Tim Carmody on Jeff Bezos

Tim Carmody:

[Amazon] will not abandon the hard work of physical infrastructure for the sweet, high-margin lure of the cloud.

There are a few reasons for this. The first one is that it is impossible to do digital retail (and increasingly, brick-and-mortar retail) at Amazon’s scale without having the technological capacity a company like Amazon has. If you spun off or sidelined the retail business, you’d be either kneecapping it or forcing it to buy back the services that the retail side of the business already gets in house. Amazon has a huge advantage in both digital and physical logistics; that’s better than a moat, it’s two moats. It’s a moat surrounded by a ring of fire with a dragon inside. You don’t let that go because a consultant or activist shareholder points out that technically your profit margins could be higher if you only did one or the other. Amazon has never run its business that way under Bezos and it would be incredibly foolish for the company to start doing so now, especially when he’s still in a position to influence precisely those sorts of decisions.

Wednesday, 3 February 2021