5 ms·

OpenAI choosing Azure is not anti-competitive. You can claim it is anti-competitive because the "smaller guy" was not chosen.

by chucke1992 3y ago

_heimdall 3y ago
If Microsoft's investment came with strings attached pushing OpenAI to use Azure, how is that not functionally anticompetitive behavior (even if they found some legal gymnastics to keep it technically legal)?
- chucke1992 3y ago
  But nothing stopping smaller guy to sweeten the deal no? It is the same thing why new entrants tend to offer lower prices and stuff like that. Nobody argues that new entrant to some market should offer something in order to compete with the established giant. Established giant cannot hire goons or suppress the competitor directly, like - "if you use the competitor, then you will lose access to our big store".
  - _heimdall 3y ago
    So, in this example, you don't see any problem with a market leader offering billions in investment earmarked for use in buying that market leader's products? Assuming that there is some level of economies of scale with regards to cloud computing, how would a new entrant to the market compete? And is this not anticompetitive only because they used a massive pile of cash to corner the market? If so, why are mergers and acquisitions reviewed at all? With regards to the accounting of it, are you okay with Microsoft being able to use this as a way to offset billions in profits today and effectively amortize those gains over a few years as OpenAI spends the cash on Azure hosting? Forget the legal technicalities for a moment, would you as a citizen be okay with Microsoft being able to act this way? Do we want massive corporations able to block markets off as long as they can afford it, and hide away profits to avoid paying taxes?
    - chucke1992 3y ago
      > If so, why are mergers and acquisitions reviewed at all? they are reviewed to check if it is lessening of the competition. Like if some new grassroots company decides to offer new OS, Microsoft probably won't be able to go and buy it. It also cannot pay other companies not to use this OS. > Forget the legal technicalities for a moment, would you as a citizen be okay with Microsoft being able to act this way? Do we want massive corporations able to block markets off as long as they can afford it, and hide away profits to avoid paying taxes? Acting what way? It is like asking if you are okay if somebody can afford something, you can't.
      - _heimdall 3y ago
        > It also cannot pay other companies not to use this OS. Oh I'd assume they could pull that never if they chose to, at least in certain situations. Just take the OpenAI / Microsoft deal as an example. If a $10B investment into a company comes with strings attached, say with board seats and an exclusivity deal to use Azure products, they just blocked out any other hosting service that could compete. If that is legally questionable but they can invest most of the capital as credits for Azure products, they've effectively done the same thing without it clearly being coercion. For a new OS, Microsoft this spent decades building an ecosystem and marketshare in the enterprise space. MS could pretty easily make sure none of their services work on the new OS. They wouldn't be fully blocking the new OS out but it would make it an extremely difficult challenge. > Acting what way? It is like asking if you are okay if somebody can afford something, you can't. My understanding is that part of the OpenAI investment was in Azure credits. That may technically be legal, but it blocks any competition in the space and defers paying taxes on the value of those credits. If MS simply made the investment and OpenAI chose to use Azure of their own accord, there's absolutely nothing wrong with that. If MS strong arms OpenAI into using Azure through a combination of strings to the funding and/or board seats, I strongly disagree with that.
        chucke1992 3y ago
        > Just take the OpenAI / Microsoft deal as an example. If a $10B investment into a company comes with strings attached, say with board seats and an exclusivity deal to use Azure products, they just blocked out any other hosting service that could compete. If that is legally questionable but they can invest most of the capital as credits for Azure products, they've effectively done the same thing without it clearly being coercion. Microsoft invested in OpenAI and OpenAI has become a huge success. That's all to it. They offered them a deal with azure credits, profits etc. and OpenAI succeeded. They could have failed and doubt anybody would be concerned about MSFT's deal with OpenAI...It is not like Microsoft forced OpenAI's hand there - they could have gone to Amazon. > For a new OS, Microsoft this spent decades building an ecosystem and marketshare in the enterprise space. MS could pretty easily make sure none of their services work on the new OS. They wouldn't be fully blocking the new OS out but it would make it an extremely difficult challenge. They could but they won't due to their high market share and public outrage. That's the whole point. If Microsoft tried to ask for 30% from any Windows app installation then would be in a huge legal trouble immediately. Hell, even bundling Windows Media Player led to some fines...I can have any store on Windows and I don't need to pay Microsoft a thing but if MSFT will try to use Windows API to make Steam work worse than Windows Store, that would cause legal trouble for them. > My understanding is that part of the OpenAI investment was in Azure credits. That may technically be legal, but it blocks any competition in the space and defers paying taxes on the value of those credits. But here is the thing - OpenAI went to Microsoft and agreed to that deal. They could have gone to AWS or GCP.

