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Big tech is built on predatory pricing

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Re: Big tech is built on predatory pricing

#41

Post by dredmorbius »

amenghra wrote: post #4
habosa wrote: post #2

What Uber is doing here should absolutely not be allowed. Whenever you go to a city where Uber is in it's first year of operations the prices are insanely low. This also happens when Uber launches a new product like Pool. This enables them to crowd out any competition and then raise prices once they've got control of the market. I have a friend in SF who takes Uber to work every day. It's about 3.5 miles. I assumed h…

> big network effects at play What is Uber's network effect? Most people I know will use whatever app gives them the cheapest ride / will drive for multiple companies. There might even be an opportunity for a $1 app that tells you which service you should use at any given time/location.

Network effects apply to any system with links and nodes.

Uber sees this through its financing, application, comms network, drivers, members/subscribers, and political influence.

Transport, comms, data/information, knowledge itself, and land are all classic networks, subject to network effects, and monopoly pressures.

Re: Big tech is built on predatory pricing

#42

Post by dredmorbius »

stale2002 wrote: post #39
jacknews wrote: post #22

Earlier quoted context omitted.

"When are those mythical monopoly price increases coming?" They are not. But the "promise" that they are, or could, inflates Amazon's stock price. This is how they bank profit, not by traditional profit on income. This has the advantage that they don't need to pay tax, since they don't make any accounting profit.

Ok then. How are consumers harmed then, if prices never increase? If prices forever stay low, then consumers ALWAYS benefit, right? You are making a different argument than the one that the article makes, FYI.

A monopolist controls the market.

http://www.latimes.com/books/jacketcopy/la-et-jc-amazon-and-...

The focus on price, alone, is a distraction. The monopolist can choose winners and losers, favour or exclude sellers or buyers, unilaterally determine and dictate dispute resolution (e.g., Amazon's purchase dispute process), in favour of buyers, or sellers, or parties specified on other bases.

Or as comms providers have done in the past, and it is feared they might do if network neutrality obligations are lifted, as the FCC are attempting to ram through presently.

The monopolist isn't answerable to the public or citizenry, as a government body is.

A monopoly market is not a competitive market, with many buyers and sellers, to which any given buyer or seller has a recourse should one counterparty decline business or terms.

A monopolist creates a situation of rents, by controlling and regulating supply. This allows for price inflation if demand can then be influenced, much as is the case with land.

That's just off the top of my head. Any further questions?

Re: Big tech is built on predatory pricing

#43

Post by crdoconnor »

basseq wrote: post #18
habosa wrote: post #2

What Uber is doing here should absolutely not be allowed. Whenever you go to a city where Uber is in it's first year of operations the prices are insanely low. This also happens when Uber launches a new product like Pool. This enables them to crowd out any competition and then raise prices once they've got control of the market. I have a friend in SF who takes Uber to work every day. It's about 3.5 miles. I assumed h…

What Uber is doing here should absolutely not be allowed. What Uber is doing is called loss leading. It would be very hard to outlaw or regulate in any sort of "fair" way. The result you fear--a monopoly with price control--is illegal and is tightly regulated.

>The result you fear--a monopoly with price control--is illegal

Monopolies are not illegal.

Re: Big tech is built on predatory pricing

#44

Post by DrPsyker »

basseq wrote: post #18
habosa wrote: post #2

What Uber is doing here should absolutely not be allowed. Whenever you go to a city where Uber is in it's first year of operations the prices are insanely low. This also happens when Uber launches a new product like Pool. This enables them to crowd out any competition and then raise prices once they've got control of the market. I have a friend in SF who takes Uber to work every day. It's about 3.5 miles. I assumed h…

What Uber is doing here should absolutely not be allowed. What Uber is doing is called loss leading. It would be very hard to outlaw or regulate in any sort of "fair" way. The result you fear--a monopoly with price control--is illegal and is tightly regulated.

Loss leading is different. It's when you discount a product to attract people to an overall experience (a supermarket, for example). Not when you discount the price of your core product.

Re: Big tech is built on predatory pricing

#45

Post by DrPsyker »

banku_brougham wrote: post #31
skybrian wrote: post #14

This analysis seems pretty shallow. It's interesting that Amazon is losing money in North America. But why? That's clue worth investigating further, not a reason to immediately assume predatory pricing.

This article should have led with Uber, the author picked only on quarterly YoY and posted a misleading statement about losses, when it was just a decline in income. Yes, very shallow analysis.

Well, given there's shipping costs here blowing out and Prime has been proven to be losing money the more a customer buys, not sure your statement holds up.

Re: Big tech is built on predatory pricing

#47

Post by ocb »

DrPsyker wrote: post #45
banku_brougham wrote: post #31

Earlier quoted context omitted.

This article should have led with Uber, the author picked only on quarterly YoY and posted a misleading statement about losses, when it was just a decline in income. Yes, very shallow analysis.

Well, given there's shipping costs here blowing out and Prime has been proven to be losing money the more a customer buys, not sure your statement holds up.

I'm certain there's some compelling argument to made about Amazon abusing its market position but this isn't it.

You say "Prime has been proven to be losing money the more a customer buys" like that isn't an obvious consequence of having flat pricing for shipping. The idea that Prime and Amazon's shipping as a whole are a loss leader isn't a new insight.

Re: Big tech is built on predatory pricing

#48

Post by hknecht »

>> “I’m all for capitalism. But predatory pricing to build market share isn’t capitalism. It’s simply anti-competitive and we must call it out. “

I have to disagree, creating a monopoly is part of the capitalistic process of creating profits in the long term and I would say it’s one of the aims of capitalism itself: when you compete do you want as many competitors as possible? It could be for some reasons but it certainly can be the opposite for more reasons as well.

While I do agree that this may have some negative consequences for customers, I can’t understand how they would legislate this:

If they keep with this strategy they either fail (or just crash very hard) for not having a scalable business or they prosper in some way, let’s say by increasing prices: if they prosper the only thing we could do is making sure that customers can access more convenient offers elsewhere.

That’s why I think having transparent and accessible information is truly enforcing meritocracy, while preventing monopolies is not

Re: Big tech is built on predatory pricing

#49

Post by AlexandrB »

stale2002 wrote: post #15

This reminds me of an old Russian joke. 3 business owners are in a communist jail. That ask each other what they are in for. Person 1: "I set my prices lower than my competitors, and got sent to jail for price dumping!" Person 2 "I set my prices higher than my competitors and got sent to jail for price gouging!" Person 3 "I set my prices to be the same as my competitors and got set to jail for price fixing!" It has b…

> It has been almost 20 years since Amazon got started. When are those mythical monopoly price increases coming?

They're already here! Over the last few years Amazon has become notorious for the level of counterfeit goods making their way through their storefront - including Prime[1]. With moves like mixing supposedly identical goods from different sellers in their distribution centres, Amazon seems to be indicating that they don't really care about this problem - regardless of how much lip service they pay it. In effect, they're getting some percentage of their customers to accept inferior goods for similar prices. I don't think they could get away with it if they had robust competition in online retail.

[1] https://www.cnbc.com/2016/07/08/amazons-chinese-counterfeit-...

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