A Commentary on the Uber/Amazon Acquisition: Where Amazon Went Wrong

Article: Uber opening robotics research facility in Pittsburgh to build self-driving cars.

http://techcrunch.com/2015/02/02/uber-opening-robotics-research-facility-in-pittsburgh-to-build-self-driving-cars/?ncid=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29

A Commentary on the Uber/Amazon Acquisition: Where Amazon Went Wrong

Uber has finally acquired Amazon for 15 billion dollars; a small sum when you think about how just a handful of years ago Amazon was one of the leading companies in the competitive game of the Product to Consumer Market, also known as the PTC market. Uber took the world by storm, dominating this field to a complete yet ingenious monopoly that overtook companies we thought were guaranteed a profitable stake in the future. I take a look at where Uber excelled and where Amazon went wrong through poor investment choices and lack of foresight.

It was in 2015 when Uber, who was at the time an app-based taxi transportation network, invested in starting a robotics lab to focus on the development of self-driving cars. Uber went into the game headstrong, opening up a lab in Pittsburgh, hiring Carnegie Mellon’s brightest engineers from the cutting edge Robotics Institution, to work closely on building a safe and commercially viable automotive driving experience. They poured incredible investment into this project. This in itself was a clear-cut statement, open to the word, that Uber was serious in their aims to dominate the transportation market. It seemed many were skeptical considering the fact that the larger company, Google had already years of investment in the very same field. At the time, everyone had assumed that Uber was doing this so that they could bring people to their desired locations by simply requesting a driverless vehicle and shuttling passengers around. But in fact Uber had something much timelier in store.

Just a few years later in 2018, Uber came out with their UberZ, a self driving pod that didn’t shuttle around people as everyone had anticipated, but instead transported objects and things. Why was this a brilliant move on Uber’s part? Because they cut regulatory restrictions in half and brought something to market ASAP. Driving people around has a much higher responsibility, extensive safety measures, legal precautions, and extremely costly insurance implications. Extensive measures must be taken place to ensure that any self-driving vehicle is safe and fit for human passengers to be released for public use. This in itself could take several additional years before anything would be approved or thought of as safe in the minds of the public. Uber knew this very fact, and wanted to find a way to encourage the notion of a driverless device to the world as quickly as possible. Thus, Uber came to the brilliant foresight of transporting things rather than people. By opting to shuttle objects around instead, Uber was able to avoid several regulatory restrictions as well as ease the mind of society’s apprehension on the very idea of a driverless vehicle. Essentially they found a loophole where they released to the public a driverless service in a whopping 3 years time. Additional they saved tremendous costs in insurance by creating relatively small and fragile pods that had the capacity to self-sacrifice rather than cause harm to any living individual.

This led to the brilliance of Uber’s epic pivot from a taxi service to a delivery service. By 2020, Uber has dominated the realm of delivery goods across the nation. UberZ’s started small by delivering grocery goods, and packages. But soon it expanded to larger shipments including all Amazon Prime deliveries. Ups, Amazon’s past shipping partner could no longer keep up with Uber’s low shipping costs. Self-driving cars are fully released to the public by 2022 and approved for wide spread use. Uber was successfully able to champion the driverless car age by getting a huge head start amongst all the rest. Before we knew it, Uber had the most interconnected and effective transportation network for distribution of goods.

Now what did this mean for Amazon? Amazon reluctantly found themselves completely dependent on Uber services. While Uber was working in the robotics lab, Amazon was investing on things like Amazon Fire-Stick, Kindle and Echo, trying to dominate the content distribution market. While they are valid products, Amazon didn’t have the foresight into looking how tangible distribution services could affect their business. As Uber became increasingly notable as an incredible delivery service of goods, Amazon felt legitimate pressure partner with Uber to uphold their high standard of cheap and speedy shipment of products. And without Uber’s services, Amazon would be unable to uphold that standard. UberZ’s became a necessity. Naturally, Uber was well aware of this fact, and considering Amazon is about 43% of all shipping goods in the US, Uber made it clear that Amazon would need to cough up additional service fee if they wished to continue with Uber Services. Additionally, Uber had the power to control the speed at which products were delivered to their customers, leverage that Amazon did not have against Uber. Uber had and continues to have control over how fast products are delivered and which products to carry. Over time, Uber began carrying and delivering products from different vendors and similarly vendors starting ending contracts with Amazon in order to have access to UberZs. Soon Uber was able to start a little consumer products market of their own. And now here we are; 2025, only ten years later with a disappointing acquisition of a company that we all thought would certainly be around for years to come.

This certainly happened because Uber was incredibly clairvoyant. They saw an opportunity for domination and took it. The idea of PTC Neutrality is now in the books, but has less prevalence than the once thoroughly talked about Net Neutrality. Can something like PTC Neutrality exist when clearly Uber is a service and not a utility? That debate has yet to come. But in the meantime we can learn from Amazon’s mistakes and aim to think ahead toward the future of business, rather than focus on present demands of consumerism.

Advertisements

One thought on “A Commentary on the Uber/Amazon Acquisition: Where Amazon Went Wrong

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s