The culture wars part 2: Cloud service providers are destroying their franchises (AMZN, TWLO, ZEN, GDDY, NET)

If you follow mainstream media, you might get the wrong idea and believe that the Big Tech companies will only deplatform conservatives or far right / white supremacist / neo-Nazi / extremist content.  This is a dangerous misconception.  Part 1 in this series gave the example of Ravelry, whose founder was attacked with lies despite following woke ideology.  If a woke transwoman can be cancelled, nobody is safe from cancel culture.

This phenomenon is extremely problematic for Amazon Web Services (and other companies providing cloud services) because the company forced Parler offline (and damaged Parler’s reputation).  Smart AWS customers will eventually figure out that they should avoid using AWS for mission-critical infrastructure.  AWS could lose most of its customer base unless it dramatically changes course.

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The progress of woke culture affects who’s safe and not safe

In the early stages of a woke takeover, the woke will confine their attacks to extremists.  For example, many tech companies de-platformed the conspiracy theorist Alex Jones and white nationalist websites such as Stormfront and the The Daily Stormer.

In the next stage, once everybody understands that cancel culture is effective, woke activists go on to attack those critical of woke politics.  Critics are the woke bullies’ most dangerous enemy because the critics threaten the bullies’ social power.  This is why the Proud Boys (a group highly critical of Antifa and wokeness) are smeared far more often than actual white supremacists like Richard Spencer.  Spencer was “only” punched in the face.  Proud Boys have been beaten and stabbed; one of their Patriot Prayer friends, Jay ‘Aaron’ Danielson, was murdered by an individual who self-identified as Antifa.  (To be fair, murder is a bit of an outlier because it does not align with the values of most Antifa activists.)  In the first presidential debate, Joe Biden used the Proud Boys as an example of a white supremacist group rather than an actual white supremacist group like the KKK.

To the less informed, it might seem like woke activists only go after conservatives, the far right, neo-Nazis, racists, white supremacists, etc.  Woke propaganda actively encourages this misconception and the illusion that everything is ok.

In this intermediate stage, the woke activists also engage in performative social justice and go after people who did not do anything particularly wrong (e.g. Parler).  As a company, Parler did not engage in partisan politics or speak out against woke politics.  The only thing that Parler did “wrong” was to create a neutral platform that became popular with hardcore Trump supporters and right-wingers banned from Twitter.  Woke activists decided to target Parler because they could portray Parler as a fictitious cesspool where evildoers incited the January 6 violence on Capitol Hill.  This is a problematic form of targeting because it targets companies with reasonable and mainstream viewpoints.  Many American companies don’t have woke viewpoints and could be targeted under these social rules.

Mainstream woke culture is not at the infighting stage yet

Woke cultures tend to devolve into infighting once they are done fighting their critics and their ideological enemies.  The knitting world example of Ravelry was discussed in part 1.  Once infighting happens, nobody is safe because public displays of wokeness (e.g. coming out as transgendered, persecuting Trump supporters by banning them from Ravelry) does not protect somebody from being cancelled.

In university settings, the woke have begun to discriminate against Asians and Jews.  These new practices go against their old ideology, which would consider those groups to be historically oppressed.  Jews and Asians can be ‘problematic’ because they have been highly successful in merit-based systems, e.g. hiring professors based on competence rather than identity group characteristics.  If Jews and Asians are considered to be white (because they supposedly absorb high levels of white supremacy from their environment), opportunities can be taken away from whites/Jews/Asians and given to other racial/cultural groups.

See:

• The ‘Whitening’ of Asian Americans
• Are Jews White?

Once the infighting begins, I think that everybody will see the problem with corporations causing unnecessary harm to their customers.

AWS customers don’t see the danger ahead

At the moment, it seems that the majority of AWS customers mistakenly believe that they are safe.  On message boards for the IT community such as the subreddits r/AZURE r/cloudcomputing r/Cloud r/aws, there is very little discussion about the implications of AWS cancelling Parler and not giving the company time to switch vendors without a business interruption.  One of the threads in r/sysadmin contains 2 comments (here and here) regarding the situation:

It certainly means that I wont choose AWS any time I have the option. I feel uncomfortable using a provider whose policies let them terminate accounts for content that they disagree with.

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I think it sets a dangerous precedent.

Imagine getting a phone call that AWS cut you off. What happens to your business?

(I don’t want to get into what Parler was or wasn’t doing, this could happen to ANY business they deem unsavory.)

Most of the commenters in that thread argued politics and did not discuss their opinion on the precedent set by AWS.  At the moment, AWS customers see cancel culture as a non-issue for them and think that they are safe.

Switching away from cloud software is a problem

In addition to offering commodity servers and commodity data center space, Amazon Web Services also offers proprietary software that integrates into its AWS ecosystem.  Switching away from this proprietary software will require developers to integrate software from another vendor.  This is an expensive process because it takes time for programmers to integrate the new software into their platform (e.g. days, weeks, a month, etc.).  The actual time needed to switch vendors will depend heavily on the level of integration with Amazon’s proprietary software.  (Parler’s integration seems to be extremely low.)  Because AWS customers do not own their servers and software licenses, Amazon has the power to pull critical infrastructure from its customers.

The disadvantage of vendor lock-in creates a massive incentive to avoid purchasing proprietary/non-commodity software services from Amazon.

