Amazon Aerospace and Satellite Solutions -- integrating satellites and terrestrial services

At this time, Musk has a clear lead in launch technology and Bezos has superior terrestrial resources and is building the infrastructure to connect them to space.

Since its founding, Amazon has reinvested profit in building infrastructure. They began with retail sales and distribution infrastructure and later added Amazon Web Services (AWS) providing data center and hosting infrastructure. Amazon founder Jeff Bezos also established Blue Origin, a company to provide satellite launch service and eventually to support space travel, and last year Amazon filed an application for a 3,236-satellite constellation of low-earth orbit Internet service satellites -- Project Kuiper.

Soon after filing the Project Kuiper application, AWS announced a new satellite ground station service, establishing a link between the two companies and now they have announced the formation of AWS Aerospace and Satellite Solutions. Aerospace and Satellite Solutions (I can’t bring myself to type “AWS ASS”) does not add new physical infrastructure but will be marketing and assisting on the design and implementation of complex space/terrestrial systems.

Organizations from space startups to government agencies like NASA and DOD should be able to save time and cost by building their applications on top of this integrated infrastructure. Recognizing the lucrative government market, Amazon has hired retired U.S. Air Force Major General Clinton Crosier, who was most recently the Director of Space Force Planning, to head the AWS Aerospace and Satellite Solutions. (Hiring General Crosier might also help Amazon in their battle with Microsoft over a ten-billion dollar Pentagon cloud services contract).

Elon Musk and Jeff Bezos share a common goal -- making homo sapiens a space-faring, multi-planet species. Bezos stated that goal in his high-school valedictorian speech and believes that it is imperative that we do so because humanity is growing too fast and using too much energy to be sustainable in the long run and the SpaceX Web site states that "SpaceX’s family of launch vehicles and spacecraft were designed from the beginning to take humans to Earth orbit, the Moon, Mars and beyond."

They both also have plans for an interim step of establishing broadband Internet-service constellations -- Musk's Starlink and Bezos' Project Kuiper. At this point in time, Musk has a clear lead in launch technology and Bezos has superior terrestrial resources and is building the infrastructure to connect them to space. Bezos and Musk could move faster toward their shared goal by collaborating, with SpaceX launching Project Kuiper satellites and Starlink satellites using AWS's terrestrial services. I don't know about Bezos, but Musk seems to be willing to share a market in pursuit of a long-range goal.

Amazon will thrive after COVID-19

Amazon has already received a retail
windfall, but their infrastructure
will be more important in the long run.

My final exam this term will include a take-home question: How will COVID-19 affect the fortunes one of the major Internet companies -- Apple, Google, Facebook, or Microsoft?

I didn't include Amazon because they are an obvious winner. On December 30, 2019 Amazon stock was selling for $1,847.84 per share and on May 1, 2020 it was $2,286.04, a 23.7 percent increase. The government gave trillions of dollars to consumers and at the same time, told most brick and mortar retailers they had to close, creating a double windfall for Amazon and other online retailers.

Since its inception, the Internet has enabled us to substitute communication for transportation. (See, for example, my 1998 pilot study at Hyundai USA). The rate of that substitution is a function of technological improvement and experience with the technology by users and organizations. COVID-19 has led to the invention of new use cases for communication in lieu of transportation and forced organizations and individuals to learn to use the technology. That will cause an increase in the rate of substitution of communication for transportation which will increase demand for Amazon’s infrastructure and services. While Amazon is known for retail, they are a major infrastructure company, which will be more important in the long run.

Amazon & Jeff Bezos' infrastructure
and services

More companies will establish affiliate retailer stores at Amazon.com and those that are already there will see increased sales. (In 2018, third-parties accounted for 58% of Amazon retail sales). There will be increased demand for Amazon fulfillment and delivery services as well as Amazon credit cards.

