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What You Need to Know About 5G in 2020

LAS VEGAS — Like many consumers, Kathryn Schipper, an attorney in Seattle, doesn’t have a landline. She relies on her smartphone for calls and videoconferencing, but reception is spotty.

So she is excited about the arrival of 5G, the fifth-generation wireless network that has been the subject of breathless speculation over the last few years. The new cellular standard, carriers have said, will reduce network congestion and pump out data so fast that smartphone users could download all the “Avengers” movies in a few minutes. It might even eventually help cars drive themselves.

“5G seems like orders-of-magnitude improvement,” Ms. Schipper said. “I’ve also heard it’s much more reliable, so that matters to me.”

Yet the shift to 5G feels like a tech revolution happening in slow motion. In 2019, AT&T and Verizon, the two largest American carriers, lit up their 5G networks in a small number of cities. Handset makers released only a handful of phones compatible with the new standard. The overwhelming majority of us saw no meaningful improvement to our cellular networks.

At CES, the big consumer electronics show in Las Vegas this week, the carriers are insisting that 2020 will be a turning point for 5G. AT&T and Verizon say they expect their 5G networks to be accessible nationwide this year. In addition, the carriers say at least 15 smartphones will be 5G compatible this year, more than triple the number last year.

“2020 is pivotal because you’ve got a good foundation built, and the ecosystem starts to form,” said Kevin Petersen, a marketing executive for AT&T.

So what does that even mean? A major technology shift is underway, which may have an impact on your personal technology in the coming years. And unlike its predecessors, 5G is complex and more confusing.

Here’s what you need to know:

In the simplest terms, 5G is a new cellular standard. Phone carriers have jumped to a new wireless standard roughly every decade. About 10 years ago, 4G, the fourth-generation network, arrived with significantly faster speeds and stronger reliability than 3G. About a decade before that, 3G arrived and was much faster and more robust than 2G. You get the picture.

Unfortunately, 5G is more complicated. There are a few flavors of 5G described with deeply technical jargon.

To make 5G easier to swallow, let’s rename the jargon into ice cream flavors:

  • The much-hyped, ultrafast variant of 5G is known as “millimeter wave,” but let’s call it rocky road. It lets carriers transmit data at incredibly fast speeds — the kind that would let you download an entire movie in a few seconds.

    The problem with rocky road is that its signals travel shorter distances, covering a park in New York but not a broad swath of the city, for example. It also has trouble penetrating obstacles like walls. So Verizon and AT&T have focused deployment of rocky road in large spaces like sports stadiums and outdoor amphitheaters.

    Because of the technical limitations of rocky road, we are unlikely to see it deployed nationwide anytime soon (if ever), meaning we won’t be getting these incredible speeds in the vast majority of places.

  • Instead, this year our cellular networks will broadly shift to a version of 5G that is less exciting. Let’s call this vanilla 5G.

    Vanilla 5G will have speeds that are only slightly faster than current 4G networks. The main benefit will be a reduction of lag known as latency. For example, when you do a web search on your phone, the results usually won’t load immediately; the lag can often last hundreds of milliseconds. In theory, 5G technology will shave this latency down to a few milliseconds. (To be clear, rocky road offers low-latency benefits, too.)

    AT&T and Verizon say their 5G networks, which will be made up of mostly vanilla 5G and small scoops of rocky road, should be activated nationwide this year. T-Mobile, which put a priority on deploying vanilla 5G over rocky road, said its 5G network was available nationwide last year.

    In short, the broad shift to 5G won’t be mind blowing, but you will probably notice a marked improvement.

In some cases, yes. While Wi-Fi is also very fast, it pulls data from a broadband connection, which is susceptible to degraded performance when others nearby are using it. By design, 5G transmits high amounts of data more efficiently, so it is expected to significantly mitigate network congestion. There is a high likelihood that you will get a consistently strong, faster connection on 5G.

Yes. You will have to buy a new phone with a 5G modem to connect with the new network technologies.

Most current 5G-compatible phones are expensive: Samsung’s Galaxy Note 10 Plus 5G, for example, costs $1,300. But as the technology becomes more common in the next few years, prices should drop.

The carriers are still tinkering with pricing.

