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Amazon’s history with payments could haunt its crypto future

Amazon money

Good morning! This Tuesday, Amazon's payments business has always been an afterthought, Facebook is all in on the metaverse, Jeff Bezos wants all in on the moon, and employees are speaking out against Activision Blizzard.

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The Big Story

Amazon's past could predict its future

The news that Amazon was hiring a lead for a new digital currency and blockchain initiative sent the price of bitcoin soaring. Amazon quickly poured cold water on the speculation, saying that "notwithstanding our interest in the space, the speculation that has ensued around our specific plans for cryptocurrencies is not true."

But the company did say it's exploring crypto, and how it could work on Amazon. So wait: 13 years after Satoshi Nakamoto's white paper appeared on the internet, Amazon is just discovering cryptocurrency? That may be a bit unkind, but the truth is sometimes unkind.

Amazon has a long history of stumbles and missed opportunities in payments, which goes back more than two decades to the company's purchase of internet payments startup Accept.com.

It's hard to remember how crude payments were in those days. The website let customers who were afraid of inputting a full credit card number online phone or fax in the digits.

  • Jeff Bezos or another employee would match up with their order. It worked well enough, but it wasn't designed for third-party sellers.
  • Amazon zShops launched a few months later. It was mostly a flop, but it laid the groundwork for Amazon's third-party seller marketplace.

The problem was that Accept.com got swept up into the bowels of Amazon's infrastructure. The service its founders had envisioned — pay anyone, for anything, anywhere online — fell by the wayside.

  • Meanwhile, Elon Musk, Peter Thiel and Max Levchin were working on their payments startups, which would soon merge to become PayPal and leverage eBay's auctions to become the first real fintech giant.
  • EBay bought PayPal in 2002 for $1.5 billion.

Amazon had plenty of its own payments problems to solve, like fraud. An Accept.com employee, Jaya Kolhatkar, took charge of that effort, and got Amazon's fraud rate down to a reasonable level. And its 1-Click payments was a genuine innovation.

  • But all that payments wizardry — including the boost it got from Accept.com — remained captive inside Amazon for years.
  • It wasn't until 2013 that Amazon created a "Pay With Amazon" button for non-Amazon storefronts — the innovation that catapulted PayPal to internet ubiquity in 1999. Amazon Pay is still struggling for market share.

The pattern repeated in mobile payments and back-end payments. Amazon bought technology and hired a team from GoPago, the maker of a point-of-sale system that was challenging Square's iPad-based system for space on cafe counters, in 2013.

  • Blink and you may have missed Amazon Local Register, which launched in 2014 and shuttered a year later. Amazon's person-to-person payment system, WebPay, had almost as short a life.
  • Kickstarter, a marquee customer for Amazon Payments, dropped it in 2015 in favor of Stripe after Amazon discontinued its Flexible Payments Service.

The counterargument is that adding Accept.com to Amazon was a huge win, even if it never became PayPal, because Amazon now handles a gigantic volume of payments, and even slight improvements add up. Adding anything to Amazon makes it big, because Amazon is big.

  • That worked as Amazon went from books to music to electronics. But payments isn't a line of business: It's a complex, interconnected web of services that all have to work together, and it's crucial to other functions like security, customer support and marketing.
  • One of the hardest things for Amazon is convincing other retailers that it won't screw them over, which is why Microsoft Azure and Google Cloud are actively wooing internet sellers, and why PayPal has thrived since it split off from eBay.

So now Amazon wants to hire someone to lead its crypto efforts. It sounds like a fun job, and a good way to learn a lot. Accept.com alumni have done well: Kolhatkar is now the executive vice president for data in Disney's direct-to-consumer business, and co-founders Erich Ringewald and Mark Britto are in top roles at PayPal. If the past is prologue, look for Amazon's crypto payments chief to be changing the world of commerce … somewhere else, after they leave.

— Owen Thomas (email | twitter)

A version of this story appeared on Protocol.com.

A MESSAGE FROM ALIBABA

People are often surprised to learn that Alibaba has thousands of customers here in America, made up of U.S. brands, retailers, small businesses and even farmers. Last year, U.S. companies sold more than $54 billion worth of their high-quality products directly to Chinese consumers on our e-commerce platforms.

