Published on June 23, 2025 8:56 PM GMT
(I'm not new to posting on LessWrong. This is a new account I am using to crosspost LW-relevant content from my Substack.)
I recently read "The Everything War", a 2024 book by Dana Mattioli. The thesis of the book is that the Amazon of today is a monopoly—using their market power to raise fees for sellers on their platform, and even increasingly prices for consumers—and that they got there using all of the anticompetitive tactics you can think of—including: price dumping in the 2000s, copying and undercutting the competition via Amazon Essentials in the 2010s, using COVID as an excuse to deplatform direct competitors like Roku TV in 2020. It's an ok read if a little didactic.
Something that jumps out is the parallels between Amazon's early rapid growth in the late 90s / early 2000s and frontier AI labs' rapid growth today. The quotes below are all from chapters 2-3, which discuss the early history of Amazon. Who knows, maybe soon the later chapters will also become relevant. (For example the book describes how Amazon brazenly and repeatedly committed IP theft... it's a big mystery whether any frontier AI labs would ever do that.)
In 2001, book chain Borders also turned to Amazon to host its website. The company had launched a website and warehouse on its own, but for years it generated small sales and lost a significant sum of money for the bookseller, said Greg Josefowicz, the CEO of Borders at the time. In the press release for the partnership, he called Amazon "the world's recognized e-commerce leader." Instead of suffering years of losses as it built up its own e-commerce capability and fine-tuned it, he sold off the warehouse and turned to Amazon to run Borders.com.
Mike Edwards, who took over as CEO of the bookstore chain in 2009 and eventually led it through its bankruptcy, said the deal was a major misstep. The deals came with another nonmonetary cost. Partnering with Amazon provided it with customer data and directional information about their businesses. Borders learned that the hard way.
"We were literally walking into the enemy and saying 'Here's our plans.' It was an extremely poor idea," said Edwards. The partnership gave Amazon customer data, contact information, and more. "Amazon was literally growing on the backs of their competitors and funding themselves through their competitors," he said.
This is kind of like OpenAI "partnering" with StackOverflow, Google partnering with Reddit, or OpenAI partnering with the Guardian (don't worry, journalism hasn't been killed quite yet, look at all the newsrooms they're helping out of the goodness of their heart). The dying platforms get a little more life in the AI age, but not by much. (Though actually, maybe Reddit will survive by filling the platform with enough AI slop, so that might not be the best example.)
[Linens 'n Things CEO] Axelrod, like many other retail CEOs, launched a website for Linens 'n Things. But the costs were challenging. In addition to funding the website and distribution centers, he had to also face the overhead costs of hundreds of stores. He also had less-forgiving shareholders, who, unlike Amazon's wouldn't welcome losses as part of his strategy. Amazon's competitors were beholden to Wall Street and weren't given the same leeway. The idea of a publicly traded retailer reporting an earnings loss and being celebrated by its investors was unthinkable. This forced them to be cautious about how and where they spent their resources. "For public companies, it was really challenging to make an all-in investment on e-commerce," Axelrod said. He chose to invest less than $25 million in online operations for Linens 'n Things rather than the $100 million plus that the company would likely need to invest to be competitive. "It would have destroyed earnings in the short term," he said of a major investment. [...]
"How do you compete with someone who spends a billion dollars on technology and can lose whatever they want and Wall Street still treats them like the hero?" [Target executive] Storch questioned.
We have a similar situation now with AI. There's a lot of hype and growth expectations behind frontier AI labs even as they post losses (in 2024, OpenAI lost $5B, and Anthropic $5.6B). OpenAI can tell their investors things like "It would be wise to view any investment in OpenAI Global, LLC in the spirit of a donation, with the understanding that it may be difficult to know what role money will play in a post-AGI world" and people are still on board because OpenAI is indeed going to keep growing, just like Amazon kept growing from books, to electronics, to toys, to literally anything they make in Shenzhen that can be sold for a profit.
Finally, an easy one that needs no explanation:
In the early aughts, few companies understood the potential of harnessing data. But Bezos, even years earlier, had impressed upon his employees just how powerful the troves of information the online business collected was. Information about what people ordered and what they clicked on but didn't order, and a relationship with the customer via their email inboxes were all a part of a new digital currency emerging on the internet. For traditional retailers just hoping to get a website up and running, these weren't considerations. But they were things Amazon wouldn't ignore.
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