Amazon, eBay, FaceBook: the risk of building your business on a third-party platform

We are seeing web giants flex their muscles. Here’s three instances.

FaceBook’s frequent platform changes make it tough for small developers to keep up – I blogged about this recently.

Amazon declares that Print on Demand sales on its site must use its own printing system, causing consternation for rivals like Lightning Source.

Ebay changes its terms for sellers, removing the option to give negative feedback to scam buyers and increasing final value fees from 5.25% to 8.75% (a 67% increase).

In each case, the losers can fume and complain; but there’s little else they can do, other than withdraw their business. Ebay, FaceBook and Amazon have the right to as they want, within the law, with their web sites. Unfortunately, withdrawing your business from the dominant platform in each field (social networking, web retailing, auction sales) is likely to be even more expensive than gritting your teeth and putting up with it – at least, that’s what the big guys are counting on.

The problem: it’s high risk to have a third-party control your platform. This is something the music industry has belatedly recognized in respect of Apple’s iTunes.

I expect to see more of this, as the biggest players change focus from buying market share with low prices and free services, to trying to monetize their existing share more effectively.

PS: I realise that FaceBook is in nothing like the same position of strength within its market as Amazon or Ebay; nevertheless there seems to be a parallel to do with lack of control over your destiny.

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1 comment to Amazon, eBay, FaceBook: the risk of building your business on a third-party platform

  • Tino Paz

    Singling out Amazon, eBay and Facebook helps make your point more concrete. The underlying problem, however, applies to the whole Web 2.0 movement (used as a metaphor for the current trends, not as an explicitly organized effort). Google, Salesforce, etc., etc. could all be added to your list. Or are there significant differences between how various businesses implement their Software as a Service (SaaS) models? What are the critical criteria that end-users (individuals, groups, businesses) should be evaluating before surfing the Web 2.0 wave? Or are you pointing out an innate and inevitable reality that we simply have to come to terms with?

    Tino