A Star Is (Not) Born
Or, why Amazon is retooling its strategy in movies, groceries, and the cloud
|tcarmody||Feb 27, 2019|
It’s been a month to the day since the first edition of The Amazon Chronicles, starting with my Statement of Purpose on January 27. Since then, Amazon released its quarterly earnings, we explored Amazon’s monopoly/monopsony status across the globe, we revised the “unlocking the commons” freemium incentive structure for the newsletter, Jeff Bezos went full Charles Foster Kane in publicly exposing a blackmail attempt against him, Amazon pulled out of its plans to locate part of its second headquarters in Queens, and this newsletter cracked 5000 subscribers. Pretty typical month when you’re talking about one of the biggest, most diversified, and most dynamic companies in the world.
I can’t promise you a below-the-belt photograph or a massive win for neighborhood activists every week, but I can promise what I hope is compelling news and analysis about that company, with occasional tangents into both business theory and modern philosophy and literature. This week is no different. Let’s get to it.
Amazon Studios, Rebooted
Last week, we discussed Amazon Studios’ reboot under Jennifer Salke. In short, the studio is putting fewer of its eggs into one basket, without necessarily throwing eggs at every door in the neighborhood. (It’s an imperfect metaphor; roll with it.) The studio is looking to make more original movies than it has in the past (up to 30 a year), but trying to slide those movies into particular niches and focus less on getting those movies into a full Manchester By The Sea / Cold War three-month theatrical release, with more movies going direct to Amazon Prime. It’s a little less Hollywood, a little more HBO.
You'll see less of the three-month window, and you'll see different variations. Even through Sundance, I learned a lot about just how flexible we can be with those models, and they really vary. In some cases, it'll be important for us to get the movie quickly to the service, while still following through with a theatrical release that feels much shorter, two weeks even, two to eight weeks. And then in other cases, we'll allow, where it makes sense, a wider release strategy.
This was already the plan before the Oscars, but I wonder how much it might have been tweaked had Amazon Studios’ Cold War won the award in any of the Oscar categories it was nominated in. There was talk headed into the awards show that Alfonso Cuarón’s Roma might win Best Director or Best Picture, but lose Best Foreign Language Film to Cold War. As it was, Cold War was nominated for Best Foreign Language Film, Best Cinematography, and Best Director, and lost all three awards to Cuarón and Roma. Netflix drank Amazon’s milkshake.
Now, Cold War is a remarkable film, and a huge success for Amazon. As Guillermo del Toro said when introducing the Best Director Oscar, it remains exactly the same film it was before the awards were announced. Cold War won Best Director at Cannes, Best Foreign Language Film for the New York Critics’ Circle, and swept the European Film Awards. But the prestige of the Oscars matters, and it shapes film studios’ strategies about what kinds of movies they pursue and how they produce and promote them. If Cold War had won any of the Oscars it was nominated for, we’d be talking about the film and Amazon Studios quite differently.
We’d also be talking about Amazon Studios differently if Roma had won Best Picture instead of (barf) Green Book. Roma, like Cold War, was produced by a digitally-minded distributor rather than a traditional studio, and given an unusual combination of theatrical release and an early streaming window. This is a powerful model to disrupt the way Hollywood has traditionally done business. And its effects are probably not most keenly felt with Oscar bait like Roma and Cold War, but with mid-budget grown-up films that play well with home audiences but have sort of lost their way in the studio theatrical system. Here, I like Steven Soderbergh’s interview with The Atlantic’s David Sims:
Sims: Most of the studio movies you made were in the the mid-budget tier that Hollywood doesn’t make anymore. What happened to it?
Soderbergh: Look, I have a lot of crackpot theories about how moviegoing has changed and why.
Sims: I would like to hear your crackpot theories.
Soderbergh: One of the most extreme is, I really feel that why people go to the movies has changed since 9/11. My feeling is that what people want when they go to a movie shifted more toward escapist fare. And as a result, most of the more “serious” adult fare, what I would pejoratively refer to as “Oscar bait,” all gets pushed into October, November, December.