Organizations that need to tighten their belts to survive after COVID-19 will want to cut costs and staff, making Amazon Web Services (AWS) and Cloud Storage more attractive than on-premises information technology. Organizations that fail as a result of the pandemic will free up IT people and potential entrepreneurs to create startups to exploit novel Internet use cases that were made apparent by COVID-19. Many of those startups will be run out of Amazon datacenters.

Space is a long-term growth sector and Amazon will benefit from that as a space infrastructure company. They are investing heavily in the launch business and recently (along with two others) received funding as part of NASA’s ambitious lunar program. Amazon's ground station service will be attractive for space startups with little cash to spend on building out their own ground infrastructure.

Amazon’s forthcoming broadband Internet service satellite constellation got a boost with the recent bankruptcy of OneWeb, which was shaping up to be a major competitor. OneWeb says COVID-19 precipitated their bankruptcy and Amazon may purchase the company or a portion of its assets.

Amazon’s Echo voice platform is also the leader in the growing voice-application sector.

In addition to being strong in retail and infrastructure, Amazon is rich. They had $55 billion cash in the quarter ending March 31, a 33.8% year-over-year increase. A lot of people will be looking for jobs after COVID-19, and Amazon will be able to afford to hire them. They will also have the funds to buy companies. How about Zoom? (If they can't afford something, they can probably get a loan from founder and CEO Jeff Bezos who has a net worth of $138.5% billion).

Finally, in addition to generating revenue, Amazon’s infrastructure will yield increased amounts of information in the post-COVID era. That information will enable them to better allocate resources and investments and make dynamic pricing decisions.

One caveat -- all of this is good news for Amazon post-COVID, but if it is too good, they may face anti-trust action.

Latecomer Amazon will be a formidable satellite ISP competitor

Amazon CEO Jeff Bezos

In spite of being a latecomer to the race to deploy a constellation of low-Earth orbit (LEO) broadband Internet satellites, Amazon's Project Kuiper will be a formidable competitor. SpaceX, OneWeb and Telesat already have test satellites in orbit, but Amazon has several strategic advantages.

For a start, each of the LEO broadband competitors plans to end the digital divide by providing global connectivity to end-users and small organizations in underserved areas, but they are also counting on high-margin customers -- governments, enterprises, financial institutions, telephone companies, airlines, maritime companies and luxury yacht owners for early revenue. (A fifth company, LEOSAT, will focus exclusively on these commercial markets). Amazon's complementary infrastructure will give them a strategic advantage with these early customers. They will be able to leverage Amazon's established global Web and database services as well as their newly launched satellite ground-station service all of which will be integrated with the Project Kuiper constellation. Furthermore, when new end-users come online, they will be potential Amazon retail customers regardless of their satellite ISP.

The high-margin applications require inter-satellite laser links (ISLLs) for fast, secure long-distance communication and that technology is still under development. OneWeb has decided to forego ISLLs for their first constellation and SpaceX launched their first 60 satellites without them and, as far as I know, has not said when they will be deploying satellites with ISLLs. Amazon may be working on their own ISLL technology or planning to partner with (or buy) Mynaric or one of the partners in the European project ORIONAS (Lasercom-on-chip for next-generation, high-speed satellite constellation interconnectivity). Note that there are political as well as technical barriers to ISSL deployment.

SpaceX and OneWeb have talked of consumer ground stations costing as little as $200, but that will require another critical technology that is still under development -- cheap, mass-produced, electronically-steerable antennas the size of a "pizza box". Telesat says they will concentrate on the maritime, aviation and cellular-backhaul markets until the cost of end-user antennas comes down. SpaceX is developing their own antenna and has filed for permission to deploy a million end-user ground stations but an engineer working on the project told me they do not yet have an antenna that is cheap enough for the consumer market. OneWeb CEO Greg Wyler claims to have a self-funded side project that has developed a suitable fifteen dollar antenna and they may be ready to deploy. I don't know whether Amazon has been working on small electronically-steerable antennas internally, but even if they have not, as with ISSLs, they have the funds to either partner with or purchase a company that is working on them.

Debris mitigation is another technology for which no one has a proven lead over Amazon at this time.