Learn More

People Are Talking

On Protocol | Policy: GIFCT's Erin Saltman says Big Tech needs a lot more manpower to tackle extremism:

  • "It could be the case in the future that GIFCT decides to be a list-maker, in and of itself, but we would need more staff for that. There are a lot of things to think about, although that would be exciting."

Apple's Phil Schiller thinks it's time to move from combustion engines to electric:

  • "I think the world requires it of us, so I'm excited to see what companies like Lamborghini can do to bring efficiency in a way that still brings emotion."

On Protocol | Enterprise: Google Cloud wants to kill its "Killed By Google" reputation, Kripa Krishnan said:

  • "No feature may be removed or changed in a way that is backwards incompatible for as long as customers are actively using it."
Elon Musk acknowledged that the chip shortage is slowing Tesla's plans, and then took a swing at Apple:
  • "Our goal is to support the advent of sustainable energy. It is not to create a walled garden and use that to bludgeon our competitors, which is sometimes used by some companies."
  • Then he faked a cough and said "APPLE." Good one, Elon.
QR codes are convenient, but ACLU analyst Jay Stanley says they're also a privacy concern:
  • "Suddenly your offline activity of sitting down for a meal has become part of the online advertising empire."

Making Moves

Medallia is going private, with the help of $6.4 billion from private equity firm Thoma Bravo. The company first went public about two years ago.

Vishal Shah is the leader of Facebook's new Metaverse Product Group. He was previously Instagram's VP of product, and will now report to Andrew Bosworth. He's also planning to hire hundreds of new employees.

On Protocol: Kedar Doshi, Kate Wright and Jim Joudrey are joining Tableau's leadership team. The company's CEO, Mark Nelson, promoted the trio to take on his former role.

Christopher Payne is DoorDash's next president. He's been with the company for more than five years, most recently serving as COO.

Tamar Yehoshua is joining Snyk's board of directors. She's the chief product officer at Slack and held leadership positions at Google and Amazon.

Josette Sheeran is Canoo's next president. Sheeran is a former diplomat and sits on the board of the McCain Institute.

Gideon Lett is now a chief growth officer at BSA | The Software Alliance. He was previously a senior adviser for fair tech at Access Partnership.

In Other News

  • Employees are speaking out against Activision Blizzard. Around 1,000 employees called the company's response to the suit "abhorrent and insulting" and urged one of its EVPs, Fran Townsend, to leave after she shot down the gender discrimination claims.
  • Tether is under investigation. The DOJ is trying to figure out whether Tether committed bank fraud, which prosecutors have reportedly been doing for a few years now.
  • Qualcomm and AWS are Intel's first foundry customers. The two companies will play a key part in Intel's roadmap to regain chip supremacy by 2025.
  • WeChat suspended new user registrations until early August, saying it's undergoing a technical upgrade to align with security legislation.
  • On Protocol | Workplace: Tech didn't always pay attention to its diversity issues. When he first moved to Silicon Valley, Wayne Sutton wrestled with an industry that ignored representation, which he's spent a decade trying to work inside — and change.
  • Jeff Bezos wants the lunar lander contract. He's offering to pay for up to $2 billion in NASA costs this fiscal year and for the next two years in exchange for a contract to help land astronauts on the moon.
  • China is trying to control competition. Over the next half year, the country is rolling out a program focused on rectifying Big Tech issues that discourage competition, like regulations around user rights and data security.

One More Thing

Parking post-pandemic

During the pandemic, traffic all but disappeared from U.S. roads. Sidewalks and streets were free of cars and people, and parking was abundant. But that could change, now that companies are allowing employees to come back to the office.

If you'll soon need to look for parking spots other than your driveway, there are apps that can help. SpotHero and ParkWhiz make "reservations" at parking garages near your destination. And SpotAngels uses crowdsourced information to find nearby spots. Putting on real pants and heading to work might be a drag, but circling the block to find parking doesn't have to make it worse.

A MESSAGE FROM ALIBABA

Think of Alibaba as a massive digital mall. When a U.S. business opens a digital storefront on Alibaba's platform in China, they gain access to our 900 million active Chinese consumers. Alibaba provides all the tools to help U.S. businesses build their brands in China to serve local Chinese consumers.

Learn More

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