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OpenAI is Visa – Buttering up the government to retain a monopoly

sherwood.news

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Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#91

Post by bdangubic »

1659447091 wrote: post #69
bdangubic wrote: post #57

Earlier quoted context omitted.

I don’t understand this line of argument at all… Costco has competitors, you do NOT have to go to Costco. I choose not to go to many places because I disagree with their business practices or politics or whatever I feel like - it is my right. I do not understand this at all - especially in America. You don’t want my MasterCard or Discover or WhateverNewPaymentThingy? Great, imma head over to XYZ and spend my money th…

> And excusing Amex - why is that?! Fees alone? To be fair, the core AMEX product is a charge card, not a credit card. They have more recently expanded into a few credit card products. I don't know the exact details, but my understanding is that the charge card system is more merchant hostile than the credit card system and more than simply larger fees.

but we are establishing here that companies (like Costco) have the right to choose which payment methods they allow in their store… if they can (of course they can and no one should stop them) then they can - end of story

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#92

Post by lxgr »

Spooky23 wrote: post #83
jncfhnb wrote: post #77

Earlier quoted context omitted.

The duopoly isn’t really as problematic as the concept itself. Credit cards, where customers are bribed to insert a middleman into all transactions and suppliers are largely powerless to refuse it; are a plague. The switching costs of a consumer to a different credit card are small. The switching cost of a business saying they no longer allow certain payment types is potentially very painful.

Credit cards are probably the most consumer friendly innovation ever — a product of the time they were developed. It was an era when the federal government functioned and the credit card operations were so problematic a heavy hand was required. Every supposedly better alternative adds margin for the supplier, increases the risk of fraud, and leaves the user with poor recourse due to the lack govnerment regulation. Ad…

If they provide that much value to consumers intrinsically, then why are banks paying the same consumers to use them?

I completely agree that credit (and just as much, if not more, debit) cards are an incredibly useful invention and great accelerator for online commerce. I don't know of any other way of paying a merchant I know next to nothing of that will allow me to get my money back if they do not deliver on their side of the contract.

But at the same time, the price discovery mechanisms for what exact value they provide (and who, i.e. the networks or the issuing banks, and to whom!) are next to nonexistent. In an efficient market, credit card cashback would not be a thing, for example.

You could argue that that doesn't matter, that the status quo is good enough, but that's what people used to say about incumbent phone companies as well. The EU just demonstrated that an alternative is very possible (at least on the interchange side, which is the bulk of what merchants pay).

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#93

Post by rqtwteye »

delusional wrote: post #54
mdasen wrote: post #44

Earlier quoted context omitted.

Yea, I don't want to defend Visa, but a lot of their dominance came from network effects. Merchants want to accept Visa because it's what people have in their wallet. Customers want Visa because it's what merchants accept. That cycle keeps reinforcing itself. That's not to say that Visa hasn't worked toward favorable regulations, but the biggest problem with alternative payment networks (to Visa/MC/Discover/AMEX) is…

> Yea, I don't want to defend Visa, but a lot of their dominance came from network effects. I think it's worth noting that VISA is also really doing a pretty good job. Like the cards work. Here in Europe they seem eager to adopt emerging technology and are willing to invest to maintain their dominance. There's a ton of not so consumer friendly backroom deals with kickbacks for the banks and stuff, but the core produc…

They aren't very vendor friendly and their fees are way too high. Little bit like Amazon. they are are consumer friendly at the expense of their vendors.

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#94

Post by mattlondon »

How does this attempt even work these days? So let's say you get your monopoly for only OpenAI in the USA. Everyone else in the world just stops and OpenAI just gets to do what they want and name their price? I don't think so.

Isn't DeepMind HQ'd in the UK already? I am sure Ireland would jump at the chance to create some friendly tax treatment again to entice competitors. And of course China can just keep being China and churn out a few more coal fired power stations every few weeks to power things cheaply. You may capture consumers and a few Gov contracts, but global companies will just circumvent it

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#95

Post by dangerwill »

bdangubic wrote: post #57
dangerwill wrote: post #37

Earlier quoted context omitted.

> What's the difference if they want to force customers to use cash or Visa. I'll leave the cash option aside because the provider of cash is the US treasury. But yes, I do think it is wrong for a merchant to only allow mastercard or visa or discover. I understand merchants not taking Amex because their fees are significantly higher on the merchant side, but discover, mastercard, and visa are all similar for the merc…

I don’t understand this line of argument at all… Costco has competitors, you do NOT have to go to Costco. I choose not to go to many places because I disagree with their business practices or politics or whatever I feel like - it is my right. I do not understand this at all - especially in America. You don’t want my MasterCard or Discover or WhateverNewPaymentThingy? Great, imma head over to XYZ and spend my money th…

If you want a healthy market, your standard cannot simply be: As long as there is more than one retailer in the space, retailers can place whatever restrictions they want on how you pay for their services. Businesses in one sector being able to directly affect consumer choices across sectors is how you end up with cross sector monopolies.

It is bizarre to bring up China here, this isn't about the state dictating the payment system but maintaining a healthy market. It's like a garden, you don't dictate exactly how the plants grow, but you prune them once they encroach onto other plants to maintain a healthy balance.

I brought up Amex because it is common for merchants to not accept it, due to it being a significantly worse deal for the merchants. I am fine with the argument for an even more expansive version of my argument, but I'm making a more narrow argument due to discover, visa, mastercard being so close in how they function that it is not a burden on merchants to accept one vs the others.

