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What is bad about the situation exactly? You get a service for below cost for some amount of time at which point you have to start paying what it actually costs

What is bad about the situation exactly? You get a service for below cost for some amount of time at which point you have to start paying what it actually costs. I can understand if the company manages to corner the market by selling below cost and then jacks up the price way above cost, but cloud storage is still an extremely competitive market and generally quite a bit cheaper than the cost of storing an equivalent amount of data on your own hardware (with the same availability)

terminous 3y ago
It is literally anti-competitive, bad for consumers and competitor startups. How can an average startup compete if a rich company or VC backed startup has a business model of selling below cost to get market share? The fact that the big players are doing it makes it an oligopoly not a monopoly, but that's still bad. This is a 100+ year old problem and has already been solved in other industries, but tech likes to think it is unique. It's a bad pattern to sell below cost to gain market share. Oil and steel companies were selling below cost to undercut competing startups in the 1900s, then raised prices when those competitors folded. It wasn't good for anyone other than the robber barons then either.
- thinkharderdev 3y ago
  > raised prices when those competitors folded This part only works if you don't have other large competitors. But this obviously not the case for cloud storage. It is an extremely competitive commodity product. > bad for consumers How exactly is it bad for consumers to get products below cost?
  - bluesroo 3y ago
    That argument that GP is making isn't that low prices are bad for consumers. The argument is that amortized over the lifetime of the business, the prices are actually significantly higher because they are able to momentarily drive their prices down, eat the losses long enough to run their competition out of business, and then immediately break the low-priced agreements with their customers. Sure, they may be a commodity product now. That shouldn't exempt them from holding up their agreements from when they were still competing for market space.
    - freedomben 3y ago
      Exactly. It's also bad for consumers because they then have to migrate existing data to some new service (which is far from trivial for most consumers who don't know how to use rclone), and potentially face steep egress fees. Remember we're talking about the industry not just G. G doesn't charge egress fees for Drive, but many cloud storage providers do. The strategy is "lock-in" and it's a primary part of the "go cheap or free to get customers" part, and it's bad for consumers. I'd much rather pay more in the short-term for cloud storage and not have to migrate later. Thank God for Back Blaze
    - thinkharderdev 3y ago
      > That shouldn't exempt them from holding up their agreements from when they were still competing for market space. What agreement? They offered a service with no guarantees that it would be provided in perpetuity. If they offered "free unlimited storage for life" and then backed out of that based on some legalese on page 75 of their EULA then I agree that would be slimy. But that is not what happened here. > they are able to momentarily drive their prices down, eat the losses long enough to run their competition out of business This can happen and when it does it is anti-competitive. But that is not what happened in this case. Do you really think that Google thought they could drive AWS and Microsoft out of business with below cost storage on Google Drive? Seems unlikely. And even if they somehow managed to do that, they would immediately have competitors undercutting them on price again as soon as they raised prices enough. What seems much more likely to me is they offered unlimited storage as a competitive feature of Google Workspace thinking it would still be profitable even with some customers using much more storage. But because we can't have nice things a bunch of people realized they could essentially use the unlimited plan as an ultra-cheap object storage service and were storing 100s of TB of data. Rather than raise everyone's prices to subsidize bad actors, it seems much more reasonable to just discontinue unlimited storage.
      - bluesroo 3y ago
        > What seems much more likely to me is they offered unlimited storage as a competitive feature of Google Workspace thinking it would still be profitable even with some customers using much more storage. But because we can't have nice things a bunch of people realized they could essentially use the unlimited plan as an ultra-cheap object storage service and were storing 100s of TB of data. Rather than raise everyone's prices to subsidize bad actors, it seems much more reasonable to just discontinue unlimited storage. This is the internet. Google has been around since the dawn of the popular internet. At this point, no one should be naive to the abuses that internet-facing services regularly encounter. The correct thing to do here is not offer a fantasy service to customers. Now that they've offered a fantasy service, they should be on the hook for actually assisting the customers that have been locked into their service. Admittedly, there's naiveté on both sides here. There difference is that the company is the one with the money and power, and they instigated this relationship by offering the service in the first place. They should shoulder the burden of fixing the problems they have created by attempting to undercut the market when it was beneficial to them.
  - terminous 3y ago
    > How exactly is it bad for consumers to get products below cost? Because it is necessarily a short term strategy, and when the subsidy ends, it is incredibly disruptive (in the bad way). It is good in the short term for those consumers who get in early and get their consumption subsided by VC funds or FAANG profits from another subsector. But it is bad in the long term for everyone when firms try to compete by selling below cost. Consumers usually win when companies have to compete with each other. But selling below cost is a strategy that only very rich or entrenched players can do. It means you have to play the VC unicorn game as a startup. It sets unrealistic price expectations for consumers. It leads to situations like this when the rug is pulled. Look what has happened with ride sharing and delivery apps. A few rich VC backed firms took over the market and subsidized cheap rides. Entire industries were transformed, and most restaurants stopped offering delivery themselves. Now, it is becoming clear that those $5-7 rides actually cost 2-3x that, and that's not what people are willing to pay.
    - gruez 3y ago
      Except in this particular case cloud storage is a very competitive space with dozens of competitors.
johnnyanmac 3y ago
>I can understand if the company manages to corner the market by selling below cost and then jacks up the price way above cost, That's usually what happens. And Google is no stranger to it given Youtube and to some extent Chrome (which is "free" but also being molded to more or less have DRM on the browser level). Cloud is fortunatly still competitive, but I can't say the same for many other tech markets.