The same problem exists for companies that sell subscription software hosted on cloud servers.  Zendesk (NYSE:ZEN), Twilio (NYSE:TWLO), and Okta have cut off service to Parler according to this article.  These companies are setting a dangerous precedent for themselves if their customers become better informed and decide to make rational business decisions.

Unrelated to Parler, the domain registrar Godaddy (NYSE:GDDY) has cut off service to the gun enthusiast website AR15.com / ARFCOM (available at ar15-backup.com).  Because most domain registrations cost less than $15/year, website owners may decide to go with competing domain registrars who do not offend them politically and do not harm their customers with service interruptions.

Cloudflare (NYSE:NET) is another company that has a history of dropping controversial customers such as 8chan and The Daily Stormer.  However, their service is not entirely critical for their customers.

The culture wars will probably get sillier

Obviously, causing great damage to your customers’ business is not a good strategy.  Amazon could have given Parler a grace period to switch vendors.  It chose not to do so.  ¯\_(ツ)_/¯

Historical experience suggests that the situation will get even sillier.  Evergreen College did not fire George Bridges (who played a role in Evergreen going woke, ordering police to stand down, and allowing students to patrol campus with baseball bats) and allowed enrollment to drop from 4,225 in 2015 to 2,209 in 2020.  Ravelry has not reversed its policy on Trump supporters being banned from their service (that policy began in June 2019).  Some CEOs simply want to engage in the virtue signalling of performative social justice.  Others will go along with woke nonsense because they are afraid of being cancelled.

It is unlikely that Amazon Web Services has reached peak wokeness.  (Jeff Bezos owns The Washington Post, a newspaper which has gone woke.)  As absurd as the current situation is, the situation will likely become even more absurd in the future.

Put options are available on AMZN stock

Fundamentals, profits, and common sense occasionally cause stock prices to move.  While fundamentals did not matter in 2020, this time could be different.  There’s a chance that AWS customers and investors wake up to the dangers ahead.

In practice, there’s a high chance that everybody ignores the problem until it blows up on them.  Most tech companies are dominated by woke liberals so there are political reasons for many AWS customers to ignore their tribe’s self-destructive behaviour and the danger that they face.  As far as investment analysts go, a deep understanding of America’s culture wars is generally low because intersectional identity politics and social justice bullying is not very popular in investment circles.  I don’t know of anybody on finance Twitter who lists their preferred gender pronouns.  However, it is highly likely that the culture wars will explode in a way that causes AWS to cancel another customer and trigger an AWS exodus.  It will probably happen but I don’t know when.

Eventually, I would expect Amazon to reverse its course because activist shareholders can theoretically fire management.

 

*Disclosure: I own a single out-of-the-money put option on AMZN.

 

 

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Amazon’s statements on Parler

Amazon has not released an official statement on Parler as far as I know.  However, a Buzzfeed News article claims to have a copy of an email Amazon sent to Parler:

Dear Amy,

Thank you for speaking with us earlier today.

As we discussed on the phone yesterday and this morning, we remain troubled by the repeated violations of our terms of service. Over the past several weeks, we’ve reported 98 examples to Parler of posts that clearly encourage and incite violence. Here are a few examples below from the ones we’ve sent previously: [See images above.]

Recently, we’ve seen a steady increase in this violent content on your website, all of which violates our terms. It’s clear that Parler does not have an effective process to comply with the AWS terms of service. It also seems that Parler is still trying to determine its position on content moderation. You remove some violent content when contacted by us or others, but not always with urgency. Your CEO recently stated publicly that he doesn’t “feel responsible for any of this, and neither should the platform.” This morning, you shared that you have a plan to more proactively moderate violent content, but plan to do so manually with volunteers. It’s our view that this nascent plan to use volunteers to promptly identify and remove dangerous content will not work in light of the rapidly growing number of violent posts. This is further demonstrated by the fact that you still have not taken down much of the content that we’ve sent you. Given the unfortunate events that transpired this past week in Washington, D.C., there is serious risk that this type of content will further incite violence.

AWS provides technology and services to customers across the political spectrum, and we continue to respect Parler’s right to determine for itself what content it will allow on its site. However, we cannot provide services to a customer that is unable to effectively identify and remove content that encourages or incites violence against others. Because Parler cannot comply with our terms of service and poses a very real risk to public safety, we plan to suspend Parler’s account effective Sunday, January 10th, at 11:59PM PST. We will ensure that all of your data is preserved for you to migrate to your own servers, and will work with you as best as we can to help your migration.

– AWS Trust & Safety Team

The “concerns” about violence seem to be a red herring because both Facebook and Twitter continue to provide platforms for Antifa groups like Rose City Antifa.  Twitter even censored tweets and videos from Donald Trump telling his supporters to go home.  The censors and cancellers don’t actually care about violence if it happens to the “right” people.  They probably don’t even care about right-wing violence because there has been little discussion about Nick Fuentes, TheDonald.win, 4chan, 8chan/8kun, Infowars, and platforms which spread right-wing viewpoints.

It seems to me that Amazon panicked and made a very rushed decision to avoid being cancelled.  (I don’t think it was about virtue signalling because Amazon could have released a statement bragging about how they yeeted Trump supporters off their servers.)  In doing so, AWS risks destroying its entire franchise.  The new social rule is that woke activists can demand products and services to be cancelled if they happen to be popular among the woke’s ideological enemies.  This is similar to Fred Perry stopping production on one of its clothing products because it was popular among the Proud Boys.  Now that AWS has set the precedent, woke activists will likely demand a repeat.