How Google Can Eat Amazon's Lunch


I can’t believe I’m going to do this, but I’m going to do it.

Yesterday, Dave Winer ranted about how blogs have become an ecosystem of recycled conversations about an original thought that happened long ago. Even so, I am going to talk about a post that Dave Winer wrote this weekend.

No, not that post, the one about the pig in Walnut Creek. Winer stops at a traffic light and a pig tells him (I know, that part makes no sense to me either — if you get it, please fill me in) that Google is going to move into the kinds of web services on which Amazon built its amazing turnaround. Only for free.

Maybe this talking pig thing is some uncharted territory in deep backgrounding, or maybe it’s a very useful hallucination. Either way, Winer is really onto something. And if Google wants to secure its dominance of all things Internet, even in the face of flat clickthrough rates or a brain drain, it had better find that pig — fast.

The real juice of the idea isn’t in the post itself, but in something that Winer went in and wrote in the comments.

“Google until they came up with their text ads had no business model other than VC, and they managed to take over an industry with that approach. I don’t see why Amazon charges me for my use of AWS… I’d use their services for new things if there was no cost to it. I think perhaps that’s what Google is thinking, acquisitions. How much would it be worth it to them to buy companies without having to transition their technology to their cloud? I think if that’s how they’re thinking they’re smart to approach it that way. “

When I read that, my mind flashed back to an interview I conducted last year with an executive at Amazon’s web services. In the interview I speculated aloud that what Amazon was doing was a lot like what corporate VC arms like Intel Capital do — invest in startups with which they will work — or buy — later on. Only instead of using hard cash, they were using infrastructure. Very shrewd, I said.

The executive’s response was that Amazon was not doing that at all, and that it would never do that with web services. I thought but didn’t say: Well, if you don’t do it someone else will.

Now some pig is saying that Google is doing it. As valued Google workers pack up their desks and launch new startups, this is the single best strategy for Google to bring them back into the fold. And it’s a great way to pull the rug out from under Amazon, strategy-wise and profit-wise.

While not exactly an original thought, it may be something for blog superdelegates to chew on.



Couldn’t google eat amazon’s lunch just by cutting them out of their index?


Google needs to launch competition to eBay. They are the only ones that can do it… eBay is screwing everyone…

Television Voyeur

Good read, interesting to see where this all goes. I’m not sure they’ll venture into the web services game in regards to Amazon’s services. I mean I’d like to see them do a free version of S3 – it is very possible since Google holds the majority of bandwidth, but something tells me that they wouldn’t be willingly to do it for free – it doesn’t make good business sense. How do you monetize that as well using banners?


Employees and companies have been doing this for a long, long time. It’s not new to Google or Amazon.

Brian Magritte

Ben Macalester,

I don’t like to be playing kindergarten teacher here, but you could have made the same — quite interesting point — without resorting to name calling or hostility. I’m not sure what that accomplishes, and a change in tone definitely detracts from this interesting debate.

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Mark Sigal

A big part of me wonders with the commoditization of the CDN space, why Google doesn’t move into this space, tier out a set of free or ad supported infrastructure services (e.g. video, photo hosting, social networking, commerce) and offer premium versions with guaranteed throughput and no ad support restrictions.

Forget the M&A and go after the developer universe. After all, he who wins the hearts and minds of the developer ecosystem secures the gold. Google owns consumers and marketers, but what about developers?

Besides, knowing what apps and what functions are popular and what types of users fall into what buckets is also incredibly valuable from an engagement metrics perspective.

A bit off topic, here is a post on the Google M&A game, “So you think you’re Google-worthy?

Check it out if interested.


Ben Macalester


If you think Amazon’s “turnaround”, and I believe you are reffereing to the valuation, is based on its web services business you are an idiot. They sell stuff. Web services is a small line item the with little added cost, not the entire buiness model. You should change the title to “How Google can Eat Amazon’s After Dinner Snack” and save your dramatic overstatements for your blog.



I think the GCloud is inevitable and the possibility of it being a freemium offering in contrast to Amazon’s pay for AWS is highly likely given the history with plays like Google Apps. Doing this economically however is tricky, I have written up some thoughts about how it could work referring to existing posts by Google super developer Steve Yegge :

Interesting times



@Ed Anuff: couldn’t have said it better myself! You’re absolutely right. Sometimes I want to pay for a pure service, as opposed to worrying how the company offering the service is creatively monetizing my business!

Kevin Kelleher

@Dave: Yes, the photo was trippy. But do they serve pork at that restaurant?

You’re probably right that it’s driving Microsoft’s lust for Yahoo. But will it work, filtering it through both companies’ reputations? I’m guessing the hierarchy of trust goes like this: 1) Amazon (no strings attached), 2) Google, 3) Yahoo, 4) [whoever], and finally 5) Microsoft.

@Ed: Agreed that the fewer strings the better, but lots of startups don’t object to the demands (acquisition leads or otherwise) that the financial investments from their VCs extract. What if free infrastructure merely opens an interesting door? Or at least a known one, for Google alum?

That said, the scenario you propose makes a lot of sense.

Kevin Kelleher

@Mike: They can do the same for my cheap advice. Which only proves that any good idea has its limits.

Ed Anuff

I think it’s an intriguing idea. However, unlike Dave, I like to understand the business model behind my infrastructure suppliers, and I’d find a “charity” service from Google that’s designed to get a lead on acquisitions or has strings attached in the form of mandating monetization through Google ad programs worrisome. Now, if Google were to offer cloud computing services with a commercial SLA and a fair pricing model, like Amazon does, but chose to offer aggressive entry-level pricing, including free for small projects as Dave wants, then they’d have something compelling that people could use to launch new types of products but which could have a growth path that would make it safe for people to build their businesses on.

Om Malik

@ Dave,

Thanks for the piggie-story :-) Good post you wrote, and Kevin extended. I hope someone else chimes in soon as well.

Dave Winer

There’s no significance to the little pig, I just happened to have finished eating at a restaurant that had pig dolls and statues everywhere and I had taken a pic of a really trippy pig, and so I formed the story around the pig. I almost always use animals for these pieces, I like to use a bird, that lands on my shoulder and whispers something in my ear. Or sometimes a Fedex truck that rolls over a speed bump in front of my house and something falls off the back of the truck. Otherwise the stories are kind of dry and I like to spice them up a bit.

BTW, this idea was what was behind XML-RPC, which was hatched with some guys at Microsoft and acquisitions was very much part of the strategy until it got taken over by numerous committees and became to complicated for it to be anyone’s strategy.

I’m pretty sure this is the idea driving Microsoft’s acquisition of Yahoo, they want Yahoo to fold into MSN of course and the advertising business, but what they really want is a running start with the Internet dev platform. Google couldn’t possibly be missing that, and I think you’re right, Amazon isn’t placing any value on it at all, but they’re still the ones to beat, the only one with a product in this this space right now.

Say hi to Om for me and keep up the good work. You guys have great energy. Love, Dave

Mike Klein, MD

I work down the street from Google. If they provide free lunch for me everyday at Google Cafe, they can overhear all my ideas for free…

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