Verizon’s earliest 5G plans charged an extra $10 a month for people with compatible smartphones to gain access to 5G. (It is currently waiving that fee as it builds out its 5G network.) However, Ronan Dunne, a Verizon executive, said the carrier was planning different types of packages. Some with access to both vanilla 5G and rocky road 5G could be priced higher, while plans with only vanilla 5G might be priced lower. (He declined to share specific prices.)

“Here’s a plan which says this plan comes with ultralow latency, and it’s part of a gamers’ package, or it might be part of a movie and entertainment package,” Mr. Dunne said. “Because of this ability to separate components of the network, you can see an evolution of a new type of pricing and plan model.”

AT&T’s so-called unlimited extra plan, which includes 5G access, costs $75 a month for an individual line.

T-Mobile said access to its 5G network was available to its subscribers at no additional cost.

AT&T, unfortunately, made 5G extra confusing for its customers. In late 2018, it rebranded parts of its existing 4G network as “5GE.” So AT&T customers with older 4G-compatible phones started seeing a “5GE” status icon on their screens.

For the sake of simplicity, let’s ignore 5GE altogether. It’s not real 5G.

AT&T’s vanilla version of 5G is branded 5G, and its rocky-road version is labeled 5G Plus.

It depends on where you go. (Some countries still lack thorough 4G coverage.) China is poised to have the largest 5G network in the world, and 5G is well underway in Japan and South Korea. The European Union’s goal is to release 5G in at least one major city in each member state this year, according to a study conducted for the European Commission.

The benefits will probably feel subtle and significant.

Lower latency is crucial to future mobile applications. It could make virtual reality work more smoothly — like if you were watching a virtual-reality broadcast of a live sports game and wanted to look around the stadium.

Reduced lag may also improve gaming: If you were playing a shooting game with friends online, there would be less delay between button presses and your actions in the game.

A reduction in latency will also help internet-connected devices talk to one another immediately. That is why technologists are looking to 5G deployment as a crucial step toward a world of autonomous cars. If one car is 5G equipped and so is the other, they can tell each other when they are braking. Or if the vehicle is signaling to turn right, it can communicate the turn to cars behind it so they can slow down or switch lanes.

“You can see why that’s not very relevant today but very useful tomorrow,” said Frank Gillett, a technology analyst for Forrester Research.

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Prime Power: How Amazon Squeezes the Businesses Behind Its Store

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Credit…Andrea Chronopoulos

Twenty years ago, Amazon opened its storefront to anyone who wanted to sell something. Then it began demanding more out of them.


SEATTLE — For tens of millions of Americans, it is so routine that they don’t think twice.

They want something — a whisk, diapers, that dog toy — and they turn to Amazon. They type the product’s name into Amazon’s website or app, scan the first few options and click buy. In a day or two, the purchase appears on their doorstep.

Amazon has transformed the small miracle of each delivery into an expectation of modern life. No car, no shopping list — no planning — required.

But to make it all work, Amazon runs a machine that squeezes ever more money out of the hundreds of thousands of companies, from tiny start-ups to giant brands, that put the everything into Amazon’s Everything Store.

In more than 60 interviews, current and former Amazon employees, sellers, suppliers and consultants detailed how Amazon dictates the rules for those businesses, sometimes changing those rules with little warning. Many spoke on the condition of anonymity, for fear of retaliation by Amazon.

Amazon punishes the businesses if their items are available for even a penny less elsewhere. It pushes them to use the company’s warehouses. And it compels them to buy ads on the site to make sure people see their products.

All of that leaves the suppliers more dependent on Amazon, by far the nation’s top online retailer, and scrambling to deal with its whims. For many, Amazon eats into their profits, making it harder to develop new products. Some worry if they can even survive.

“Every year it’s been a ratchet tighter,” said Bernie Thompson, a top seller of computer accessories who Amazon has highlighted in its marketing to other merchants. “Now you are one event away from not functioning.”

Tumi, the luxury bag maker, sold its products at wholesale prices to Amazon for years. But executives said Amazon sometimes misjudged consumer demand, keeping too few bags in stock, and regularly demanded more in marketing and other fees. Last year, Tumi decided to sell its bags to another company, which then listed the items on Amazon. The arrangement gave Tumi more control over inventory and better sales data.

