So when you think of Amazon,
you probably think of this ugly website
or maybe Amazon buying Whole Foods
and making avocados cheaper.
But Amazon also sits behind a huge portion of the internet.
It dominates the server side computers
that make the internet work.
Right now, you're probably watching this video
on a computer or a phone. But when you click “play,”
it isn't just your computer that's doing the work.
There's another computer somewhere out there in the world
that's sending the video to you,
playing it along with you from hundreds of miles away.
And a lot of those computers are run by Amazon.
Most people online have no idea they're there.
You only see them when you look at the big picture.
So what do those computers look like?
They mostly look like this,
a loud room with a ton of server racks.
But while you might expect that Apple servers
are run by Apple and Netfix's servers are run by Netflix,
the reality is weirder.
See, if your servers are just all in one room,
then any network problem between you
and the rest of the internet can
bring down your whole system.
So you want to give people as many ways
to reach your website as possible,
which means a whole constellation of servers
all around the world.
That's where host networks like Amazon Web Services come in.
AWS has dozens of data centers in strategic points
all around the world.
It's a kind of secondary internet that's completely
controlled by Amazon.
If someone in Chicago wants to watch Stranger Things,
and the Ohio fiber is tied up,
they can get it from Oregon.
If Oregon's tied up, they can get it from Quebec.
You've probably heard of cloud computing,
and this is what it means.
It's not some abstract cloud;
it's just a bunch of warehouses full of thousands
of servers networked together
and rented out piece by piece.
You can buy a big piece, like Netflix and Apple,
or a tiny piece for a single website or piece of code.
That flexibility has made AWS
one of the biggest forces on the web,
controlling as much as 40 percent of the programs
running in the public cloud.
When you take that 40 percent away,
the internet starts to look really different.
Want to watch Netflix?
Too bad, it's gone.
Same thing with Uber, Expedia, Yelp,
Pinterest, and tons more.
This isn't just hypothetical.
AWS still has regional blackouts sometimes
if the system gets misconfigured.
They're usually fixed within an hour or two,
but while it lasts, you're stuck with companies
like Facebook and Google that are big enough
to build their own server networks.
So how did Amazon end up owning most of the internet?
Through the ‘90s, Amazon's web team was just devoted
to making sure amazon.com loaded fast
and didn't go down.
They got good enough that in 2000,
they started to sell that system to other companies.
So if Target or Walmart wanted to get into e-commerce,
Amazon could build them an online store
using the same technology.
From there, the services kept getting
more basic and fundamental.
AWS officially launched in 2006 just storing files.
A few months later, they launched the ability
to run programs remotely.
They just kept growing, adding more features
and data centers and users until it became
the monster we know today.
It's hard to say how an online store ended up
dominating the server market while competitors
like Oracle and IBM fell away.
But the simple answer is that while other companies
got good at making deals and filling contracts,
Amazon treated server time like any other product,
making it as fast, cheap, and fluid as possible.
Now, cloud computing is still really competitive.
Microsoft’s Azure service is nearly as big as Amazon,
and Google’s in there fighting for more business, too.
But AWS is still basically the gold standard,
and it's become a really profitable business
for the company.
In the first quarter of this year,
AWS brought in $7.7 billion in revenue,
roughly half the company's profit.
So what does Amazon do with all that money?
Well, the nice thing about being a massive
multiprong company is that you can use
profitable parts of the business to funnel money
to other parts that are still mature.
For Amazon, that means growing services like Amazon Prime
or launching new products under Amazon Basics,
which can be priced so cheap
that they drive competitors out of business.
That's kind of awkward for Netflix,
which is indirectly funding Amazon's
competing streaming service under Amazon Prime.
But it seems like it's worked out so far.
When Amazon bought Whole Foods in 2017,
that same dynamic was on full display.
Whole Foods is always going to be more expensive
than your local grocery store,
but Amazon lowered prices up front
to reel customers in.
And because they had billions of dollars
pouring out of the server business,
they could afford to.
What does that mean for you?
Well for one, it means when AWS does go down,
most of the internet just disappears.
But as long as it keeps working,
Amazon's basically printing money and pouring it
into other Amazon products,
which means your Netflix binge ends up
making your avocado a little bit cheaper.
Thanks for watching. If you want to know more
about Amazon and their stranglehold on the avocado industry,
we have a whole other video about their attempt
to start a headquarters in New York
that ended up not working out.
And as always, like and subscribe
and eat avocados.