Sims: And people have become conditioned, in the fall, to go and see a couple of serious movies.
Soderbergh: Put on a heavy coat and go see something serious. What that creates is what you see now, which is this weird dichotomy of fantasy spectacle; low-budget genre, whether it’s horror or comedy; and the year-end awards movies. I guess that’s a trichotomy.
Sims: From January to March, you can have some cheap fun, then in March, here we go …
Soderbergh: The big shit’s coming.
(Soderbergh has all sorts of smart thoughts on windowing, too, and how changing digital distribution can save films that don’t get a fair shot at the box office. It’s great.) Now! Genre-wise, as it happens, The Soderbergh Niche is a decent example of exactly the type of movies Amazon Studios is targeting. Combine that with a mix of direct-to-streaming and variable-window releases, plus what Netflix is up to in the same sphere, and you have something that can genuinely transform how people watch cinema and what kinds of movies they see. It’s an exciting time, even if there is no red carpet for that.
Why Can’t Amazon Solve Groceries?
This subhed is a little unfair, insofar as it assumes that groceries are a problem to be solved, rather than an inherently complex retail business that is also a fundamental part of people’s lives. But we’re certainly well removed from that brief utopian moment when people thought Amazon buying Whole Foods was going to upend the entire industry and instantly transform everything about food and how we bought it.
It’s not that easy. Stratchery’s Ben Thompson does a good job of explaining why.
Walmart has worked for years to respond to Amazon’s threat; the problem, though, as I explained in 2016’s Walmart and the Multichannel Trap, is that an integration built around stores was fundamentally unsuited to offering the sort of selection and convenience that Amazon does. The company needed to build up an entirely new set of capabilities and integrations, even as Amazon was leveraging theirs to integrate forward into logistics, adding on a 3rd-party marketplace to expand selection even more, and integrating backwards into their own brands. The result is that Amazon has around 50% share in e-commerce while Walmart has less than 5%.
That, though, is precisely why groceries is worth examining: as I explained when Amazon bought Whole Foods, perishable goods are not well-suited to Amazon’s value chain. Superior selection has diminishing returns, quality varies on an item-by-item basis within a single SKU, and, most importantly, the quality of items degrades with time and transport. In other words, they are a great fit for stores, not distribution centers.
In this view, Amazon’s purchase of Whole Foods was an attempt to acquire a first best customer for its grocery delivery operation, one that would efficiently store and sell perishable goods that weren’t suitable for Amazon’s traditional e-commerce model. And, to be clear, this strategy may yet succeed, but only to the extent Amazon builds a completely new set of capabilities and integrations that will probably end up looking a lot like Walmart, which has a massive head start it is clearly taking advantage of.
Walmart is also not Amazon’s only competitor here, or even its most dangerous one, even if grocery sales are helping Walmart fend off Amazon’s threat. Amazon’s Customer Satisfaction Index is slipping, down to a still-high 83 percent. But Trader Joe’s and Costco are doing much better, with Costco pushing Amazon to second place in the e-retailer category for the first time since 2010. CostcoGrocery’s two-day delivery for shelf-stable products matches Amazon Prime’s two-day guarantee, and Costco’s same-day delivery for fresh groceries through Instacart hits more markets than Amazon’s Prime Now.
The last e-retail company to beat Amazon was Newegg. Suffice it to say, Newegg was a niche electronics retailer and was not a threat to Amazon. Costco is kind of a threat. And maybe a bigger one than Walmart. People shop at Walmart; they shop at Albertson’s, which is partnering up with Microsoft; but they love Costco, just as they love Trader Joe’s. Amazon is used to being loved, and in leveraging that love to drive more purchases. But Whole Foods’ customer satisfaction is slipping, too, post-Amazon purchase, down to 79 percent. People don’t love Whole Foods that much, especially if they don’t already shop there.
Meanwhile, Trader Joe’s customers are making scratch reselling TJ products on Amazon’s marketplace at a steep markup. We’ve talked before about retail arbitrage being a core part of Amazon’s business, but in this case, this is a problem.