Amazon also gained ground on the others when Elon Musk reportedly became frustrated with the pace of development at Starlink and fired the vice president in charge of the satellite program, Rajeev Badyal, a veteran of Microsoft and Hewlett Packard and satellite designer Mark Krebs, who led Google’s aircraft and spacecraft teams before coming to SpaceX and playing a key role in developing their first two test satellites. Amazon subsequently hired Baydal, Krebs and other ex-SpaceX engineers. I wonder if they influenced Bezos' decision to proceed with Project Kuiper.

Amazon has its own launch capability, but SpaceX has a clear lead in launch technology and capacity. Still, OneWeb has contracted with Amazon for five launches of perhaps 400 satellites starting in 2021 and one could imagine SpaceX serving their competitors as well. (I wonder if anti-trust law would require some sort of arm's length pricing).

Amazon CEO Jeff Bezos has deep pockets so will not have to worry about raising money and, perhaps more important, he will have complete control over the project. SpaceX has had to go to the capital markets several times, OneWeb is working with a group of investors and collaborator/investors and Telesat has income from its established geostationary satellite business, but is owned by a somewhat contentious combination of Loral Space and Communications and a Canadian pension fund.

Finally, Bezos has had the skill and vision to build an array of highly successful, complementary companies from online retail to fulfillment infrastructure to Internet services to space. That is not to take anything away from the others -- I suspect they were less surprised than I by the announcement of Project Kuiper. Whatever led to Amazon's decision, it is good to see them involved in a competitive battle among would-be global Internet service providers.

Update 7/22/2019

Megaconstellations points out that as a smart follower Amazon will also benefit from a matured ecosystem of suppliers and service providers facilitating mass production created and paid for by the first movers, OneWeb, Telesat and SpaceX.

Update 7/13/2020

Amazon had applied for Ka-band frequencies between 17.7-20.2 GHz for various types of customer terminals and gateways and 27.5-28.5 GHz for higher frequency gateways and FCC Chairman Ajit Pai has recommended approval of the request. Since he is one of three Republican appointees on the five-person Commission, I guess it is nearly certain the request will be granted. (That is not to say the Democrats will not also favor it as well).

Amazon's AWS Ground Station service is now available

Amazon announced that they would be providing satellite ground station service last year and Andy Jassy, CEO of Amazon Web services, announced its availability in the video at the end of this post.

AWS Ground Station is a fully managed, ready-to go ground station service, featuring:

• No upfront cost.
• Scaleability -- you only pay for antenna time.
• No long-term contract.
• Self-service scheduling on a per-minute basis, that can be changed dynamically using their ground station console.
• Secure transmission.
• Low latency due to proximity to Amazon data centers.
• Integration with EC2, S3 and other Amazon services and Amazon's global network backbone.
• Simultaneous up/download.
• Support of most common communication frequencies.

This sounds like a compelling case, especially for a small operator or startup, but I don't know how the prices compare to existing services or building proprietary ground stations.

A couple of questions come to mind. I assume Project Kuiper, Amazon's proposed broadband satellite venture, will use this service, but will SpaceX, OneWeb, Telesat and other potential satellite broadband ISPs also use it? If so, will Amazon treat them fairly? Competing ground station companies might also raise the issue of predatory pricing since Amazon will have an opportunity for cross-subsidy with their other services or they might just operate at a loss until competitors are eliminated (as they have done in other cases).

Open data leads to competition

When evaluating proposed mergers and breakups, control of data should be considered along with market impact.

In a previous post, I spoke of Amazon's use of customer and market data in restraint of trade, but they are not alone. For example, leaked internal documents show that plans to sell access to user data were discussed for years and received support from Facebook’s most senior executives. Facebook gave Amazon extended access to user data because Amazon was spending money on advertising and partnered with them on the launch of the Fire smartphone. In another case, Facebook discussed cutting off access to user data for a messaging app that had grown too popular and was viewed as a competitor.

