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Yep. Of course companies do it when they can; it works for them. It's the effect on other companies, on actual market competition, and ultimately the consumer,

Yep. Of course companies do it when they can; it works for them. It's the effect on other companies, on actual market competition, and ultimately the consumer, that is a problem. Heck, Amazon is a fun example; they've long used their monopoly power to dictate to publishers, and are currently seeking to leverage their monopoly, Kindle Unlimited, etc, to help drive self-publishing on their platform, to cut out Publishers entirely. I'm not saying that removal of publishers is innately a bad thing, I -am- saying that making Amazon the largest publisher and the largest distributor of books in the world probably is. And they've achieved it not by simply being the best, but also via predatory pricing, and using money from AWS to cover costs in their retail arm to help gain market share, at the expense of smaller retailers who don't have a massively profitable cloud service to offset their losses with.

lotsofpulp 5y ago
> And they've achieved it not by simply being the best, but also via predatory pricing, and using money from AWS to cover costs in their retail arm to help gain market share, at the expense of smaller retailers who don't have a massively profitable cloud service to offset their losses with. Source? Their financials do not indicate that they were or are subsidizing losses in their retail business with AWS. https://dazeinfo.com/2019/11/06/amazon-net-income-by-year-graphfarm/ https://dazeinfo.com/2019/11/06/amazon-net-income-by-year-gr... AWS income did not even ramp up until a few years after it came out in 2006. Their main competitive advantage was having a decent website and shipping operation early on when other retailers did not, and being able to sell goods to customers in most states without charging sales tax until the 2010s for most states.
- hoppyhoppy2 5y ago
  In fairness to the parent commenter, Amazon never had a net profitable year until 2004. Most new non-Silicon Valley retailers can't operate for ten years with yearly losses. Certainly not most smaller retailers.
  - lotsofpulp 5y ago
    They certainly can. They choose not to. Amazon, at the time, chose to invest in their warehouse operations, they chose to lose a little money in the short term and build out their operations to go head to head with Walmart and the other retailers. And they chose to invest in developing their website and e-commerce when online shopping was not a sure thing. You bet big, you win big. Of course, now it is just a side show since retail is playing for pennies, but they certainly were not "dumping" back then just to kill the competition, and then planning to raise prices. They clearly innovated and brought online shopping to the fore.
  - spaced-out 5y ago
    That's because investors know those small retailers have no ability to scale. If Amazon did what most retailers do when they have a good quarter, throw their investors some dividends and only employ the people they need to keep things running, then investors would never have valued as high as they were/are.
- lostcolony 5y ago
  Fair, I'm overstating it. They basically kept wall street happy with their profit in AWS, while having comparatively little realized profit in retail, allowing them to keep margins in retail extremely thin. I'm explicitly thinking of 2010-2015ish, when I recall seeing news articles about it, but I'm way too lazy to go find them. Either way, I completely agree that they're now in such a dominant position they don't have to have predatory pricing to still capture a huge part of the market.
  - lotsofpulp 5y ago
    Retail margins are already extremely thin at ~2%. However, the public markets allowed AMZN to maintain at 0% or even slightly negative because the market (correctly) believed the group of people at Amazon were doing something innovative. The market could have chosen Walmart, or Target or Home Depot too, but they did not (correctly) because the chances of the people working at those companies coming out with something like AWS is insufficient. Amazon is a poor company to use as an example for one that dumps their product at below cost in hopes of gaining market share.

lotsofpulp 5y ago

> And they've achieved it not by simply being the best, but also via predatory pricing, and using money from AWS to cover costs in their retail arm to help gain market share, at the expense of smaller retailers who don't have a massively profitable cloud service to offset their losses with. Source? Their financials do not indicate that they were or are subsidizing losses in their retail business with AWS. https://dazeinfo.com/2019/11/06/amazon-net-income-by-year-graphfarm/ https://dazeinfo.com/2019/11/06/amazon-net-income-by-year-gr... AWS income did not even ramp up until a few years after it came out in 2006. Their main competitive advantage was having a decent website and shipping operation early on when other retailers did not, and being able to sell goods to customers in most states without charging sales tax until the 2010s for most states.

hoppyhoppy2 5y ago
In fairness to the parent commenter, Amazon never had a net profitable year until 2004. Most new non-Silicon Valley retailers can't operate for ten years with yearly losses. Certainly not most smaller retailers.
- lotsofpulp 5y ago
  They certainly can. They choose not to. Amazon, at the time, chose to invest in their warehouse operations, they chose to lose a little money in the short term and build out their operations to go head to head with Walmart and the other retailers. And they chose to invest in developing their website and e-commerce when online shopping was not a sure thing. You bet big, you win big. Of course, now it is just a side show since retail is playing for pennies, but they certainly were not "dumping" back then just to kill the competition, and then planning to raise prices. They clearly innovated and brought online shopping to the fore.
- spaced-out 5y ago
  That's because investors know those small retailers have no ability to scale. If Amazon did what most retailers do when they have a good quarter, throw their investors some dividends and only employ the people they need to keep things running, then investors would never have valued as high as they were/are.
lostcolony 5y ago
Fair, I'm overstating it. They basically kept wall street happy with their profit in AWS, while having comparatively little realized profit in retail, allowing them to keep margins in retail extremely thin. I'm explicitly thinking of 2010-2015ish, when I recall seeing news articles about it, but I'm way too lazy to go find them. Either way, I completely agree that they're now in such a dominant position they don't have to have predatory pricing to still capture a huge part of the market.
- lotsofpulp 5y ago
  Retail margins are already extremely thin at ~2%. However, the public markets allowed AMZN to maintain at 0% or even slightly negative because the market (correctly) believed the group of people at Amazon were doing something innovative. The market could have chosen Walmart, or Target or Home Depot too, but they did not (correctly) because the chances of the people working at those companies coming out with something like AWS is insufficient. Amazon is a poor company to use as an example for one that dumps their product at below cost in hopes of gaining market share.