OpenAI choosing Azure is not anti-competitive. You can claim it is anti-competitive because the "smaller guy" was not chosen.

_heimdall 3y ago

If Microsoft's investment came with strings attached pushing OpenAI to use Azure, how is that not functionally anticompetitive behavior (even if they found some legal gymnastics to keep it technically legal)?

chucke1992 3y ago
But nothing stopping smaller guy to sweeten the deal no? It is the same thing why new entrants tend to offer lower prices and stuff like that. Nobody argues that new entrant to some market should offer something in order to compete with the established giant. Established giant cannot hire goons or suppress the competitor directly, like - "if you use the competitor, then you will lose access to our big store".
- _heimdall 3y ago
  So, in this example, you don't see any problem with a market leader offering billions in investment earmarked for use in buying that market leader's products? Assuming that there is some level of economies of scale with regards to cloud computing, how would a new entrant to the market compete? And is this not anticompetitive only because they used a massive pile of cash to corner the market? If so, why are mergers and acquisitions reviewed at all? With regards to the accounting of it, are you okay with Microsoft being able to use this as a way to offset billions in profits today and effectively amortize those gains over a few years as OpenAI spends the cash on Azure hosting? Forget the legal technicalities for a moment, would you as a citizen be okay with Microsoft being able to act this way? Do we want massive corporations able to block markets off as long as they can afford it, and hide away profits to avoid paying taxes?
  - chucke1992 3y ago
    > If so, why are mergers and acquisitions reviewed at all? they are reviewed to check if it is lessening of the competition. Like if some new grassroots company decides to offer new OS, Microsoft probably won't be able to go and buy it. It also cannot pay other companies not to use this OS. > Forget the legal technicalities for a moment, would you as a citizen be okay with Microsoft being able to act this way? Do we want massive corporations able to block markets off as long as they can afford it, and hide away profits to avoid paying taxes? Acting what way? It is like asking if you are okay if somebody can afford something, you can't.
    - _heimdall 3y ago
      > It also cannot pay other companies not to use this OS. Oh I'd assume they could pull that never if they chose to, at least in certain situations. Just take the OpenAI / Microsoft deal as an example. If a $10B investment into a company comes with strings attached, say with board seats and an exclusivity deal to use Azure products, they just blocked out any other hosting service that could compete. If that is legally questionable but they can invest most of the capital as credits for Azure products, they've effectively done the same thing without it clearly being coercion. For a new OS, Microsoft this spent decades building an ecosystem and marketshare in the enterprise space. MS could pretty easily make sure none of their services work on the new OS. They wouldn't be fully blocking the new OS out but it would make it an extremely difficult challenge. > Acting what way? It is like asking if you are okay if somebody can afford something, you can't. My understanding is that part of the OpenAI investment was in Azure credits. That may technically be legal, but it blocks any competition in the space and defers paying taxes on the value of those credits. If MS simply made the investment and OpenAI chose to use Azure of their own accord, there's absolutely nothing wrong with that. If MS strong arms OpenAI into using Azure through a combination of strings to the funding and/or board seats, I strongly disagree with that.
      - chucke1992 3y ago
        > Just take the OpenAI / Microsoft deal as an example. If a $10B investment into a company comes with strings attached, say with board seats and an exclusivity deal to use Azure products, they just blocked out any other hosting service that could compete. If that is legally questionable but they can invest most of the capital as credits for Azure products, they've effectively done the same thing without it clearly being coercion. Microsoft invested in OpenAI and OpenAI has become a huge success. That's all to it. They offered them a deal with azure credits, profits etc. and OpenAI succeeded. They could have failed and doubt anybody would be concerned about MSFT's deal with OpenAI...It is not like Microsoft forced OpenAI's hand there - they could have gone to Amazon. > For a new OS, Microsoft this spent decades building an ecosystem and marketshare in the enterprise space. MS could pretty easily make sure none of their services work on the new OS. They wouldn't be fully blocking the new OS out but it would make it an extremely difficult challenge. They could but they won't due to their high market share and public outrage. That's the whole point. If Microsoft tried to ask for 30% from any Windows app installation then would be in a huge legal trouble immediately. Hell, even bundling Windows Media Player led to some fines...I can have any store on Windows and I don't need to pay Microsoft a thing but if MSFT will try to use Windows API to make Steam work worse than Windows Store, that would cause legal trouble for them. > My understanding is that part of the OpenAI investment was in Azure credits. That may technically be legal, but it blocks any competition in the space and defers paying taxes on the value of those credits. But here is the thing - OpenAI went to Microsoft and agreed to that deal. They could have gone to AWS or GCP.