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Thomas Sowell gives a nice introduction on predatory pricing here: http://www.forbes.com/forbes/1999/0503/6309089a.html http://www.forbes.com/forbes/1999/0503/6

Thomas Sowell gives a nice introduction on predatory pricing here: http://www.forbes.com/forbes/1999/0503/6309089a.html http://www.forbes.com/forbes/1999/0503/6309089a.html From Sowell's article: It is a commentary on the development of antitrust law that the accused must defend himself, not against actual evidence of wrongdoing, but against a theory which predicts wrongdoing in the future. It is the civil equivalent of "preventive detention" in criminal cases -- punishment without proof.

olefoo 15y ago
Predatory pricing does exist, but several conditions have to be true of the commodity being priced. It must be a rival good, it's production has to have high-barriers to entry and it cannot have easy substitutes. In the case of online maps, none of those is true. Which is why so many HN readers are surprised by this.
- jlarocco 15y ago
  Actually all 3 of those are true. I don't know exactly what this company's product is, but if they offer an API for creating maps on a website it would be a rival product. Next, the barrier to entry for online mapping is huge. The raw data to generate and create maps is not easy to collect. Especially for satellite images and topo data. And then there's the infrastructure required to actually process and serve the data. Switching mapping APIs is not always trivial. Along with the different interfaces, most of them have slightly different features. Once a site is using a specific mapping API it's anywhere from a hassle to a major PITA to switch to something else.
  - cjy 15y ago
    I think you misunderstand the economic meaning of "rival good": http://en.wikipedia.org/wiki/Rivalry_(economics) http://en.wikipedia.org/wiki/Rivalry_(economics)
    - onemoreact 15y ago
      True, but API's use hardware that has actual costs so it is a "rival good". For example, GPL code is a non "rival good" in that someone running it on their own hardware costs nothing, a download service that provides GPL code is a "rival good" in that a finite number of people can use it at one time. Now if Google hosted their map's as a torrent and said, use this for whatever you want. That would be close enough that calling it a non rival good would be a reasonable defense. But, they do charge some customers for using their API which right or wrong opens them up to predatory pricing laws.
      - jamesaguilar 15y ago
        Yeah, rival-ness is not a binary value though. In a case where marginal costs of providing a service are very low, it's reasonable to describe it as being mostly non-rival. > if Google hosted their map's as a torrent . . . Then it would be non-excludable, which is a different concept from non-rival. It would be rival to the same degree as before, in that it would require marginal computing resources to use. Just the resources required would be coming from the user rather than the provider of the service.
victork2 15y ago
Your equivalent is, imho, incorrect. See it that way, when does predatory begins? As a matter of Fact Google Maps is already the biggest on the market with a price next to 0 for users. If we would compare it to something in real life it would: "Somebody has given to a group of people a serious death threat". Then in that case you'd need a punishment. Anyway, I read some of the comments on this story and I believe take attacks on websites and companies as personal offense. Nothing could be far from reality. A society has to maintain a balance and competition is GOOD. Allowing Google to phagocyte the whole Maps business is not beneficial at all for society as a whole. Actually it's quite bad, even for users. The French government is not racist, they don't want to attack or kill Google, they want a favorable ecosystem for innovation and fair competition. Google is a big business that can use its other services to temporarily dump prices on one of its product to totally wipe out competition, there need to be safeguards!
- robk 15y ago
  France is well known for being protectionist however, when it's a foreign firm competing with local firms regardless of the terms. I expect protectionism like this is probably timed around the upcoming election, which will feature several candidates who are anti-globalization and/or protectionist. http://www.nytimes.com/2011/04/19/business/global/19inside.html http://www.nytimes.com/2011/04/19/business/global/19inside.h... http://www.windpowermonthly.com/news/1080479/Tender-will-favour-French-firms/ http://www.windpowermonthly.com/news/1080479/Tender-will-fav...
- Tichy 15y ago
  By that logic, anybody who invents something new that puts other people out of their jobs is also threatening them with death. Also I don't like that logic of "they are the biggest player, so they must be guilty".
anigbrowl 15y ago
Federal Rules of Civil Procedure include a requirements that plaintiffs plead on facts rather than possibilities, and have done since the 70s or so. Sowell omits to mention that the Sherman act passed at the end of the 19th century was a response to trusts using novel legal vehicles to circumvent rules against cross-shareholding designed to establish a monopoly. It's not great law (and has arguably been hollowed out over the last 30 years), but market failure was a persistent problem when it was put in place.
yannickmahe 15y ago
It makes sense to me. You want to be able to stop the unfair practices before all the competition dies out.

