4 ms·

> Essentially these are unfair business practices, product cross subsidization to ensure market dominance. Offering a different discounted rate for a service,

> Essentially these are unfair business practices, product cross subsidization to ensure market dominance. Offering a different discounted rate for a service, though their first-party platform is not an unfair business practice whatsoever, though. The bar isn't what you disagree with, or what you think their motives are without any substantial proof. They could even make a honest argument that they can aggressively key-value cache default prompts from their own software reducing inference costs. >See also: Microsoft and a whole bunch of other companies. What does that have to do with Google?

cyberax 8mo ago
Offering goods or services below the cost of their production is often illegal, though. It's called "dumping". Although in this case it's probably impossible to define, given the complexity of calculating the true cost of tokens.
- jacquesm 8mo ago
  And in this case the subsidy is paid for by tied sales from other users that don't actually use the service, which is another illegal business practice.
  - raw_anon_1111 8mo ago
    So cable bundling channels is also “illegal” according to you? Since I don’t watch sports?
    - Marsymars 8mo ago
      There certainly are jurisdictions where tv providers are legally required to offer channels a la carte.
      - raw_anon_1111 8mo ago
        Not in the US…
        andrew_lettuce 8mo ago
        And not typically channels that can survive independently
        Marsymars 8mo ago
        Sure, but we're generally talking here about companies that don't operate only in the US. :) e.g. the CRTC has regulations around a la carte offerings since the past decade: https://crtc.gc.ca/eng/television/program/alacarte.htm https://crtc.gc.ca/eng/television/program/alacarte.htm > TV service providers must offer channels both individually and in packages of up to 10 channels.
  - Aurornis 8mo ago
    What are you talking about? Where is this illegal? It’s common to sell subscription services and then price them according to expected usage blended across the user base.
  - walletdrainer 8mo ago
    Tying is typically perfectly legal in both the EU and the US. This isn’t even vaguely similar to illegal tying. The biggest problem being that the products almost certainly aren’t dissimilar enough to be considered “tied” at all.
- MichaelZuo 8mo ago
  This obviously cannot be true, otherwise Costco would have been sued to oblivion for “dumping” their rotisserie chickens.
  - cyberax 8mo ago
    Costco gets to sidestep a lot of regulations because they technically are a private club with paid membership. The US anti-monopoly laws are also unusually weak. In other countries, selling a $7 chicken if it's subsidized by the sale of other goods can indeed be illegal.
    - hrimfaxi 8mo ago
      Do you have some countries in mind where that's illegal?
      - tovej 8mo ago
        That would most likely be illegal in Finland. You're not allowed predatory pricing. And the same is true for the EU as a whole, although you may have to be operating in an international market, not just a local one. See Abuse of dominance in: https://en.wikipedia.org/wiki/Article_102_of_the_Treaty_on_the_Functioning_of_the_European_Union https://en.wikipedia.org/wiki/Article_102_of_the_Treaty_on_t...
      - cyberax 8mo ago
        The US, the Sherman Antitrust Act prohibits predatory pricing.
        hrimfaxi 8mo ago
        So if I could charge less for chicken because I use that as a doorbuster to get you inside the store, but I charge more for other items, that is predatory pricing and against US law?
      - apex_sloth 8mo ago
        In Germany, selling goods for less then the one bought them for can be illegal if its used to push competition out on a large scale.
- JumpCrisscross 8mo ago
  > Offering goods or services below the cost of their production is often illegal, though. It's called "dumping" No. Dumping is an international-trade term. It doesn’t even require pricing below cost, just aiming “to increase market share in a foreign market by driving out competition and thereby create a monopoly situation where the exporter will be able to unilaterally dictate price and quality of the product” [1]. Loss leaders are common in commerce and entirely legal, as are free trials. I struggle to think of a competent jurisdiction that bans them. [1] https://en.wikipedia.org/wiki/Dumping_(pricing_policy) https://en.wikipedia.org/wiki/Dumping_(pricing_policy)