As former FCC Chairman Tom Wheeler points out in a recent post, proprietary data is a source of market control and he cites two examples where opening data has led to competition. In the US, a law mandating open access to video content enabled satellite companies to compete with cable companies and in the UK, open access to customer banking data led about 200 organizations to offer new services in its first year.

Wheeler's position is elaborated in Unlocking Digital Competition, a report from the Digital Competition Expert Panel convened by the British Treasury Department. Their data-related recommended actions are:

• Establishing data mobility and open standards between services: overcoming network effects which cause markets to tip by requiring systems to ‘talk’ to each other using open, standardised formats. This will mean consumers can port their data between networks, interact with users on other, similar networks, and smaller firms can plug their services into those of bigger ones. New business opportunities will open up that use, manage, and combine data made available. Consumers, in turn, will have new choices of digital services, with switching made much easier.
• Securing access to non-personal and anonymised data: tackling the data barrier to entry for smaller and newer firms, while protecting privacy. The power of bulk data driving economies of scale and scope is a key reason new firms struggle to compete and bring innovative services to consumers. Overcoming this barrier will allow the digital economy to remain dynamic.

These are only two of the 20 recommended actions in the 140-page report. Those actions are grouped under six strategic recommendations for the government:

• Sustain and promote effective competition in digital markets, by establishing a pro-competition digital markets unit, tasked with securing competition, innovation, and beneficial outcomes for consumers and businesses.
• Take more frequent and firmer action to challenge mergers that could be detrimental to consumer welfare through reducing future levels of innovation and competition, supported by changes to legislation where necessary.
• Update and effectively use tools against anti-competitive conduct to help them play their important role in protecting and promoting competition in the digital economy.
• Continue to monitor how the use of machine learning algorithms and artificial intelligence evolves to ensure it does not lead to an anti-competitive activity or consumer detriment, in particular to vulnerable consumers.
• Conduct a market study into the digital advertising market encompassing the entire value chain, using its investigatory powers to examine whether competition is working effectively and whether consumer harms are arising.
• Engage internationally on the recommendations it chooses to adopt from this review, encouraging closer cross-border co-operation between competition authorities in sharing best practice and developing a common approach to issues across international digital markets.

The two open-data actions mentioned above fall under the first strategic recommendation of promoting competition, but control of data is involved in the others as well. When Amazon acquired Zappos and Whole Foods, they gained access to data on relatively affluent shoppers. Facebook's acquisition of Instagram and WhatsApp and Google's acquisition of Waze also yielded data in addition to eliminating competition. The machine learning recommendation involves training data. When evaluating proposed mergers and breakups, control of data should be considered along with market impact.

The last strategic recommendation -- international engagement -- recognizes the global nature of the Intenet. (Note that the Digital Competition Expert Panel was chaired by an American). Nations like China and the US have different goals with respect to competition, but democratic, capitalist nations should strive to adopt compatible institutions and policies. In the era of Brexit and MAGA, we need to work with other nations -- I'd rather end up with two Internets than fifty.

Amazon's orbiting infrastructure

The invisible eye of the marketplace

I have been following satellite Internet service since the 1990s, but I was surprised when I learned last week that Amazon had filed an application for a 3,236-satellite constellation of low-earth orbit Internet service satellites -- Project Kuiper.

I shouldn't have been surprised -- Amazon was an infrastructure company from the start.

In his first post-IPO letter to shareholders in 1997, Jeff Bezos pointed out that their distribution center capacity grew from 50,000 to 285,000 square feet and said their goal remained "to continue to solidify and extend our brand and customer base. This requires sustained investment in systems and infrastructure to support outstanding customer convenience, selection, and service while we grow."

Today Amazon infrastructure is used internally and is offered as a service to others. Their distribution centers are now highly automated and they distribute a lot more than books. Amazon also offers Web, cloud storage, shipping and delivery services, credit cards, a voice application platform, an affiliate retailer program, satellite ground stations, automated retail stores, pickup locations, Whole Foods stores and other things I am probably overlooking. Bezos personally owns the Washington Post and the Blue Origin aerospace manufacturing and spaceflight services company. (Blue Origin has a contract to launch satellites for Telesat, a Project Kuiper competitor).