olefoo 15y ago

Predatory pricing does exist, but several conditions have to be true of the commodity being priced. It must be a rival good, it's production has to have high-barriers to entry and it cannot have easy substitutes. In the case of online maps, none of those is true. Which is why so many HN readers are surprised by this.

jlarocco 15y ago
Actually all 3 of those are true. I don't know exactly what this company's product is, but if they offer an API for creating maps on a website it would be a rival product. Next, the barrier to entry for online mapping is huge. The raw data to generate and create maps is not easy to collect. Especially for satellite images and topo data. And then there's the infrastructure required to actually process and serve the data. Switching mapping APIs is not always trivial. Along with the different interfaces, most of them have slightly different features. Once a site is using a specific mapping API it's anywhere from a hassle to a major PITA to switch to something else.
- cjy 15y ago
  I think you misunderstand the economic meaning of "rival good": http://en.wikipedia.org/wiki/Rivalry_(economics) http://en.wikipedia.org/wiki/Rivalry_(economics)
  - onemoreact 15y ago
    True, but API's use hardware that has actual costs so it is a "rival good". For example, GPL code is a non "rival good" in that someone running it on their own hardware costs nothing, a download service that provides GPL code is a "rival good" in that a finite number of people can use it at one time. Now if Google hosted their map's as a torrent and said, use this for whatever you want. That would be close enough that calling it a non rival good would be a reasonable defense. But, they do charge some customers for using their API which right or wrong opens them up to predatory pricing laws.
    - jamesaguilar 15y ago
      Yeah, rival-ness is not a binary value though. In a case where marginal costs of providing a service are very low, it's reasonable to describe it as being mostly non-rival. > if Google hosted their map's as a torrent . . . Then it would be non-excludable, which is a different concept from non-rival. It would be rival to the same degree as before, in that it would require marginal computing resources to use. Just the resources required would be coming from the user rather than the provider of the service.

victork2 15y ago

Your equivalent is, imho, incorrect. See it that way, when does predatory begins? As a matter of Fact Google Maps is already the biggest on the market with a price next to 0 for users. If we would compare it to something in real life it would: "Somebody has given to a group of people a serious death threat". Then in that case you'd need a punishment. Anyway, I read some of the comments on this story and I believe take attacks on websites and companies as personal offense. Nothing could be far from reality. A society has to maintain a balance and competition is GOOD. Allowing Google to phagocyte the whole Maps business is not beneficial at all for society as a whole. Actually it's quite bad, even for users. The French government is not racist, they don't want to attack or kill Google, they want a favorable ecosystem for innovation and fair competition. Google is a big business that can use its other services to temporarily dump prices on one of its product to totally wipe out competition, there need to be safeguards!

robk 15y ago
France is well known for being protectionist however, when it's a foreign firm competing with local firms regardless of the terms. I expect protectionism like this is probably timed around the upcoming election, which will feature several candidates who are anti-globalization and/or protectionist. http://www.nytimes.com/2011/04/19/business/global/19inside.html http://www.nytimes.com/2011/04/19/business/global/19inside.h... http://www.windpowermonthly.com/news/1080479/Tender-will-favour-French-firms/ http://www.windpowermonthly.com/news/1080479/Tender-will-fav...
Tichy 15y ago
By that logic, anybody who invents something new that puts other people out of their jobs is also threatening them with death. Also I don't like that logic of "they are the biggest player, so they must be guilty".

anigbrowl 15y ago

Federal Rules of Civil Procedure include a requirements that plaintiffs plead on facts rather than possibilities, and have done since the 70s or so. Sowell omits to mention that the Sherman act passed at the end of the 19th century was a response to trusts using novel legal vehicles to circumvent rules against cross-shareholding designed to establish a monopoly. It's not great law (and has arguably been hollowed out over the last 30 years), but market failure was a persistent problem when it was put in place.

yannickmahe 15y ago

It makes sense to me. You want to be able to stop the unfair practices before all the competition dies out.