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Big tech is built on predatory pricing

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Re: Big tech is built on predatory pricing

#91

Post by dhimes »

dpatru wrote: post #80
dhimes wrote: post #73

Earlier quoted context omitted.

GP's not talking about investing in infrastructure or training. GP's talking about selling the product for less than it costs to produce in order to have a monopoly in the region. This not only discourages the competition, it discourages the existence of competition. Back in "the day," VCs (at least some) would tell you directly that they wouldn't invest in anything that competes with Microsoft. The legality of it al…

Uber's network of drivers is way of providing transportation services. This network doesn't just spring into existence. It must be created and it costs money. A traditional bus service also costs money; the buses must be purchased, the drivers hired and paid, the routes established and signs posted, etc. Why isn't a bus company unfairly competing with taxis by offering lower fares based on massive upfront investments…

Uber's network of drivers is way of providing transportation services.

They provide a particular type of transportation services, just like the cable company provides a particular type of information service. The cable company can have a monopoly even though you can still read a newspaper for information.

I understand what they are doing, i.e., their strategy. That's not the question. The question is whether or not it is or it should be legal. I honestly don't know the answer to this but there is absolutely no question they are using their size to smash their competition. They could use an alternative strategy, like the rest of us do, such as start with a smaller size and grow demand 'organically' by having a better experience than the bus, taxi, and lyft. But they have a lot of financial muscle and they are using it, for better or worse, to demolish the competition that is in place and intimidate those who are considering it. My guess is that it'll be pretty effective if they can pull it off.

Re: Big tech is built on predatory pricing

#92

Post by stale2002 »

dredmorbius wrote: post #42
stale2002 wrote: post #39

Earlier quoted context omitted.

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…

Maybe your points are correct.

But my argument is that there must be provable consumer harm, and that consumers are the only thing that matters.

So all those bad things that you mentioned, do they hurt consumers AND is Amazon actually doing them? That is the only thing that matters, and would be the thing that should be determined by whatever court case happens.

Re: Big tech is built on predatory pricing

#93

Post by stale2002 »

TheDong wrote: post #57
stale2002 wrote: post #51

Earlier quoted context omitted.

Ok, maybe it hurts competitors, but how in the world does it mess with public transportation? Public transportation can't handle the load across the country. If everyone starts using VC subsidized services, that FIXES the public transportation under capacity problem. Public transportation loses money. So if people find something better or cheaper, then all the better!

> Ok, maybe it hurts competitors, but how in the world does it mess with public transportation? ... If everyone starts using VC subsidized services... If no one uses public transit, public transit will be hurt clearly. The real risk though is that people who can afford uber start using it, public transit fails, and then uber increases its price since people have fewer options. > Public transportation loses money. So…

Public transit is overcrowded in many places. So the less people that use it the better, as it means that it won't be overcrowded and have to deal with the issues that overuse creates.

It is not about 'nobody' using it. It is about less people, than the already too much people who are using it.

Re: Big tech is built on predatory pricing

#94

Post by dredmorbius »

stale2002 wrote: post #92
dredmorbius wrote: post #42

Earlier quoted context omitted.

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…

Maybe your points are correct. But my argument is that there must be provable consumer harm, and that consumers are the only thing that matters. So all those bad things that you mentioned, do they hurt consumers AND is Amazon actually doing them? That is the only thing that matters, and would be the thing that should be determined by whatever court case happens.

I disagree with both points.

There may be highly probable harms which cannot be directly proven, or for which various standards of proof are thwarted by the monopolist itself. Since "wealth is power" (Thomas Hobbes, Adam Smith), monopoly power itself conveys additional power. There's a strong argument for additional responsbility, limits, and/or oversight as a result, for which there's a long list of supporting argument (Smith, Mill, Marx, Galbraith, off the top of my head).

Secondly, consumers are only one of several parties potentially affected. The other groups may be competitors, suppliers, vendors, the public at large, natural systems, etc. I'd have to think over this at greater length.

The argument that price and "consumers" are the only factors of significance in considering monopoly harms is a distinctly modern one, promulgated almost exclusively by monopolists themselves. To rather great effect.

After all, wealth is power.

Re: Big tech is built on predatory pricing

#95

Post by conanbatt »

dhimes wrote: post #75
conanbatt wrote: post #34

Earlier quoted context omitted.

If you were an Uber investor, and they told you that they are going to blow your money below margin of operations for years to come, would you feel happy about it? Do you prefer to be the dumper or the dumpee? Because I prefer to be the latter. > Unlike with cloud services (the other example) it's much harder for competition to Uber to reappear once it's disappeared. It's just a car. Its super easy to break into that…

If they weren't they wouldn't let them do it. Maybe amateur investors will get upset, but as I said in another comment the pros know that this tactic will not only scare off competition, this will scare off potential competition. Few will fund a company to compete against an incumbent who is large and powerful enough to do this to you. There are other battles to be fought, so why risk it?

