# The Amazon Tax  ## Metadata - Author: [[Stratechery by Ben Thompson]] - Full Title: The Amazon Tax - Category: #articles ## Highlights - The “primitives” model modularized Amazon’s infrastructure, effectively transforming raw data center components into storage, computing, databases, etc. which could be used on an ad-hoc basis not only by Amazon’s internal teams but also outside developers: [](https://i0.wp.com/stratechery.com/wp-content/uploads/2016/03/stratechery-Year-One-274.png?ssl=1) ([View Highlight](https://read.readwise.io/read/01h2k19r1nxbyjbgaxk15ss18b)) - This AWS layer in the middle has several key characteristics: • AWS has massive fixed costs but benefits tremendously from economies of scale • The cost to build AWS was justified because the first and best customer is Amazon’s e-commerce business • AWS’s focus on “primitives” meant it could be sold as-is to developers beyond Amazon, increasing the returns to scale and, by extension, deepening AWS’ moat ([View Highlight](https://read.readwise.io/read/01h2k1akxhwddk2nadk6vm930d)) - The paper laid out the expanded AWS mission: “to enable developers and companies to use Web services to build sophisticated and scalable applications”… “We tried to imagine a student in a dorm room who would have at his or her disposal the same infrastructure as the largest companies in the world,” Jassy says. “We thought it was a great playing-field leveler for startups and smaller companies to have the same cost structure as big companies.” ([View Highlight](https://read.readwise.io/read/01h2k1bjd6vzcf7zz385j2jhn1)) - The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital…we choose to prioritize growth because we believe that scale is central to achieving the potential of our business model ([View Highlight](https://read.readwise.io/read/01h2pwfee0htprhavgt1fz7a52))