One solution, possibly, are Amazon Go convenience stores. Amazon’s planning to open more than 3,000 cashierless stores across the United States by 2021. Here, much more so than with Whole Foods or online grocery delivery, is a chance for Amazon to apply a combination of its tech wizardry and frictionless consumer experience to actually create something that changes the game.
The problem, however, is that Amazon Go stores are getting HQ2 level pushback. The issue is the fact that Go stores don’t accept cash, and millions of people are unbanked. Philadelphia recently passed a law banning stores that don’t accept cash, and Amazon is in some trouble for its employees lobbying to try to reverse or exempt themselves from that decision without first registering as lobbyists with the city’s Board of Ethics. There’s an email trail between Amazon and city employees showing how Amazon attempted to influence this bill to carve out a space for Go stores.
Despite Amazon’s efforts, City Council ultimately passed legislation with language that Amazon believes could be “detrimental” as the company plans to open cashierless stores, emails show.
Amazon wanted language that would exclude retail locations that “collect payment from customers solely by a mobile device application or by charging a customer’s Internet-based account,” according to a copy of the proposal.
Instead, Council amended the measure to exclude retailers “selling consumer goods exclusively through a membership model that requires payment by means of an affiliated mobile device application.”
Greenlee has said that language should allow Amazon to open one of its stores in the city. But Amazon and its legal counsel don’t think that the language is applicable to their model, according to Cox, the Commerce Department spokesperson. In particular, Amazon has concerns with the word “membership” because the company’s “Prime” membership is not required to access Amazon Go stores, Cox said.
The New Jersey legislature has already passed a similar bill outlawing cashless stores, and New York City, Washington, San Francisco and Chicago are considering their own versions. (Amazon already has Go stores in San Francisco and Chicago.) Based on what’s happened in Philadelphia, you can bet that Amazon is working hard behind the scenes to influence those bills. Go is too important to Amazon’s brick-and-mortar future for the company to let itself get shut out of those markets.
But unfortunately, Amazon hasn’t done much to try to address the fundamental concern of these bills, that poorer people are getting shut out from retail establishments. Instead it’s focused on trying to carve out exemptions, so that it can appeal to a certain kind of Amazon customer in a certain kind of way.
There are ways around this: Amazon gift cards are available for cash at almost every pharmacy. That’s how most people who don’t have credit cards already shop at Amazon. But Amazon wants the credit card numbers, and it’s not invested in making a cashless experience available for everyone. That’s a shame.
This is actually a perfect time for former PepsiCo CEO Indra Nooyi to join Amazon’s board. Nooyi is probably best known to the internet for that time she said that women don’t dump entire bags of Doritos down their throats—which, well, not all women, I guess. But she’s a remarkably talented executive who helped change the culture at PepsiCo, pushed the company from an exclusive focus on junk food to a wider range of healthier items, and also had to navigate city taxes on soda and sugary drinks.
Nooyi ran a logistics and groceries company extraordinarily well for over a decade. She knows how to take a brand that’s taken some dents in its public perception and revitalize it. (Have you seen the “Is Pepsi OK?” commercials? They’re terrific.) She’s who Amazon needs right now.
Plus, her appointment continues to improve the company’s diversity at the top. Amazon now has five women on its board, of eleven directors total, including two women of color. It’s turned a weakness into a strength. (Now if they could only do the same thing with their top executives.)
The Australian Broadcasting Corporation’s “What it’s like to work in an Amazon Australia warehouse” is not breaking all-new ground, at least not for those of us who’ve read Mac McClelland’s “I Was A Warehouse Wage Slave,” or Hamilton Nolan’s series of “True Stories of Life As An Amazon Worker,” or Dave Jamieson’s “The Life and Death of an Amazon Warehouse Temp.” At this point, if you don’t know that warehouse work at Amazon and its peer companies is extraordinarily difficult, dangerous, often humiliating, and thoroughly casualized in its reliance on temporary workers without guarantees or benefits, you’re choosing not to know.