  - cyberax 8mo ago
    I'm sorry, my fault. I studied economics in Russia, and the term "dumping" was used in a more general sense as "selling goods or services below their cost". Russian laws officially use the term "monopolistically low prices", and prohibit them if the entity engaging in such pricing holds a dominating presence in the market (and not necessarily for the goods that are being underpriced). A correct term for the US is "predatory pricing", and it's also prohibited by the Sherman Act. For much the same reason, a large entity can destroy competition by accepting losses from selling goods below the cost. The border between loss leaders and predatory pricing is, as usual, very blurred.
    - deleted 8mo ago
      [deleted]
    - JumpCrisscross 8mo ago
      > I studied economics in Russia, and the term "dumping" was used in a more general sense as "selling goods or services below their cost" Oooh! Do you have a recommendation for a translation of a Russian economics text? I’m particularly curious of Soviet-era texts that work on theory without prices. > correct term for the US is "predatory pricing", and it's also prohibited by the Sherman Act Sherman prohibits the “restraint of trade or commerce” [1]. The word “price” never appears in its text. In practice, predatory pricing is a tightly-regulated term that doesn’t generally prohibit selling goods below cost [1] https://www.govinfo.gov/content/pkg/COMPS-3055/pdf/COMPS-3055.pdf https://www.govinfo.gov/content/pkg/COMPS-3055/pdf/COMPS-305...
- raw_anon_1111 8mo ago
  So every company that is not immediately selling enough to cover its fixed costs and its variable cost should be illegal? Every company and every new initiative must be profitable from day one in your world?
  - cyberax 8mo ago
    If it's a large company, that can dominate the market by absorbing the losses until competition disappears? Arguably, yes.
    - raw_anon_1111 8mo ago
      So that means for instance it was illegal for Netflix to get into the streaming business or for Apple to start selling iPods because neither could do it profitably from day one? Should Microsoft have not been allowed to sell operating systems and still survive from selling BASIC interpreters? Should Nintendo have not been allowed to sell video games and still be selling playing cards? Every company that is interested in survival takes profits from an existing business to start a new one,
    - s1artibartfast 8mo ago
      The question is over what timescale and volume. Toyota shouldn't have to sell their first new car off the line for 100 million to pay for the entire manufacturing line. Your first SAAS customer shouldn't have to pay back all your costs. Can you plan to break even after your first month of sales? first year? 10 years?
      - raw_anon_1111 8mo ago
        So we are going to pass a law that any new company initiative must be profitable in $x years? Are we going to outlaw loss leaders?
      - andrew_lettuce 8mo ago
        This isn't typically an area where laws and regulations can work effectively because who knows until after the fact? Taxation laws do deal with this from a different perspective, for example most jurisdictions won't let a company take losses every year forever, as they judge the intent of a corporation. Even this is incredibly complex so I'm not sure how your idea would work, even the term "break even" doesn't have a clear definition, ex: do Capital assets still depreciate the same in the AI world? When did Amazon start to break even? What if they didn't deliver shopping on top of aws? Was that an unfair subsidization?
- Aurornis 8mo ago
  First of all, I doubt they’re losing money in inference. Even across subscriptions. This is a tired argument that has been repeated so many times on HN. Second, that’s not what dumping means. It’s a specific term for international trade. Third, it’s not illegal to sell something for below the cost to make it. That’s another common misunderstanding.
  - rvnx 8mo ago
    They give over 300k USD of free credits as part of the startup program without any commitment required...