A few months later, Amazon gave Tumi an ultimatum: Stop selling through the middleman, or do not sell to the retailer’s 150 million customers at all.

“Some guy we had never talked to gave us a call and was like, ‘We have changed the rules,’ ” said Charlie Cole, who runs Tumi’s online business. He pushed back, but wasn’t successful.

“It was like talking to a brick wall,” he said. “They want to be able to control everything.”

Companies struggling to navigate Amazon’s growing chaos fill Facebook groups, private message boards and industry conferences. One session at a leading retail meeting next year is called “The Big Question: Is Selling on Amazon Worth the Hassle?” More than 12,000 people signed a petition on Change.org asking Amazon to alter an arcane rule on counterfeit products that they said could “destroy” an entire business.

Many sellers and brands on Amazon are desperate to depend less on the tech giant. But when they look for sales elsewhere online, they come up short. Last year, Americans bought more books, T-shirts and other products on Amazon than eBay, Walmart and its next seven largest online competitors combined, according to eMarketer, a research company.

“The secret of Amazon is we’re happy to help you be very successful,” said David Glick, a former Amazon vice president who left the company last year. “You just have to kiss the ring.”

Amazon says that its operation is so massive, the rules are necessary to give customers a quality experience. The company said the health of sellers was a top priority, and that it had invested billions of dollars to support them. It said that about 200,000 sellers surpassed $100,000 in sales in 2018, roughly a 40 percent increase from the year before.

“If sellers weren’t succeeding,” said Jeff Wilke, the chief executive of Amazon’s consumer business, “they wouldn’t be here.”

Jack Evans, a spokesman for the company, said that Amazon only succeeded when sellers succeed, “and claims to the contrary are wrong.” Merchants can choose the products they sell, how they are priced and how they fulfill the orders, he said.

The policy change that affected Tumi, Mr. Evans said, was to make sure that Amazon had the best prices and availability for popular products. He said that Tumi’s prices were high when it sold through the middleman.

Amazon has faced harsh criticism in the past for displacing Main Street brick-and-mortar retailers. Now, the diverging fortunes of Amazon and many of the companies selling products on its own site are at the heart of the antitrust scrutiny Amazon faces in Washington and Europe. Investigators at the Federal Trade Commission and the House Judiciary Committee are examining whether Amazon abuses its position as the central online connection between people making products and those buying them.

Amazon collects 27 cents of each dollar customers spend buying things its merchants sell, a 42 percent jump from five years ago, according to Instinet, a financial research firm. That does not include what companies pay to place ads on Amazon, a business that Wall Street considers as valuable as Nike.

The pennies add up. Last year, the profit from retail was so high that it surprised even some senior leaders close to the business, according to two of the people involved.

Thanks to the retail success, the company’s profit exceeded its own Wall Street projections by more than $3 billion.

Jeff Bezos, Amazon’s founder and chief executive, lumps the many parts of the company into two buckets, according to the two people close to the business. One bucket is investments, or bets on the future like Alexa, its virtual assistant. The other is contributors, or the profitable businesses that provide money for Amazon’s investments.

To him, the retail operation is a contributor that can be squeezed for cash.

Billions of dollars generated from selling products online go into investments like Alexa, which has 10,000 employees working on it, and the company’s expensive Hollywood productions. And still, Amazon’s consumer businesses, including Alexa and other pricey projects, produced $5 billion in operating profit last year.

The financial success stems from a big strategy shift that was underappreciated when Mr. Bezos made it two decades ago.

From the day the company started shipping orders in 1995, Amazon offered customers products the same way as traditional retailers like Target, buying them at wholesale and reselling them at a higher price. Four years later, Mr. Bezos and his team decided that Amazon would also let companies list items on the site for a cut of the sale, more like eBay and Alibaba. The change allowed Amazon to offer a wider variety of products.

“We want to try and build a place where people can come to find and discover anything that they might want to buy online,” Mr. Bezos said that year.

The decision eventually turned Amazon into the one-stop shop it’s known as today. Shoppers could find not only well-known brands like Tide detergent, but also obscure Christmas ornaments.

Initially, the move empowered sellers and gave them access to millions of customers. They could ship their products however they wanted. And they could set their own price.

Bit by bit, the sellers lost control.