What I think is striking about what the ABC has done, which other stories have touched on but not delved into, is the psychological reality of working as a picker. It’s not just tough blue-collar work. There’s an ideology involved that you as a worker are required to buy into.
Teams huddle together on the warehouse floor at the start of their shift.
“I say Amazon, you say ‘efficiency’,” a supervisor chants.
The supervisor asks someone to lead the daily team stretches. The workers are asked to share an Amazon ‘success story’. This is all designed to gear ‘Amazonians’ up for the high-pressure day ahead.
‘Work hard. Have fun. Make history.’ The company’s motto is woven into a huge rainbow-coloured mural at the front of the warehouse.
This ideology is reinforced through constant surveillance and measurement.
Each worker’s performance is calculated into ‘pick rates’. Amazonian 1 says that if you’re collecting ‘small items’ from the shelves, you’re expected to collect about 120 products an hour—two items every minute. The employees say they’re left physically and mentally exhausted at the end of each shift.
If staff don’t meet their rates, they say a supervisor will approach them and ask if something is wrong.
“A representative came to me and said, ‘your numbers are low, what happened?’,” Amazonian 3 says. “I said I was lifting large items, 15 or 20 kilograms. But when they come to us it makes me feel like we’re not working hard enough.”
“It’s hard, I can’t make the times in the scanner,” Amazonian 4 says. “It’s really fast. I get stressed. They [are] always looking for your rates. It’s about numbers at Amazon.”
Workers say it’s never explicitly said, but everyone understands that poor pick rates result in fewer shifts.
The ABC story reflects this inside-outside, Imaginary Amazon vs. Real Amazon divide very well through its juxtaposition of official Amazon footage and photographs with its uncensored stories from current and former workers.
The obvious connection here in terms of big tech stories this week is with Casey Newton and The Verge’s “The Trauma Floor: The secret lives of Facebook moderators in America.” In both cases, a high-tech veneer is pulled aside to reveal real people doing high-risk, demanding temporary work that damages them physically and psychologically, for little pay and no benefits, but without which the company’s core product couldn’t exist.
In both cases, too, we’re urged by the companies and their defenders to accept this bargain. Without the tireless work of these invisible employees, Amazon and Facebook couldn’t exist; and to give them the pay and support their jobs would seem to demand would only add great costs to customers.
On Twitter, I compared this bargain to the thought-experiment posed by Ivan Karamazov in The Brothers Karamazov. Ivan has been having a long argument about The Problem of Evil with his pious brother Alyosha. Ivan’s contention is that no salvation, no ultimate forgiveness, no paradise is worth the suffering of humanity on Earth, especially that of its innocents.
“I don’t want harmony. From love for humanity I don’t want it. I would rather be left with the unavenged suffering. I would rather remain with my unavenged suffering and unsatisfied indignation, even if I were wrong. Besides, too high a price is asked for harmony; it’s beyond our means to pay so much to enter on it. And so I hasten to give back my entrance ticket, and if I am an honest man I am bound to give it back as soon as possible. And that I am doing. It’s not God that I don’t accept, Alyosha, only I most respectfully return him the ticket.”
“That’s rebellion,” murmered Alyosha, looking down.
“Rebellion? I am sorry you call it that,” said Ivan earnestly. “One can hardly live in rebellion, and I want to live. Tell me yourself, I challenge your answer. Imagine that you are creating a fabric of human destiny with the object of making men happy in the end, giving them peace and rest at last, but that it was essential and inevitable to torture to death only one tiny creature—that baby beating its breast with its fist, for instance—and to found that edifice on its unavenged tears, would you consent to be the architect on those conditions? Tell me, and tell the truth.”
“No, I wouldn’t consent,” said Alyosha softly.
“And can you admit the idea that men for whom you are building it would agree to accept their happiness on the foundation of the unexpiated blood of a little victim? And accepting it would remain happy for ever?”
It’s not my position that you should stop using Amazon or Facebook. As Ivan says, “one can hardly live in rebellion, and I want to live.” But the people who have stopped using Amazon and Facebook on moral grounds have a case that cannot be ignored, just as vegetarians and people who boycott Chick-Fil-A and Walmart and companies that advertise on Fox News cannot be ignored.