I wouldn't compete against someone stabbing himself either...

Re: Big tech is built on predatory pricing

#96

Post by rtpg »

mc32 wrote: post #26
rtpg wrote: post #19

Earlier quoted context omitted.

You might be able to classify it as dumping. Loss leading itself could also be regulated more. For example, in France it's illegal to resell something for less than the price you paid for it (except during regulated "sales" periods). This prevents companies coming in and using their funds to subsidize the products. I could see the argument that Uber is a reseller, given they're not part of the actual taxi experience

What are the "sales periods"? I can see what they're trying to address, but commerce is fickle and often times unpredictable. What if I thought I saw an opportunity to do business but it turned out to be a bad judgement and now I have 20,000 count of something that isn't moving and I have better things to do than wait for the sale period and at least get half my money back and reinvest it in something else I think mi…

The sales periods are two times in the year. These periods are pretty long (6 weeks?).

There are exceptions for perishable goods and for products that have been rendered obsolete due to technological progress. I think there are some other force majeure exceptions.

It's a bit stifling, but it means that huge retailers can't destroy smaller businesses just due to their huge capital reserves. It helps to preserve competition in the retailing space. And worst case you just have to handle it for a couple of months.

Re: Big tech is built on predatory pricing

#97

Post by mc32 »

rtpg wrote: post #96
mc32 wrote: post #26

Earlier quoted context omitted.

What are the "sales periods"? I can see what they're trying to address, but commerce is fickle and often times unpredictable. What if I thought I saw an opportunity to do business but it turned out to be a bad judgement and now I have 20,000 count of something that isn't moving and I have better things to do than wait for the sale period and at least get half my money back and reinvest it in something else I think mi…

The sales periods are two times in the year. These periods are pretty long (6 weeks?). There are exceptions for perishable goods and for products that have been rendered obsolete due to technological progress. I think there are some other force majeure exceptions. It's a bit stifling, but it means that huge retailers can't destroy smaller businesses just due to their huge capital reserves. It helps to preserve compet…

I have not been to France in a bit, but I recall seeing lots of "Soldes" signs (perh clothing nad other retail is considered "seasonal" and therefore can be discounted whenever).

I'm not sure how preventing any time sales helps sole proprietor shops, as big enterprise can simply sell barely above cost till they sink the mom and pops. If they are looking to protect the consumer a better tact is preventing the boost and cut pricing tactic to make a sale seem like a good deal.

So I guess no BOGO/BOGOFs?

Re: Big tech is built on predatory pricing

#98

Post by rtpg »

mc32 wrote: post #97
rtpg wrote: post #96

Earlier quoted context omitted.

The sales periods are two times in the year. These periods are pretty long (6 weeks?). There are exceptions for perishable goods and for products that have been rendered obsolete due to technological progress. I think there are some other force majeure exceptions. It's a bit stifling, but it means that huge retailers can't destroy smaller businesses just due to their huge capital reserves. It helps to preserve compet…

I have not been to France in a bit, but I recall seeing lots of "Soldes" signs (perh clothing nad other retail is considered "seasonal" and therefore can be discounted whenever). I'm not sure how preventing any time sales helps sole proprietor shops, as big enterprise can simply sell barely above cost till they sink the mom and pops. If they are looking to protect the consumer a better tact is preventing the boost an…

12 weeks out of the year is a pretty huge time, so it's likely you were present during those times. If you were in more touristy areas I think there are huge exceptions there (especially in Paris).

You can totally do things like BOGO if you're selling things way above cost, or if you're not a reseller but the actual manufacturer of the good.

An example of this is take out pizza, which usually offers BOGO if you don't opt for delivery.

The Sales rule is usually about when you are just being a market maker and not part of the production process itself. Similar rules exist for things like book sellers (you can not discount the price of a new book by more than 5% of the MSRP).

Re: Big tech is built on predatory pricing

#99

Post by jacknews »

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.

"If prices forever stay low, then consumers ALWAYS benefit, right?"

Not necessarily. The system is much more complex than simply "low prices = good".

Markets are an ecosystem, if you allow one retailer to dominate, they will exert control. That could be by hiking prices, or it could be by picking favorites among their suppliers, deciding which products are "suitable" and so on, and by squeezing suppliers, possibly to the point where the result is stagnating quality and innovation, as suppliers race to the bottom on price alone.

Quite apart from consumer political issues of having such a dominant presence in the market. Eg, if they refuse to serve you for whatever reason (or serve you badly, perhaps with "custom" pricing), you are disadvantaged.

The consumer ultimately loses in this long game, and it should go without saying that enabling a monopolist, even one with low prices and supposedly a focus on "customer satisfaction" (though is that merely a vector for dominance?), is likely to end badly.

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