MONEY Amazon

Amazon’s New Phone and the Rise of the Internet Middleman

Just as people are starting to wonder if Amazon is too powerful, Jeff Bezos seems ready to put his ultimate store in the palm of your hand

Before there was “disruption” there was “disintermediation.” Does anybody still remember disintermediation?

Back in the olden times of portals and Webvan and free floppies from AOL, the big, exciting thing about the Internet was the way it cut out the intermediaries, a.k.a. the middlemen, between you and the stuff you wanted. No more having the trudge down to your local record store to get a CD, only to find your choices limited by what the record store chain and it distributors wanted to stock. The web let you point and click to get almost any CD. Or book. Or can of organic dog food.

The new smartphone Amazon is announced today sounds like it’s all about getting the business end of the Internet’s pipeline of stuff into a device you’ll have at hand almost 24/7. (Admit it: You keep your phone next to your bed.) The phone can instantly respond to how you tilt it and maybe even how you look at it, all the better, perhaps, to serve up more ways to look at the products in the phone’s built-in Amazon store. Amazon is on the verge on monetizing your twitches and blinks.

This comes at a moment when we are very aware that Amazon, the great middleman slayer, has itself become one very aggressive middleman. Look at it’s battle with book publisher Hachette, in which Amazon is slow-walking delivery of some book titles in an apparent dispute over e-book pricing. Now it looks like pre-orders of The Lego Movie are being held up because of a similar fight with Time Warner. (Money and Time‘s parent company was part of Time Warner, but split off this month.)

There are two sides in these disputes. Amazon sees itself, unlike the classic middleman, fighting suppliers to drastically lower prices for customers. Media companies think they’re confronting a big buyer trying to muscle its way into their businesses. (This is a good place to note that another new middleman, Apple, just settled an e-book price fixing suit with several states.) But from a consumer point view, what’s clear is that all the choices, all the time isn’t the Internet’s inviolable rule. Here are Amazon and Hachette acting a bit like Dish Networks and AMC in 2012, when they shut down viewers’ Mad Men fix because they couldn’t come to terms over fees. When your business can be compared to cable and satellite TV providers, that’s never flattering.

Sure, you can go somewhere else if Amazon doesn’t want to sell you the latest J.K. Rowling book as fast you’d like. But the whole point of the new Amazon smartphone is to make sure you’ll never want to do that.

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