/what-profit-margin-usual-company-retail-sector.asp

 

 

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IFA 2018 – Appliances of the future

7

October

2018

No ratings yet. Last month in Berlin took place the biggest exhibition for consumer electronics and household appliances in Europe – IFA. Major companies from all over the world (with the notable exception of Apple) took part of the trade show by presenting their newest smart products: from mobile phones to security systems. The key theme of the event was Artificial Intelligence and the ways it can transform the home appliances industry, in particular through the implementation of voice recognition and control.

In the last year the amount of AI-based household appliances has increased dramatically, all integrating voice control either from Google Assistant or Amazon Alexa, but the battle between these two tech giants in the smart appliance market is just beginning. On one hand there is Amazon, which basically invented the smart speaker category with Echo and since then has expanded enormously its application into a large range of appliances – from refrigerators to lighting systems. At IFA this year companies like Bose, Sony, Huawei and Toshiba introduced their new products, featuring Amazon’s Alexa. Miele, the leading German home appliance manufacturer, presented the Amazon Echo Show, a speaker that can control and monitor the company’s newest dishwasher, the G7000.

On the other hand, there is Google, which entered the market two years later by integrating Google assistant in smartphones and has since gained large awareness and customer recognition. Due to its rising popularity in the appliances industry, more and more companies are choosing to implement Google Assistant. For example, Electrolux has announced its plan to launch smart ovens with Google voice integration in the beginning of 2019. This will introduce a new kind of technology called “Hands-free cooking” that will facilitate main functions such as selecting the right cooking program and desired temperature.

Sources:

http://www.koreaherald.com/view.php?ud=20180902000249
https://www.thestar.com.my/tech/tech-news/2018/09/05/ifa-2018-voice-control-spreads-through-the-home-with-smarter-speakers-vacuums-ovens-and-more/
https://b2b.ifa-berlin.com/Press/PressReleases/News_54643.html
https://developer.amazon.com/blogs/alexa/post/85354e2f-2007-41c6-b946-5a73784bc5f3/ifa-2018-alexa-devices-continue-expansion-into-new-categories-and-use-cases
https://www.electroluxgroup.com/en/electrolux-expands-smart-appliances-collaboration-with-google-26049/

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