Amazon, Facebook, and many other companies that have made a killing on the web while treating their workers with contempt need to change. Or something else does. It’s too high a price to pay.
More Things to Read
A few really interesting Jeff Bezos anecdotes this week!
Y Combinator’s Sam Altman said that Bezos told him that we don’t have enough human beings to fill all of the jobs that need filling, making robots and other AI necessary. “It'd be great for every student to have an individual teacher, it'd be great for every time you go into a doctor's office never to be waiting and there's plenty of doctors ready for you.”
At an internal all-hands meeting in March 2018, Bezos told Amazon employees that other companies should stop being so afraid that Amazon is going to dominate them and steal their business.
Bezos responded that concerns [about Amazon stomping out competition] are raised “all the time” and often gets exaggerated because it's a “juicy” media story. He laughed at the fact that some company stocks even dropped on rumors of Amazon getting into a new field, shrugging off those effects as “very short term.”
“In real life, there's room for lots of winners,” Bezos said, in a recording of the meeting that CNBC has heard. “In fact, the sky does not fall for these companies.”
(This dovetails nicely into my “Amazon is a good partner” theory. Amazon does not want to be seen as the company that eats alone.)
At a private talk at the Yale Club, Bezos lightly trash-talked some of his spacefaring competitors and talked up his vision of humanity spread throughout the solar system, while raising the slightly frightening prospect of “a Mark Zuckerberg of space”:
I've witnessed this incredible thing happen on the internet over the last two decades. I started Amazon in my garage 24 years ago—drove packages to the post office myself. Today we have 600,000-plus people, millions and millions of customers, a very large company.
How did that happen in such a short period of time? It happened because we didn't have to do any of the heavy lifting. All of the heavy-lifting infrastructure was already in place for it. There was already a telecommunication network, which became the backbone of the internet. There was already a payment system—it was called the credit card. There was already a transportation network called the US Postal Service, and Royal Mail, and Deutsche Post, all over the world, that could deliver our packages. We didn't have to build any of that heavy infrastructure….
How do you get that kind of entrepreneurial [advancement] in space? You need to lower the price of admission right now to do anything interesting in space because it requires so much heavy lifting and so much infrastructure development. The entry price point for doing interesting things is hundreds of millions of dollars. Nobody is going to do that in their dorm room. You can't have a Mark Zuckerberg of space today. It's impossible. Two kids in their dorm room can't start anything important in space today.
I want to take the assets that I have from Amazon and translate that into the heavy-lifting infrastructure that will [help] the next generation to have dynamic entrepreneurialism in space—kind of build that transportation network. That's what's going on, that's what Blue Origin's mission is. If we can do that, then the whole thing will take off and there will be thousands of companies doing creative things.
Oh, That’s Right: The FTC Exists
This week, the Federal Trade Commission brought its first case against a company buying up fake paid reviews on a retail website—guess which website it was! Our pal Amazon!
The FTC alleges that the defendants paid a website, amazonverifiedreviews.com, to create and post Amazon reviews of their product. The FTC contends that Jacobowitz told the website’s operator that his product needed to have an average rating of 4.3 out of 5 stars in order to have sales and to, “Please make my product … stay a five star.”…
The FTC’s complaint also alleges that the defendants made false and unsubstantiated claims on their Amazon product page, including through the purchased reviews, that their garcinia cambogia product is a “powerful appetite suppressant,” “Literally BLOCKS FAT From Forming,” causes significant weight loss, including as much as twenty pounds, and causes rapid and substantial weight loss, including as much as two or more pounds per week.
This is like the bare minimum of what the FTC is supposed to do as part of its mission to protect consumers and fair trade, so it’s nice to see the commission break a sweat, I guess. It will really depend on how committed the FTC is to seeing these cases through in the future whether it actually makes a dent in the scourge of fake, bought, and otherwise fraudulent reviews on the site.
