This happened at a place where I worked years ago, but not as 'on purpose.' We were a large company where most pieces depended on other pieces, and everything was fine - until a new CEO came in who started holding the numbers of each BU under a microscope. This led to each department trying to bill other departments as an enterprise customer, who then retaliated, which then led to internal departments threatening to go to competitors who charged less for the same service. Kinda stupid how that all works - on paper it would have made a few departments look better if they used a bottom barrel competitor, but in reality the company would have bled millions of dollars as a whole...all because one rather large BU wanted to goose its numbers.
Why is that a bad thing? If an internal department that’s not core to their business is less efficient than an external company - use the external company.
Anecdote: Even before Amazon officially killed Chime, everyone at least on the AWS side was moving to officially supported Slack.
I guess it depends on circumstances, but it boils down to each department only cost others some marginal cost in practice.
Imagine a hosting company and a dns company, both with plenty of customers and capacity. The hosting company says... I'll host your DNS site, if you provide DNS to our hosting site. Drop in the bucket for each.
One year the DNS company decides it needs to show more revenue, so will begin charging the hosting company $1000/yr, and guess what the hosting company says the same. Instead, they each get mad and find $500/yr competitors. What was accomplished here?
Further, it just looks bad in many cases. Imagine if Amazon.com decided AWS was too expensive, and decided to move their stuff off to say, Azure only. That wouldn't be a great look for AWS and in turn hurts...Amazon.
I do get your point, but there are a lot of... intangibles about being in a company together.
There is more politics than you think within Amazon Retail about moving compute over to AWS. I’m not sure how much of Amazon Retail runs on AWS instead of its own infrastructure (CDO).
I know one project from Amazon got killed because their AWS bill was too high. Yeah AWS charges Amazon Retail for compute when they run on AWS hardware.
As a rule, organizations are created to avoid the transaction costs on those detail tasks. If you externalize every single supporting task into a market, you will be slowed down to a drag, won't be able to use most competitive advantages, and will pay way more than doing them in house.
But removing the market competition is a breeding ground for inefficiency. So there's a balance there, and huge conglomerates tying their divisions together serves only to make the competitive ones die by the need to use the services of the inefficient ones.
My four years at AWS kind of indoctrinated me. As they said, everytime you decide to buy vs build, you have to ask yourself “does it make the beer taste better”?
Don’t spend energy on undifferentiated heavy lifting. If you are Dropbox it makes sense to move away from S3 for instance.