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#96

Post by dangus »

lxgr wrote: post #92
Spooky23 wrote: post #83

Earlier quoted context omitted.

Credit cards are probably the most consumer friendly innovation ever — a product of the time they were developed. It was an era when the federal government functioned and the credit card operations were so problematic a heavy hand was required. Every supposedly better alternative adds margin for the supplier, increases the risk of fraud, and leaves the user with poor recourse due to the lack govnerment regulation. Ad…

If they provide that much value to consumers intrinsically, then why are banks paying the same consumers to use them? I completely agree that credit (and just as much, if not more, debit) cards are an incredibly useful invention and great accelerator for online commerce. I don't know of any other way of paying a merchant I know next to nothing of that will allow me to get my money back if they do not deliver on their…

I think you're missing the point here a little bit.

To break this down more simply:

Credit cards: Merchants pay 3% and pass the cost on to the customer, IRS gets the vast majority of business taxes paid (no way to under-report taxable income), average person gets all the benefits of a fully funded government plus 1-2% of their purchase back in credit card rewards. Average person also gets a revolving credit line with okay-ish interest rates considering how no collateral is needed and approval is instant.

Cash: Merchants broadly and easily commit tax fraud and under-report earnings, average person then has to pay a higher tax rate to overcome the tax fraud rates and get the same government services in return, merchant still pays something similar to or higher than 3% in transaction costs to handle cash (shrinkage (employees stealing, miscounting, lost cash), physical storage, movement, and processing, armored truck service, etc) and passes those costs on to the customer. Customers have no access to revolving credit which is totally fine but before credit cards people would resort to much more poorly regulated/higher interest/illegal sources of short term loans.

I would also point out that debit card swipe fees are already regulated to under 1% and have many of the same benefits as credit cards.

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#97

Post by bdangubic »

dangerwill wrote: post #95
bdangubic wrote: post #57

Earlier quoted context omitted.

I don’t understand this line of argument at all… Costco has competitors, you do NOT have to go to Costco. I choose not to go to many places because I disagree with their business practices or politics or whatever I feel like - it is my right. I do not understand this at all - especially in America. You don’t want my MasterCard or Discover or WhateverNewPaymentThingy? Great, imma head over to XYZ and spend my money th…

If you want a healthy market, your standard cannot simply be: As long as there is more than one retailer in the space, retailers can place whatever restrictions they want on how you pay for their services. Businesses in one sector being able to directly affect consumer choices across sectors is how you end up with cross sector monopolies. It is bizarre to bring up China here, this isn't about the state dictating the…

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Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#98

Post by hdbbd »

ADeerAppeared wrote: post #16
insane_dreamer wrote: post #6

Doesn't explain what regulations Visa pushed for and got which helped it maintain its monopoly. Would be helpful to have some concrete examples of what it did and what OpenAI is trying to do. The point of the article sounds plausible, but doesn't really present any evidence to support it. Also OpenAI in no way has a monopoly of the kind that Visa/MC has.

> Also OpenAI in no way has a monopoly of the kind that Visa/MC has. I think this is misreading how literal the comparison is meant to be; Sherwood's running a bunch of "OpenAI is X" articles today. This is not about the massive duopoly which has been catastrophic for US payments, but about the way companies entrench themselves. > Doesn't explain what regulations Visa pushed for and got which helped it maintain its m…

Well Companies are told to show either profit or growth every 3 months. That sets up where the story goes.

So we have everyone from Starbucks to McD to AT&T to Comcast to Walmart to Amazon to Netflix to Disney etc etc all trying to pull that off even as Incomes dont grow globally other than in small pockets of the world which are over targeted and over fished. Its very hard to correct these kind of runaway processes cuz "everyone is doing it" and everyone doesnt know hpw to do anything else.

Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#99

Post by dangerwill »

bdangubic wrote: post #97
dangerwill wrote: post #95

Earlier quoted context omitted.

If you want a healthy market, your standard cannot simply be: As long as there is more than one retailer in the space, retailers can place whatever restrictions they want on how you pay for their services. Businesses in one sector being able to directly affect consumer choices across sectors is how you end up with cross sector monopolies. It is bizarre to bring up China here, this isn't about the state dictating the…

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Re: OpenAI is Visa – Buttering up the government to retain a monopoly

#100

Post by lxgr »

dangus wrote: post #96
lxgr wrote: post #92

Earlier quoted context omitted.

If they provide that much value to consumers intrinsically, then why are banks paying the same consumers to use them? I completely agree that credit (and just as much, if not more, debit) cards are an incredibly useful invention and great accelerator for online commerce. I don't know of any other way of paying a merchant I know next to nothing of that will allow me to get my money back if they do not deliver on their…

I think you're missing the point here a little bit. To break this down more simply: Credit cards: Merchants pay 3% and pass the cost on to the customer, IRS gets the vast majority of business taxes paid (no way to under-report taxable income), average person gets all the benefits of a fully funded government plus 1-2% of their purchase back in credit card rewards. Average person also gets a revolving credit line with…

With your last sentence, you supply your own counterexample demonstrating that "tax-evasion-enabling cash or credit cards costing the merchant 2-3%, pick one" is a false dichotomy.

As I've mentioned, another counterexample is that Visa and Mastercard credit cards very much continue to exist in the EU, even after consumer credit card interchange rates have been capped to 0.3%.

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