The same week, however, the FTC approved Staples’ offer to buy up one of the two wholesalers that sell office supplies to independent stores, giving Staples huge leverage over their local competition. This has implications for Amazon, as Stacy Mitchell writes for Washington Monthly:
A final risk, perhaps the most serious, is that this merger will accelerate Amazon’s push to dominate the office supply market, including its bid to capture the spending of thousands of cities and school districts, which my organization reported on last year. While Staples and Office Depot offer little to differentiate themselves from Amazon among these customers, independent dealers have distinct strengths that Amazon cannot match. Yet the FTC seems happy to weaken them as viable competitors.
If anything, Wired’s headline noting that “Critics Are Wary of the FTC’s New Tech Antitrust Task Force” is a huge understatement.
“I’m scornful of the new seating arrangements, because the FTC has consistently proven they do not want to wield power,” says Matt Stoller, a fellow at the Open Markets Institute, an antimonopoly think tank that has called for a breakup of Facebook. “They want to hold hearings. They want to get their friend economists and antitrust lawyers to fly into DC and talk to each other. They don’t want to do their No. 1 job, which is to police markets for unfair and anticompetitive behavior.”
Even with the Trump administration making itself an avowed enemy of Jeff Bezos and his companies, I don’t see the FTC doing anything to rein in Amazon. As I’ve written in this newsletter before, we just don’t think about monopoly power in the United States the way that we used to. And everything about how Amazon is built is designed to take advantage of the reigning pro-consumerist interpretation of antitrust law in the United States.
HQ2: Still Mad About It
New York governor Andrew Cuomo called Amazon’s withdrawal from the Queens deal “the greatest tragedy that I have seen since I have been in government.” I don’t want to list all the actual enormous tragedies since Andrew Cuomo became an assistant district attorney in 1984, but you can just imagine a few of them for yourself and play them back in your head if you want to.
James Patchett, president of the New York City Economic Development Corporation, blamed a misunderstanding of the $3 billion in tax subsidies New York City was offering Amazon to build its second headquarters in Queens, plus some misunderstandings on Amazon’s part. “They didn't perform particularly well at their public hearings. They never hired a single New Yorker to work for them, to talk to New Yorkers and never really connected with people in the city.” (Amazon did hire some NYC-based lobbyists, but one suspects that Patchett is suggesting the company hired the wrong set of people to get the deal done.)
Barry Ritholtz has a fine riposte to the continued debate over the $3 billion subsidy: “As a fire-breathing Wall Street working capitalist, my instinct is to say: Build your own fucking HQ on your own goddamned dime. I say that with no disrespect—it’s the same thing I have been saying to the corporate welfare queens who run Wal-Mart and McDonalds; to the wimpy Football team owners too poor to build their own stadiums; to the chicken-shit cowards who ran Wall Street banks pretending to be capitalists, but all the while turned out to be commie pinko bastards the moment the going got tough.” Ritholtz also observes that Bezos pulled out of the deal rather than get humiliated by New York State Senator Michael Gianaris, which seems plausible to me.
Gianaris has an interview with New York magazine and The City where he contrasts New York’s process with Virginia’s: “Starting at the end of 2017, I could not get a phone call returned (from state officials). Three or four times I tried. I was trying to get information and express myself as to what might be necessary to be part of this thing before it was too late, and there was no willingness to engage… Virginia, by contrast, had a very different process. It’s instructive to look at what they did. They established a committee that included members of the legislature, stakeholders; it wasn’t just the governor and the mayor. They were involved in creating the bid, in proposing the bid, and so there was a lot more buy-in with the relevant people in that state all along the way. That did not happen here. This was a deal done in secret that was then presented as take it or leave it.”
A number of Virginians aren’t happy with their HQ2 deal either. “For Us, Not Amazon” is a coalition of stakeholders concerned with gentrification, Amazon’s anti-union policies, the company’s work with ICE and other branches of the federal government, and the tax breaks the company is receiving as part of the deal. The problem northern Virginia faces is that its politicians don’t currently seem as frustrated or as motivated as the grassroots activists, which gives them less leverage to stop or change the deal.