cyberax 8mo ago

Offering goods or services below the cost of their production is often illegal, though. It's called "dumping". Although in this case it's probably impossible to define, given the complexity of calculating the true cost of tokens.

jacquesm 8mo ago
And in this case the subsidy is paid for by tied sales from other users that don't actually use the service, which is another illegal business practice.
- raw_anon_1111 8mo ago
  So cable bundling channels is also “illegal” according to you? Since I don’t watch sports?
  - Marsymars 8mo ago
    There certainly are jurisdictions where tv providers are legally required to offer channels a la carte.
    - raw_anon_1111 8mo ago
      Not in the US…
      - andrew_lettuce 8mo ago
        And not typically channels that can survive independently
      - Marsymars 8mo ago
        Sure, but we're generally talking here about companies that don't operate only in the US. :) e.g. the CRTC has regulations around a la carte offerings since the past decade: https://crtc.gc.ca/eng/television/program/alacarte.htm https://crtc.gc.ca/eng/television/program/alacarte.htm > TV service providers must offer channels both individually and in packages of up to 10 channels.
- Aurornis 8mo ago
  What are you talking about? Where is this illegal? It’s common to sell subscription services and then price them according to expected usage blended across the user base.
- walletdrainer 8mo ago
  Tying is typically perfectly legal in both the EU and the US. This isn’t even vaguely similar to illegal tying. The biggest problem being that the products almost certainly aren’t dissimilar enough to be considered “tied” at all.
MichaelZuo 8mo ago
This obviously cannot be true, otherwise Costco would have been sued to oblivion for “dumping” their rotisserie chickens.
- cyberax 8mo ago
  Costco gets to sidestep a lot of regulations because they technically are a private club with paid membership. The US anti-monopoly laws are also unusually weak. In other countries, selling a $7 chicken if it's subsidized by the sale of other goods can indeed be illegal.
  - hrimfaxi 8mo ago
    Do you have some countries in mind where that's illegal?
    - tovej 8mo ago
      That would most likely be illegal in Finland. You're not allowed predatory pricing. And the same is true for the EU as a whole, although you may have to be operating in an international market, not just a local one. See Abuse of dominance in: https://en.wikipedia.org/wiki/Article_102_of_the_Treaty_on_the_Functioning_of_the_European_Union https://en.wikipedia.org/wiki/Article_102_of_the_Treaty_on_t...
    - cyberax 8mo ago
      The US, the Sherman Antitrust Act prohibits predatory pricing.
      - hrimfaxi 8mo ago
        So if I could charge less for chicken because I use that as a doorbuster to get you inside the store, but I charge more for other items, that is predatory pricing and against US law?
    - apex_sloth 8mo ago
      In Germany, selling goods for less then the one bought them for can be illegal if its used to push competition out on a large scale.
JumpCrisscross 8mo ago
> Offering goods or services below the cost of their production is often illegal, though. It's called "dumping" No. Dumping is an international-trade term. It doesn’t even require pricing below cost, just aiming “to increase market share in a foreign market by driving out competition and thereby create a monopoly situation where the exporter will be able to unilaterally dictate price and quality of the product” [1]. Loss leaders are common in commerce and entirely legal, as are free trials. I struggle to think of a competent jurisdiction that bans them. [1] https://en.wikipedia.org/wiki/Dumping_(pricing_policy) https://en.wikipedia.org/wiki/Dumping_(pricing_policy)
- cyberax 8mo ago
  I'm sorry, my fault. I studied economics in Russia, and the term "dumping" was used in a more general sense as "selling goods or services below their cost". Russian laws officially use the term "monopolistically low prices", and prohibit them if the entity engaging in such pricing holds a dominating presence in the market (and not necessarily for the goods that are being underpriced). A correct term for the US is "predatory pricing", and it's also prohibited by the Sherman Act. For much the same reason, a large entity can destroy competition by accepting losses from selling goods below the cost. The border between loss leaders and predatory pricing is, as usual, very blurred.
  - deleted 8mo ago
    [deleted]
  - JumpCrisscross 8mo ago
    > I studied economics in Russia, and the term "dumping" was used in a more general sense as "selling goods or services below their cost" Oooh! Do you have a recommendation for a translation of a Russian economics text? I’m particularly curious of Soviet-era texts that work on theory without prices. > correct term for the US is "predatory pricing", and it's also prohibited by the Sherman Act Sherman prohibits the “restraint of trade or commerce” [1]. The word “price” never appears in its text. In practice, predatory pricing is a tightly-regulated term that doesn’t generally prohibit selling goods below cost [1] https://www.govinfo.gov/content/pkg/COMPS-3055/pdf/COMPS-3055.pdf https://www.govinfo.gov/content/pkg/COMPS-3055/pdf/COMPS-305...
raw_anon_1111 8mo ago
So every company that is not immediately selling enough to cover its fixed costs and its variable cost should be illegal? Every company and every new initiative must be profitable from day one in your world?
- cyberax 8mo ago
  If it's a large company, that can dominate the market by absorbing the losses until competition disappears? Arguably, yes.
  - raw_anon_1111 8mo ago
    So that means for instance it was illegal for Netflix to get into the streaming business or for Apple to start selling iPods because neither could do it profitably from day one? Should Microsoft have not been allowed to sell operating systems and still survive from selling BASIC interpreters? Should Nintendo have not been allowed to sell video games and still be selling playing cards? Every company that is interested in survival takes profits from an existing business to start a new one,
  - s1artibartfast 8mo ago
    The question is over what timescale and volume. Toyota shouldn't have to sell their first new car off the line for 100 million to pay for the entire manufacturing line. Your first SAAS customer shouldn't have to pay back all your costs. Can you plan to break even after your first month of sales? first year? 10 years?
    - raw_anon_1111 8mo ago
      So we are going to pass a law that any new company initiative must be profitable in $x years? Are we going to outlaw loss leaders?
    - andrew_lettuce 8mo ago
      This isn't typically an area where laws and regulations can work effectively because who knows until after the fact? Taxation laws do deal with this from a different perspective, for example most jurisdictions won't let a company take losses every year forever, as they judge the intent of a corporation. Even this is incredibly complex so I'm not sure how your idea would work, even the term "break even" doesn't have a clear definition, ex: do Capital assets still depreciate the same in the AI world? When did Amazon start to break even? What if they didn't deliver shopping on top of aws? Was that an unfair subsidization?
Aurornis 8mo ago
First of all, I doubt they’re losing money in inference. Even across subscriptions. This is a tired argument that has been repeated so many times on HN. Second, that’s not what dumping means. It’s a specific term for international trade. Third, it’s not illegal to sell something for below the cost to make it. That’s another common misunderstanding.
- rvnx 8mo ago
  They give over 300k USD of free credits as part of the startup program without any commitment required...