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How would this be legislated or enforced? You're not allowed to sell a product or service at a loss? Do we really want the government dictating a company's pri
by danenania 3y ago
How would this be legislated or enforced? You're not allowed to sell a product or service at a loss?
Do we really want the government dictating a company's pricing? What about free tiers or loss leaders? Many small companies use these too.
Not to mention that we're talking about private companies, so the government currently only has a very broad idea of unit economics from tax info. It would require a whole new level of reporting from private companies.
Overall, I highly doubt such legislation would end up being beneficial for small companies, however good the intentions might be. Most likely it would make their lives even harder due to an increased reporting and compliance burden, and VC favorites would do even better by comparison since they can afford to hire people to fill out all the paperwork and make friends with the regulators.
- roland35 3y agoThe main way to prevent this is to end 0% interest rates. Now that the cost of capital is higher, I think we will see a lot less of these "ZIRP" (Zero Interest Rate Policy) strategies. Some companies like Uber seem to have been able to transition out of that, but we'll see about others like Instacart and Grubhub...
- advael 3y agoFirst off, I think loss leaders are an almost textbook example of anticompetitive tactics indicative of detrimental dominance in a market. We should expect tactics that need regulation to seem normal, because if they weren't effective, they wouldn't be a problem in the first place. But also, given the pervasiveness of VC in this environment, and the tendency of investors to exert influence on the direction of businesses they invest in, the practices of VC and PE is where antitrust should aim