This is an aggressive expansion into a new market for Amazon. Photo: Getty
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Amazon's smartphone launch offers a prudent platform for growth

What the launch of Amazon’s smartphone tells us about the company’s future strategy.

Amazon, the e-commerce internet giant, is launching its first smartphone. Media attention is focusing on whether the phone’s features, such as its rumoured 3D interface, are really as cool as portrayed in its trailer video which aims to wow early users. But by entering into the fray of an already hyper-competitive mobile phone industry, Amazon is doing a lot more than adding another gee-whizz feature to a smartphone.

This launch tells us a great deal about CEO Jeff Bezos' strategy for his company – and what it might mean for the future of competition and innovation in our increasingly digital world.

First, let’s ask the obvious questions. Why is Amazon, known for internet retailing and related software development, entering a hardware market where leading incumbents like Nokia have already failed? After all, what does Amazon know about the telecoms business? Can it succeed where Google has failed?

We have seen Google, which has virtually limitless financial resources, enter the mobile phone handset industry by purchasing Motorola Mobile in 2012, only to take a heavy loss after selling it on less than two years later. Even incumbent firms who had a very strong set of phone-making capabilities have taken tough hits in this turbulent market – witness Nokia’s dramatic plunge, which led to a sale of its mobile phone business to Microsoft.

Platform Number 1

You cannot understand Amazon’s move without situating it in the broader context of platform competition. Platforms, these fundamental technologies such as Google search, Facebook and the Apple iPhone, are the building blocks of our digital economy. They act as a foundation on top of which thousands of innovators worldwide develop complementary products and services and facilitate transactions between increasingly larger networks of users, buyers and sellers. Platform competition is the name of the game in hi-tech industries today.

The top-valued digital companies in the world (Amazon, Apple, Google, Facebook) are all aggressively pursuing platform strategies. App developers and other producers of complementary services or products provide the armies that sustain the vibrancy and competitiveness of these platforms by adding their products to them. The more users a platform has, the more these innovators will be attracted to developing for them. The more complements available, the more valuable the platform becomes to users. It is these virtuous cycles – positive feedback loops, or “network effects” – that fuel the growth of platforms and transform them into formidable engines of growth for the companies and developers associated with them.

The smartphone is a crucial digital platform. Achieving platform leader status in this space is a competitive position all the hi-tech giants are fighting for. Google has its ubiquitous Android operating system, Apple has shaped the whole market with the iPhone, Microsoft has purchased Nokia’s phone business, and Facebook has invested $19 billion in WhatsApp among other acquisitions for its growing platform.

In fact, I suppose I should have rephrased my question a little earlier – why hasn’t Amazon already staked its claim to lead this digital space after having launched its Kindle Fire tablet and Fire TV set-top box?

Opening the door

Simply put, the smartphone is the main gateway to the internet today, and, in the hand of billions of users throughout the world, is the physical embodiment of a conduit that links those users to each other and to the whole content of the internet. There are almost 7 billion mobile phones in the world (and only 1 billion bank accounts). And the trend is staggering. Mobile payment transaction value surpassed $235 billion worldwide in 2013, and is growing at 40% a year, with the share of mobile transactions already reaching 20% of all worldwide transactions.

So, while risky, Amazon’s entry into the smartphone business is a classic play: a platform leader entering an adjacent platform market that is also complementary to its primary business. All platform leaders aim to stimulate complementary innovation (think how video game console makers aim to stimulate the provision of videogames), and they often attempt not to compete too much with their complementors in order to preserve innovation incentives. But at some point all platform leaders start to enter these complementary markets themselves. Google has done it through Android, Apple has done it with iTunes, Facebook has done it with Facebook Home.

It happens when platform leaders feel threatened by competition in their core market, or when they want to steer demand, competition and innovation in a particular direction. The idea is to use their own user base as well as their own content and technologies to create an unassailable bundle, one that is difficult for external competitors to break into. Think of it as creating barriers to entry, while expanding the core market.

The reasoning behind entering a complementary market is well known, and related to the benefits of bundling. In the case of hi-tech platforms, the benefits are even stronger. By optimising and controlling the interface between a platform and complements, a company can have a structuring impact on the evolution of the platform ecosystem – and that means on all the innovators around the world that invest and make efforts to develop complementary products and services.

In your hands

So, these are the reasons why Amazon is entering the mobile phone market, despite the difficulties inherent in taking on an über-competitive market. This strategic choice makes a lot of sense.

As to whether Amazon has a fighting chance of succeeding, there are reasons to be optimistic. Beyond its deep financial resources, Amazon has learned something of what it takes in the development and successful commercialisation of various versions of the Kindle. That has given it expertise in hardware, on top of its software background, and should prove a useful training ground to allow it to launch other consumer products such as the smartphone.