Bezos' preparation for Project Kuiper was hiding in plain sight with the reference to road building in the Blue Origen mission statement: "We're committed to building a road to space so our children can build the future" and it should have become more clear when Amazon added fully-managed satellite ground station service to its Web Service offering. Amazon says Project Kuiper "will provide low-latency, high-speed broadband connectivity to unserved and underserved communities around the world.” That may be true, but it is the tip of the iceberg -- like saying Amazon saying in 1994 that they would deliver low-cost books to homes.

During the industrial era, infrastructure companies like railroads and oil and steel companies grew as quickly as possible in order to achieve economies of scale and create barriers to entry and profit from usage fees and sales. In the information era, data is as important as fees and sales. Esther Dyson pointred that out in 1995, the year after Jeff Bezos founded Amazon, and it was reaffirmed recently when Softbank founder and CEO Masayoshi Son justified his billion dollar investment in OneWeb's satellite constellation, saying "whoever gets the most data wins."

Stacy Mitchel has researched the ways Amazon has applied Dyson's insight. Since many people go straight to Amazon rather than use a search engine when shopping for products, Amazon learns what people want, what they eventually buy and don't buy and how much they pay. They use that market knowledge to decide what to feature in search results, which products to brand or manufacture themselves, which companies to buy, etc. Their size and information facilitate optimal and, in some cases predatory, pricing. Mitchel cites book sales and their zapping of Zappos as examples of the latter and also shows ways in which Amazon has used government subsidy. (Imagine the price war between Jeff Bezos and Elon Musk).

Amazon harvests data from all of their infrastructure offerings. For example, Netflix uses AWS. They even learned a lot about local demographics, real estate prices, labor costs, etc. when they invited cities to apply to be the site of Amazon's future headquarters.

But, what's wrong with this? Amazon is efficient and has kept prices low and their customer service is terrific.

That sort of reasoning has dominated US anti-trust enforcement in recent years, but it is partial and short-sighted. Prices that are low enough to maintain rapid growth suit Amazon well now, but in the long run, competition and transparency fuel low prices, efficiency and the broad distribution of wealth and income.

Industrial era concentration of power resulted in anti-trust action in the early 20th Century, but those were simpler times. In the letter to shareholders mentioned above, Bezos also stated that "there are significant opportunities to better serve our customers overseas." How can we achieve competition between global Internet service providers like Amazon, SpaceX, OneWeb and Telesat that are outside the jurisdiction of a single nation?

There is no simple answer to that question. We can't put the genie back in the lamp, but we have seen some success with government operation of neutral, free or wholesale infrastructures like roads, sidewalks and municipal backbone networks and Google has had some success with fair, wholesale networking in Africa. Europe is beginning to look for ways to encourage competition, transparency, and privacy.

Update 4/12/2019

In yesterday's 2018 letter to shareholders, Jeff Bezos reported that 58% of Amazon.com retail sales are made by independent third-party sellers, emphasizing that they "helped independent sellers compete against our first-party business by investing in and offering them the very best selling tools we could imagine and build," i. e., infrastructure. He singles out Fulfillment by Amazon, the Prime membership program, Amazon Web Services, database tools, SageMaker for machine learning and Alexa, which is built into 150 different products.

He also points out that Amazon remains a small player -- "low single-digit percentage" -- in global retail largely because nearly 90% of retail remains offline, in brick and mortar stores. But they are working on infrastructure for them -- Amazon Go stores.

He has convinced me -- forget retail, Amazon is an infrastructure company.

Amazon's infrastructure yields revenue and data, and that data can be used in restraint of trade, but Amazon is not all bad. As Bezos points out, they create jobs and valuable services as do others who use their infrastructure. Elizabeth Warren and others are calling for changes to US tax and anti-trust laws, but we need to be careful not to throw out the baby with the bathwater. (Full disclosure -- I loved Mrs. Maisel, the Big Sick, and many more and bought a terrific pasta cooker at Amazon.com yesterday).