terminous 3y ago

It is literally anti-competitive, bad for consumers and competitor startups. How can an average startup compete if a rich company or VC backed startup has a business model of selling below cost to get market share? The fact that the big players are doing it makes it an oligopoly not a monopoly, but that's still bad. This is a 100+ year old problem and has already been solved in other industries, but tech likes to think it is unique. It's a bad pattern to sell below cost to gain market share. Oil and steel companies were selling below cost to undercut competing startups in the 1900s, then raised prices when those competitors folded. It wasn't good for anyone other than the robber barons then either.

thinkharderdev 3y ago
> raised prices when those competitors folded This part only works if you don't have other large competitors. But this obviously not the case for cloud storage. It is an extremely competitive commodity product. > bad for consumers How exactly is it bad for consumers to get products below cost?
- bluesroo 3y ago
  That argument that GP is making isn't that low prices are bad for consumers. The argument is that amortized over the lifetime of the business, the prices are actually significantly higher because they are able to momentarily drive their prices down, eat the losses long enough to run their competition out of business, and then immediately break the low-priced agreements with their customers. Sure, they may be a commodity product now. That shouldn't exempt them from holding up their agreements from when they were still competing for market space.
  - freedomben 3y ago
    Exactly. It's also bad for consumers because they then have to migrate existing data to some new service (which is far from trivial for most consumers who don't know how to use rclone), and potentially face steep egress fees. Remember we're talking about the industry not just G. G doesn't charge egress fees for Drive, but many cloud storage providers do. The strategy is "lock-in" and it's a primary part of the "go cheap or free to get customers" part, and it's bad for consumers. I'd much rather pay more in the short-term for cloud storage and not have to migrate later. Thank God for Back Blaze
  - thinkharderdev 3y ago
    > That shouldn't exempt them from holding up their agreements from when they were still competing for market space. What agreement? They offered a service with no guarantees that it would be provided in perpetuity. If they offered "free unlimited storage for life" and then backed out of that based on some legalese on page 75 of their EULA then I agree that would be slimy. But that is not what happened here. > they are able to momentarily drive their prices down, eat the losses long enough to run their competition out of business This can happen and when it does it is anti-competitive. But that is not what happened in this case. Do you really think that Google thought they could drive AWS and Microsoft out of business with below cost storage on Google Drive? Seems unlikely. And even if they somehow managed to do that, they would immediately have competitors undercutting them on price again as soon as they raised prices enough. What seems much more likely to me is they offered unlimited storage as a competitive feature of Google Workspace thinking it would still be profitable even with some customers using much more storage. But because we can't have nice things a bunch of people realized they could essentially use the unlimited plan as an ultra-cheap object storage service and were storing 100s of TB of data. Rather than raise everyone's prices to subsidize bad actors, it seems much more reasonable to just discontinue unlimited storage.
    - bluesroo 3y ago
      > What seems much more likely to me is they offered unlimited storage as a competitive feature of Google Workspace thinking it would still be profitable even with some customers using much more storage. But because we can't have nice things a bunch of people realized they could essentially use the unlimited plan as an ultra-cheap object storage service and were storing 100s of TB of data. Rather than raise everyone's prices to subsidize bad actors, it seems much more reasonable to just discontinue unlimited storage. This is the internet. Google has been around since the dawn of the popular internet. At this point, no one should be naive to the abuses that internet-facing services regularly encounter. The correct thing to do here is not offer a fantasy service to customers. Now that they've offered a fantasy service, they should be on the hook for actually assisting the customers that have been locked into their service. Admittedly, there's naiveté on both sides here. There difference is that the company is the one with the money and power, and they instigated this relationship by offering the service in the first place. They should shoulder the burden of fixing the problems they have created by attempting to undercut the market when it was beneficial to them.
- terminous 3y ago
  > How exactly is it bad for consumers to get products below cost? Because it is necessarily a short term strategy, and when the subsidy ends, it is incredibly disruptive (in the bad way). It is good in the short term for those consumers who get in early and get their consumption subsided by VC funds or FAANG profits from another subsector. But it is bad in the long term for everyone when firms try to compete by selling below cost. Consumers usually win when companies have to compete with each other. But selling below cost is a strategy that only very rich or entrenched players can do. It means you have to play the VC unicorn game as a startup. It sets unrealistic price expectations for consumers. It leads to situations like this when the rug is pulled. Look what has happened with ride sharing and delivery apps. A few rich VC backed firms took over the market and subsidized cheap rides. Entire industries were transformed, and most restaurants stopped offering delivery themselves. Now, it is becoming clear that those $5-7 rides actually cost 2-3x that, and that's not what people are willing to pay.
  - gruez 3y ago
    Except in this particular case cloud storage is a very competitive space with dozens of competitors.

johnnyanmac 3y ago

>I can understand if the company manages to corner the market by selling below cost and then jacks up the price way above cost, That's usually what happens. And Google is no stranger to it given Youtube and to some extent Chrome (which is "free" but also being molded to more or less have DRM on the browser level). Cloud is fortunatly still competitive, but I can't say the same for many other tech markets.