When Amazon opened its doors to sellers, the fulfillment industry — for storing, packing and shipping online orders — was in its infancy. Many top sellers on Amazon ran their own warehouses.

Seeing a competitive advantage in offering faster delivery times, Amazon opened cavernous warehouses near major cities. Inside, workers navigated endless rows to pick products from bins and pack them into boxes.

The expansion left Amazon with extra space to fill, and the company turned to sellers. It pitched them on the idea of paying Amazon to store and ship their products, even those sold on other sites.

James Thomson, a Canadian with a doctorate in marketing, managed a team responsible for signing up sellers, leading them on tours of Amazon’s facilities near Reno, Nev., Phoenix and elsewhere. “Look how vast this is,” he recalled telling sellers. “Look at how we can easily absorb your 10,000 orders a month.”

“You do have a bigger warehouse than mine,” Mr. Thomson remembered them saying, “but I have good rates.”

Several years later, Amazon’s focus changed, and so did its pitch.

In early 2011, only a few million people were Prime members, paying $79 a year for unlimited two-day shipping. But Amazon knew those members spent far more on the site. Executives wanted more people to sign up for Prime, and they wanted to sell those customers even more stuff.

That year, Amazon began adding more perks to Prime. Most notable was unlimited video streaming of TV shows like “Mister Rogers’ Neighborhood” and movies like “The Girl With the Dragon Tattoo.”

As more people became members, products eligible for Prime shipping became more popular. Amazon reminded sellers that if they used the company’s warehouses, their items would be Prime eligible, too.

“That is what we were selling,” Mr. Thomson said.

It worked. The number of sellers using Amazon’s warehouses increased by 65 percent in 2013, according to a letter sent to investors. The company has since spent billions of dollars to continue building out its fulfillment network.

Mr. Bezos noted how intertwined sellers, warehouses and Prime had become in a note to investors in 2015. “At this point, I can’t really think about them separately,” he wrote.

Amazon has since flipped back and forth over whether outside sellers must use Amazon’s warehouses to sell Prime products. But for most types of goods, like pet supplies, cameras and baby gear, more than 85 percent of the top-selling items ship out of Amazon’s warehouses, according to Jungle Scout, which provides data to Amazon sellers.

Amazon handles packing and shipping for the most popular products sold on its site, even for products sold by outside sellers.

The 1,000 top-selling

products in each category

Orders sold and fulfilled

by outside sellers

Kitchen/dining

Pet supplies

Camera/photo

Beauty/personal care

Computers/accessories

Orders sold

and fulfilled

by Amazon

Orders fulfilled

by Amazon

for outside

sellers

Clothing, shoes/jewelry

Video games

Home/kitchen

Toys/games

Musical instruments

Cell phones/accessories

Tools/home improvement

Industrial/scientific

Patio, lawn/garden

Grocery/gourmet food

Sports/outdoors

Automotive

Arts, crafts/sewing

Health/household

Appliances

Electronics

Office products

Percentage of total

sales within each group

The 1,000 top-selling products in each category

Kitchen/dining

Pet supplies

Camera/photo

Beauty/personal care

Computers/accessories

Orders fulfilled

by Amazon

for outside

sellers

Orders

sold and

fulfilled

by outside

sellers

Orders sold

and fulfilled

by Amazon

Clothing, shoes/jewelry

Video games

Home/kitchen

Toys/games

Musical instruments

Cell phones/accessories

Tools/home improvement

Industrial/scientific

Patio, lawn/garden

Grocery/gourmet food

Sports/outdoors

Automotive

Arts, crafts/sewing

Health/household

Appliances

Electronics

Office products

Percentage of total sales within each group

Source: JungleScout

By Karl Russell

Amazon has surpassed DHL to become the largest provider of fulfillment and other logistics services in the world, according to The Journal of Commerce, a trade publication.

Many sellers say that the company charges fair rates to fulfill Amazon orders. But they say Amazon is charging them higher prices for other services. For example, because the warehouses operate near capacity, the company charges several times more than competitors to store items before they ship out.

The costs can be several times higher for sellers who use Amazon to ship orders made on other websites. Amazon charges $13.80 for one-day shipping on a T-shirt bought on a site other than Amazon, versus $3.68 when bought on Amazon.