I Didn’t Know That
Amazon Aurora is a relational database service built for the cloud and offered as part of AWS. Hacker News surfaced a blog post by Lu Pan that makes Aurora sound, well, awesome:
Now you can imagine you have a MySQL instance that would never run out of space. Huge efficiency wins can come from the compute storage decoupling. If your use case is space bound on MySQL today, you can imagine having ten times the storage nodes while keeping the database nodes the same.
Writes are faster because you only need to append the update to log before Aurora acknowledges the write. So, it strictly does less work up front comparing to MySQL. Besides, since the disaggregated storage itself is now replicated and distributed, the database has a better chance to avoid hitting performance outliers from disk or flash.
Voice Interface is the Future
For one thing, Engadget and The Wirecutter imagine that most households will have lots of voice-capable devices distributed throughout the home. Forget three screens and a cloud; this is a continuous microphone and the cloud.
What’s more, many of these microphones will be attached to screens. Skills will be multimodal, relying on speech, touch, and vision.
Voice will be a mechanism you can use to deploy code. This is some Star Trek Enterprise shit. State a command, and the computer (or the computer in the cloud) just goes.
Voice assistants will be integrated with wireless networks and wireless control routers. The obvious place this will happen will be between Alexa and eero, but Amazon is already integrating its Alexa technology with Qualcomm’s wi-fi tech and other third parties.
I said before that I thought Alexa integration with eero would probably take a while, because the product teams would need to be blended, the proper architecture would have to be sketched out, etc., and yeah, well, I might have been wrong about that. This could all happen very, very fast.
Amazon and its partners continue to invest in Alexa-based companies, whose only job is to think of the next, coolest voice-activated computer shit we might all find useful and/or fall in love with.
Cedars Sinai is putting Alexa devices in patient rooms. Now, while I am skeptical of Alexa in hotel rooms, for what I hope are obvious privacy-based reasons, Alexa in hospital rooms, assuming the proper HIPAA guidelines are being followed, could be very powerful. Having recently spent some time in a hospital, the ability to do computing by voice in that context could be liberating and transformative. Even just entertainment and information services delivered via Alexa could be a huge upgrade to most of the current systems now available. If you add the ability to do genuinely cool things with patient care, being able to access your own medical records, page a nurse or physician, etc., etc., things start getting very interesting.
A new Adobe report says that consumers find voice ads less intrusive than other kinds of ads. Which means the voice skills of the future might have a natural revenue stream.
All of this depends on the strong association of a human’s voice with their identity graph, and the ability of companies like Amazon to gather up enough data about you (what you buy, what music you like, what sports teams you prefer, everything that Echo machines are gobbling up every minute of every day) to uniquely identify you and present you with a relevant and compelling marketing experience. Look at what Amazon’s offering with its new Personalize service for AWS to offer individualized product and content recommendations in real time. It is wild.
This also means that we need to build guardrails in place to protect consumers and their data. We need what Stacey Higginbotham calls a consumer bill of rights for connected devices. The following should be explicitly known and agreed to in any home use of the internet of things:
Expiration date: When can I expect my device to stop updating?
Sensors, especially in cameras or microphones: Where are they, and how many of them are there?
What data is shared, and with whom: “Companies should disclose early on in the buying process what data gets sent to the device maker and to third parties. And those companies should know how it's used.”
How long that data is kept: “I've asked both Google and Amazon how long they keep our utterances data, and both said they keep it until the user deletes it. So, basically, we are back at square one on this issue.”
Two-factor authentication: Consumers need to be protected against themselves from reusing passwords and leaving themselves open to hackers and other abuse.
It’s going to be a difficult adjustment, but this is our new world. Whether or not Amazon and other companies take steps to secure their devices and our data will dictate whether it’s a paradise or a nightmare, or both at once.
Well, that should be plenty to tide you over for the week. Unless news breaks that can’t wait, we’ll see you again next Wednesday. If you liked the newsletter, please send it to a friend; if you loved it, please consider subscribing. If you have a tip or anything else to share, you can always reach me securely by email or Signal by following the link below.