But the ultimate judge will be you, gentle readers. Will you be willing to swap your favourite mobile phone for a yet another new kid on the block, even if it does let you browse Amazon’s ever-growing catalogue in splendid 3D?

The ConversationAnnabelle Gawer does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

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“Stinking Googles should be killed”: why 4chan is using a search engine as a racist slur

Users of the anonymous forum are targeting Google after the company introduced a programme for censoring abusive language.

Contains examples of racist language and memes.

“You were born a Google, and you are going to die a Google.”

Despite the lack of obscenity and profanity in this sentence, you have probably realised it was intended to be offensive. It is just one of hundreds of similar messages posted by the users of 4chan’s Pol board – an anonymous forum where people go to be politically incorrect. But they haven’t suddenly seen the error of their ways about using the n-word to demean their fellow human beings – instead they are trying to make the word “Google” itself become a racist slur.

In an undertaking known as “Operation Google”, some 4chan users are resisting Google’s latest artificial intelligence program, Conversation AI, by swapping smears for the names of Google products. Conversation AI aims to spot and flag offensive language online, with the eventual possibility that it could automatically delete abusive comments. The famously outspoken forum 4chan, and the similar website 8chan, didn’t like this, and began their campaign which sees them refer to “Jews” as “Skypes”, Muslims as “Skittles”, and black people as “Googles”.

If it weren’t for the utterly abhorrent racism – which includes users conflating Google’s chat tool “Hangouts” with pictures of lynched African-Americans – it would be a genius idea. The group aims to force Google to censor its own name, making its AI redundant. Yet some have acknowledged this might not ultimately work – as the AI will be able to use contextual clues to filter out when “Google” is used positively or pejoratively – and their ultimate aim is now simply to make “Google” a racist slur as revenge.


Posters from 4chan

“If you're posting anything on social media, just casually replace n****rs/blacks with googles. Act as if it's already a thing,” wrote one anonymous user. “Ignore the company, just focus on the word. Casually is the important word here – don't force it. In a month or two, Google will find themselves running a company which is effectively called ‘n****r’. And their entire brand is built on that name, so they can't just change it.”

There is no doubt that Conversation AI is questionable to anyone who values free speech. Although most people desire a nicer internet, it is hard to agree that this should be achieved by blocking out large swathes of people, and putting the power to do so in the hands of one company. Additionally, algorithms can’t yet accurately detect sarcasm and humour, so false-positives are highly likely when a bot tries to identify whether something is offensive. Indeed, Wired journalist Andy Greenberg tested Conversation AI out and discovered it gave “I shit you not” 98 out of 100 on its personal attack scale.

Yet these 4chan users have made it impossible to agree with their fight against Google by combining it with their racism. Google scores the word “moron” 99 out of 100 on its offensiveness scale. Had protestors decided to replace this – or possibly even more offensive words like “bitch” or “motherfucker” – with “Google”, pretty much everyone would be on board.

Some 4chan users are aware of this – and indeed it is important not to consider the site a unanimous entity. “You're just making yourselves look like idiots and ruining any legitimate effort to actually do this properly,” wrote one user, while some discussed their concerns that “normies” – ie. normal people – would never join in. Other 4chan users are against Operation Google as they see it as self-censorship, or simply just stupid.


Memes from 4chan

But anyone who disregards these efforts as the work of morons (or should that be Bings?) clearly does not understand the power of 4chan. The site brought down Microsoft’s AI Tay in a single day, brought the Unicode swastika (卐) to the top of Google’s trends list in 2008, hacked Sarah Palin’s email account, and leaked a large number of celebrity nudes in 2014. If the Ten Commandments were rewritten for the modern age and Moses took to Mount Sinai to wave two 16GB Tablets in the air, then the number one rule would be short and sweet: Thou shalt not mess with 4chan.

It is unclear yet how Google will respond to the attack, and whether this will ultimately affect the AI. Yet despite what ten years of Disney conditioning taught us as children, the world isn’t split into goodies and baddies. While 4chan’s methods are deplorable, their aim of questioning whether one company should have the power to censor the internet is not.

Google also hit headlines this week for its new “YouTube Heroes” program, a system that sees YouTube users rewarded with points when they flag offensive videos. It’s not hard to see how this kind of crowdsourced censorship is undesirable, particularly again as the chance for things to be incorrectly flagged is huge. A few weeks ago, popular YouTubers also hit back at censorship that saw them lose their advertising money from the site, leading #YouTubeIsOverParty to trend on Twitter. Perhaps ultimately, 4chan didn't need to go on a campaign to damage Google's name. It might already have been doing a good enough job of that itself.

Google has been contacted for comment.

Amelia Tait is a technology and digital culture writer at the New Statesman.