In addition, Amazon had let sellers pay $1 to ship an order in a plain brown box without the company’s smile logo. But in 2016, the company said it would use only Amazon boxes. Sellers were told they could take their product back from Amazon’s warehouses if they wanted. “Return or disposal fees will apply,” it wrote to sellers.

Amazon says that its logistics services are optional and a great value. Sellers who choose to use it “enjoy high-quality fulfillment services that customers want,” the company told Congress’s investigators this year.

The company says it offers lower costs on Amazon orders because it makes other money from them, including commissions and advertising, that it does not get for sales made on other websites.

Shoppers on other sites turn away when products are not available in two days or less, said Karl Siebrecht, co-founder of Flexe, a start-up that connects retailers with a network of fulfillment centers.

“It’s new browser,” he said. “Amazon.com. Click. Buy. Done.”

This summer, Brandon Fishman, the founder of VitaCup, a start-up that infuses coffee with vitamins and nutrients, saw a promising opportunity.

Zulily, an e-commerce site that offers low prices in exchange for slower shipping, wanted to list VitaCup’s products 30 percent off for a short time. It was a chance for Mr. Fishman, whose 35-employee company gets the majority of its sales through Amazon and its own site, to reach new customers.

But Amazon’s software noticed the lower price and removed the bright “Buy Now” and “Add to Cart” buttons from its site. When those buttons are gone, shoppers get a bland text link that says, “Available from these sellers” and they must make more clicks to purchase an item. Those extra clicks are often the difference between success and failure for a seller.

Mr. Fishman’s Amazon sales tumbled, and he emailed Zulily to quickly take down the listing.

“I have told them about my rage many times,” Mr. Fishman said of Amazon. “It has not changed them.”

Amazon has pushed to keep prices low since the day it opened. That has become trickier as more sales came from outside sellers. According to antitrust law, each seller of goods should determine what to charge on its own. To avoid problems, an in-house lawyer is typically present when internal Amazon teams discuss pricing, according to two former employees.

In 2017, Amazon began reducing prices to match competitors; if the new price was lower than the one requested by the sellers, Amazon paid the difference. The company also alerted companies if their products were cheaper elsewhere.

Still concerned about news reports that prices on Amazon weren’t always the lowest, the company tried another approach, the one that hit VitaCup: removing the Buy Now and Add to Cart buttons when its software detected lower prices. When those buttons disappear, sales tumble as much as 75 percent, sellers say.

Executives at Amazon intended this as a tool to lower prices. The company has told Congress that the buttons amount to an endorsement, saying it only displays them on “offers that it is confident will present a great experience for its customers.”

But many brands raise their prices elsewhere to avoid losing the buttons. Or they decide to list their product only on Amazon. That is what happened to a health care supply company that worked with Jason Boyce, who advises online sellers.

“My client cut off Walmart — Walmart! — because it was hurting their Amazon business,” Mr. Boyce said. “If that’s not monopoly power, I don’t know what is.”

Amazon said in statement that sellers “have full control of their own prices both on and off Amazon,” and that the company helps them maximize sales by advising them how to earn the Buy Now and Add to Cart buttons.

The Zulily experience frustrated Mr. Fishman. But he boiled over after another move by Amazon.

One morning in June, Mr. Fishman opened his Amazon app and typed “VitaCup” into the search bar at the top of the screen. On the results page was an ad for Amazon’s own line of coffee.

He had been paying Amazon almost $200,000 a month for ads. Mr. Fishman posted a screenshot on LinkedIn and raged.

“I have a major problem with this!!!” he wrote.

For years, the question of whether Amazon should push ads on its site generated fierce debate among senior managers and executives inside the company, according to eight current and former Amazon employees. In memos and fiery meetings, they disagreed on what was best for a company that preached obsession with serving customers.

One camp believed that ads would erode customer trust, because shoppers expected Amazon to show them popular products with strong reviews and a good price.

The other camp saw ads as a cash machine Amazon could tap to drive down prices and fund new innovations for customers. The financial potential was obvious. When people shop online, they more often turn to Amazon than Google to start their search, according to multiple studies. And every brand wants to get in front of them.

Workers eventually got word that Mr. Bezos had settled the debate, according to two senior employees. Mr. Bezos said that Amazon had two options: Sell ads, and use the cash for investments. Or shun ads, and get beaten by competitors.