The issue is further complicated by the fact that this is not a US issue, it is global. Amazon (and others) are Global infrastructure companies and China is a global infrastructure country.

Update 1/13/2020

Amazon competes with and gathers data from retailers who host their stores with Amazon. A similar situation exists in satellite Internet service where both Telesat and OneWeb have signed launch contracts with Bezos' Blue Origen. Will SpaceX also launch satellites for competitors and what sort of scrutiny is necessary in these cases?

Amazon photos -- yesterday, today and tomorrow

These photos are from coverage of Amazon by NPR and Sixty Minutes. They illustrate Amazon's policy of investing only in things that enhance the customer experience and create loyalty, the improved density and efficiency of their warehouse/fulfillment centers and experiments with 30-minute delivery of orders by autonomous drones.

1999 warehouse and fulfillment center

2013 warehouse and fulfillment center

Robots scurrying around with picked items

Amazon corporate office, 1999

Jeff Bezos' makeshift desk, 1999

Bezos' hopes for 30-minute delivery via drone in 4-5 years

A delivery drone prototype

Eight electric motors

Taking off from a fulfillment center

Autonomous flight

Landing, dropping package and leaving for home

The spotlight on Jeff Bezos and Amazon

I surveyed my freshmen students this term, asking if they knew who Bill Gates, Paul Allen, Larry Page, Sergei Brin, Jeff Bezos and Steve Jobs were.

They all knew who Gates and Jobs were, but had never heard of any of the others.

It seems that some tech entrepreneurs are public figures and others are not and it looks like Jeff Bezos has decided to go public.

A book on Amazon was recently published and Terry Gross interviewed the author, Jeff Stone, on Fresh Air. The interview covers Bezos' intention to make Amazon an "everything store" from the very start, his foregoing of quick profit to build customer loyalty and long-run profit, working conditions in Amazon warehouses, Bezos' management style and his purchase of The Washington Post.

Last night, Sixty Minutes also did a segment on Bezos and Amazon. You get to know Bezos and get a good look at the operation of the fullfilment centers they are building all around the country. The highlight is video of a research prototype -- autonomous drones delivering packages to homes. Bezos warned that this was early research, but expects that his drones will by flying in four or five years.

Links to some Sixty Minute videos on Amazon (with commercials):

• Drone delivery
• Bezos' purchase of the Washington Post
• Bezos looks to the future
• Difficulty raising capital at the start
• Last night's full show (Amazon is the first segment)
• Overtime video from last night -- background on the drone coverage

If you only watch one video, make it this one from 1999 when Amazon was just a book and music store:



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Update 12/2/2013

I've selected 11 still images from these videos, creating. They illustrate Amazon's policy of investing only in things that enhance the customer experience and create loyalty, the improved density and efficiency of their warehouse/fulfillment centers and experiments with 30-minute delivery of orders by autonomous drones.

-----
Update 8/31/2014

Google has had a delivery drone project for two years according to the Atlantic Monthly. Drones from either company will face many non-technical challenges.

Amazon's Glacier storage service will disrupt online backup

The bar chart below sums it up -- Amazon's Glacier is cheap -- 1¢ per gigabyte per month. (Follow the link for pricing detail).

Amazon has published a Glacier API, and, for now, you have to be a programmer to use it. But they have committed to releasing FTP access very soon, and it will not take long for developers to release backup programs and services with graphical user interfaces to Glacier.

California's Internet sales tax will reshape retail

Amazon VP Paul Misener

Two months ago, the California legislature passed a law requiring Amazon to collect sales tax, and Amazon retaliated by starting a state referendum drive to repeal the law and dumping thousands of California-based affiliates. Now, it seems a settlement has been reached in this battle. It's been reported that Amazon will drop its referendum drive in return for a one year moratorium on collecting sales tax.

