Amazon's Margins Again

AMZN operating margins

I've been pointing out that economies of scale allow for the astonishing margins Amazon enjoys on S3, and the rest of AWS, for six years. Now, This is the Amazon everyone should have feared — and it has nothing to do with its retail business by Jason Del Rey and Rani Molla documents AWS' margins in this table.

Amazon’s $52.9 billion of revenue in the second quarter of the year came in a tad below what Wall Street analysts expected — and that doesn’t matter whatsoever.

That’s because the massive online retailer once again posted its largest quarterly profit in history — $2.5 billion for the quarter — on the back of two businesses that were afterthoughts just a few years ago: Amazon Web Services, its cloud computing unit, as well as its fast-growing advertising business.

Below the fold, I discuss one of the implications of these amazing margins.

DINO and IINO

One of the things that I, as an observer of the blockchain scene, find fascinating is how the various heists illuminate the deficiencies of actual, as opposed to the Platonic ideal, blockchain-based systems.

I've been writing for more than 4 years that, at scale, blockchains are DINO (Decentralized In Name Only) because irresistible economies of scale drive centralization. Now, a heist illuminates that, in practice, "smart contracts" such as those on the Ethereum blockchain (which is DINO) are also IINO (Immutable In Name Only). Follow me below the fold for the explanation.

School's out (meta)

Grandkids are sick, or didn't get into the camp their parents wanted, so blogging will be close to non-existent for a while. Sorry about that!

Special Report on Decentralizing the Internet (Updated)

The Economist's June 30th issue features a special report from Ludwig Siegele entitled How to fix what has gone wrong with the internet consisting of the following articles:

• How to fix what has gone wrong with the internet
• The story of the internet is all about layers
• Blockchain technology may offer a way to re-decentralise the internet
• China has the world’s most centralised internet system
• How regulators can prevent excessive concentration online
• There is no single solution to making the internet more decentralised

I really like the way The Economist occasionally allows its writers to address a topic at length. Siegele provides a good overview of what has gone wrong and the competing views of how to fix it. Below the fold, my overall critique, and commentary on some of the articles.

Josh Marshall on Facebook

Last September in Josh Marshall on Google, I wrote:

a quick note to direct you to Josh Marshall's must-read A Serf on Google's Farm. It is a deep dive into the details of the relationship between Talking Points Memo, a fairly successful independent news publisher, and Google. It is essential reading for anyone trying to understand the business of publishing on the Web.

Marshall wasn't happy with TPM's deep relationship with Google. In Has Web Advertising Jumped The Shark? I quoted him:

We could see this coming a few years ago. And we made a decisive and longterm push to restructure our business around subscriptions. So I'm confident we will be fine. But journalism is not fine right now. And journalism is only one industry the platform monopolies affect. Monopolies are bad for all the reasons people used to think they were bad. They raise costs. They stifle innovation. They lower wages. And they have perverse political effects too. Huge and entrenched concentrations of wealth create entrenched and dangerous locuses of political power.

Have things changed? Follow me below the fold.