Ads soon appeared at critical locations, in particular on the page that pops up after a customer types a product into Amazon’s search bar. Some ads were rectangular blocks across the top of the page, and the top several products listed in the search results were ads disguised as a regular listing, aside from the word “Sponsored” in light gray. Combined, they have at times filled almost the entire first screen.

Mr. Wilke said the internal hesitation to ads was overcome by the results.

“It turned out they worked,” he said. “And by worked, I mean the ads help customers find what they’re looking for. And the reason we know that is cause they buy more stuff.”

But it added another cost for companies. Ranking high is essential to driving sales on the site. Competitors raced to place ads to ensure a prominent spot.

Out of antitrust concerns, company lawyers prohibit employees and advertising companies it works with from bragging that Amazon is where most people search for products online, according to two people who were warned about this.

Quartile, among the largest of a new breed of companies that help brands navigate Amazon advertising, tested the importance of the ads last year. It stopped running ads for 750 popular products. Immediately, sales shrank by 24 percent.

The effect then cascaded. That’s because the fewer recent sales a product has, including sales driven by ads, the lower it ranks on the site. At the end of 10 weeks, sales of the products without ads had tumbled 55 percent.

“It’s increasingly pay-to-play,” said Melissa Burdick, a 10-year Amazon veteran who now advises major consumer brands.

Amazon said its ads were optional and the majority of sellers built their businesses without them.

John Denny, who ran e-commerce for the drink company Bai, said brands used to believe that if they had a great product, it would show up in the search results, and sales would follow.

“Those days are over,” Mr. Denny said. “There are no lightning strikes on Amazon any more.”

A decade ago, Mr. Thompson, a former Microsoft software developer, recognized a big market for computer accessories like computer docking stations and cables. He started Plugable and betted big that depending on Amazon would turn his idea into a business.

It worked. In 2016, Mr. Bezos highlighted Mr. Thompson when talking about the success of sellers in his annual letter to investors. Amazon posted a video about Plugable on its website to attract new sellers.

“He has a history of good performance metrics, and an absence of things like safety and authenticity complaints,” Chris McCabe, a former Amazon fraud investigator, said in an interview.

But in the last couple of years, as rules shifted and his profit shrank, Mr. Thompson began warning people that working with Amazon had become increasingly difficult.

He took his concerns to Amazon this summer, giving a 20-slide presentation to a senior executive at the company’s Seattle headquarters. On slide No. 6, Mr. Thompson laid out his nightmare: Amazon cutting off sales of his best seller, a laptop docking station that is frequently one of the 100 most popular electronics products on the site.

His plea to the executive was simple. “No surprises,” he said.

He got surprised.

One Sunday in July, he got an email saying that Amazon had removed the docking stations. Amazon said it was because of complaints that Plugable’s products had not matched the condition described on the site.

Other docking stations, including one made by Amazon, filled the void online.

Mr. Thompson scrambled, contacting two high-level managers he knew and his account manager, who Amazon charges him $5,000 a month to have. None of them could fix it.

He and other staff members dug through customer feedback and returns. They found only outstanding reviews, said Gary Zeller, one of Mr. Thompson’s deputies.

“There was nothing borderline about it,” Mr. Zeller said.

After four days and at least $100,000 in lost sales, the listing went back up. Mr. Thompson said he still did not understand what ignited the problem.

Amazon declined to comment on Plugable. Mr. Wilke said that the company’s future depended on policing the site without harming well-meaning merchants.

“We have a strong incentive to be as accurate as possible in identifying bad actors, make very few mistakes when we’re wrong, on giving second chances to people who make an honest mistake,” he said.

Mr. Thompson is now looking for new ways to make money. But Amazon accounts for roughly 90 percent of electronics sales online, according to market research. His business at Walmart and eBay, the next largest online retailers, are less than 5 percent of his revenue.

In September, Plugable hired two people to sell directly to corporations.

“We really built the company on Amazon,” Mr. Thompson said. “We have no regrets about doing that. But today our focus has to be getting diversification off Amazon.”

He said he understood what he was up against.

“We are dealing with a partner,” he said, “who can and will disrupt us for unpredictable reasons at any time.”