If you live in California, your Amazon purchases will remain tax-free for the next year, but will be taxed after that.

That will help the state budget. Amazon VP for global public policy Paul Misener said that Amazon would also "welcome back tens of thousands of California-based advertising affiliates," which means yet more tax revenue for the state.

I favored and predicted this outcome, but did not expect it to be settled so quickly. My guess is that other states will follow suit -- California is large and influential and thirteen other states are already in conflict with them over tax collection. The New York Times has also reported on Amazon's tax problems in other states.

In a comment on a previous post, Shava Nerad, suggested that the mechanics of tax collection from 50 states with different rates, forms and procedures would create a record keeping nightmare. She worried that confusion over forms and procedure would drive thousands of small mail order and catalog companies out of business.

The one year moratorium gives online retailers and states time to work out uniform, simple forms and procedures for tax computation and reporting. It seems that Amazon wants to work out such a solution. Misener says they will "work with Congress and the states to obtain a federal resolution to the sales tax issue as soon as possible."

Amazon should take the lead in designing the system. They have a large stake in having it be simple and smooth, and they have been running a complex online service since the mid-1990s. It sounds like a good Amazon Web Services application to me.

The implications of this compromise go beyond California. It tips the on-line/storefront balance, and will impact retail business throughout the nation. We might even see some Amazon stores.

Amazon offers California a sales tax compromise

Two months ago, the California Legislature passed a law requiring Amazon to collect sales tax. Amazon refused, dumped all its California affiliate stores (costing the state tax revenue), claimed they were not operating in California and started a petition campaign for a ballot measure to overturn the law. In the meantime, they are not collecting tax, and when the measure qualifies for the ballot, the law will be temporarily suspended.

Now Amazon has offered to build two warehouses in California and hire 7,000 workers if the legislature will put the issue off for a few years. (Does the 7,000 include the affiliates they cut off or would it be the reinstated affiliates plus 7,000)?

I live in California and love it that Amazon is tax free -- often choosing them over another store for just that reason. Regardless, I think they should drop the referendum and start collecting sales tax and I predict they eventually will have to.

Here are a few reasons why (in no particular order):

• Amazon asserts that an online sales tax would cost California jobs. I find their faith in low taxes as an economic silver bullet reminiscent of the Tea Party. It will cost some jobs and pay to create or maintain some others. No one knows the net change.
  
• The California Retailers Association (Walmart, Barnes and Noble, etc.) says Amazon's refusal to collect sales tax cost California over 18,000 jobs and a $4.1-billion loss in sales resulting in over $7 billion in lost economic activity in 2010. I trust their figures about as much as I trust that Amazon gives a hoot about California jobs.
  
• California loses jobs when consumers pay higher taxes and when Amazon affiliates are zapped, but we also lose jobs with the bankruptcy of Amazon competitors like Circuit City and Borders Books. The same goes for laying off teachers, state employees, and others.
  
• I believe California needs added revenue and am willing to pay my share.
  
• I worry that a sales tax might be a burden for the poor, but I bet Amazon shoppers are relatively affluent. This is an empirical question that Amazon could answer.
  
• The early rationale for an online sales tax exemption was that it would allow Internet e-commerce to take off. Amazon has taken off.
  
• Amazon thinks it might be cheaper to do a ballot referendum than to fight the law in court, but what about the cost of a referendum to the taxpayers?
  
• The media and advertising business will surely like the referendum – both online and brick-and-mortar retailers will spend tons of money on misleading, simple-minded ads.
  
• Amazon cut off their California marketing affiliates in order to claim that they had no operations the state, but seven California addresses are on the list of United States Subsidiaries at Amazon’s Web site.

Let me know what I have left off this list – on both sides.

California is a large, precedent setting state, and this battle has national implications. Wikipedia lists 13 states where Amazon is in a controversy over sales and use taxes. My fearless prediction is that the list will grow, and, in the long run, we will be paying tax on online purchases. That will change the retail landscape (and maybe Amazon will open stores when it happens).