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So you are saying a company should never reinvest profits in the company to support another money losing business until it’s profitable? Should Netflix for ins
by raw_anon_1111 8mo ago
So you are saying a company should never reinvest profits in the company to support another money losing business until it’s profitable?
Should Netflix for instance not invested money from renting DVDs to invest in a streaming service?
Apple not use the profits it was making from selling Apple //e’s to create the Mac?
- tovej 8mo agoSubsidizing the cost of developing a product isn't necessarily bad, but predatory pricing that prohibits competition would be. Not sure that this case is either. This is just idiots breaking the TOS.
- raw_anon_1111 8mo agoSo exactly what’s the difference between “predatory pricing” and pricing to gain customers and market share? Should Sony have to sell the first PlayStation off the line at $2000 (making up a number) so it can sell it at a marginal profit from day one or should it sell it below cost knowing that that over its lifetime if it stays at that price, it will both gain customers and sell at a profit in year 4 as the price of technology comes down and it gets economies of scale?
- tovej 8mo agoThe EU uses an effects-based model. If below-cost prices are driving other actors out of business or has other anti-competitive effects, it is predatory pricing.
- raw_anon_1111 8mo agoReason #1642 that the technology industry in the EU sucks…
- tovej 8mo agoThis is not it. This is reason #1 that the tech industry in the US is so dystopian.
- raw_anon_1111 8mo agoI’m sure that developers who work for boring old enterprises who make twice as much their EU counterparts would disagree. Let alone those working at BigTech and adjacent.
- cyberax 8mo ago> So you are saying a company should never reinvest profits in the company to support another money losing business until it’s profitable? If it makes it impossible to set up a competitor? Absolutely, yes. > Should Netflix for instance not invested money from renting DVDs to invest in a streaming service? Netflix was not priced below the cost of production from the beginning. You're confusing sustainable pricing and paying off all the capital spending immediately at launch. A better example is Doordash when it was heavily subsidized by VC money: https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852 And it now faces several anti-trust lawsuits.
- raw_anon_1111 8mo agoNetflix very much was priced below the cost of production for years and had to borrow money to make Netflix originals.
- cyberax 8mo agoI'm not familiar with their originals economics, but the original streaming Netflix was not priced below the cost. As evidenced by them keeping the same subscription cost for years.
- raw_anon_1111 8mo agoHow is that “evidence” of anything? The “evidence” that they were charging less for subscriptions than it cost to run the streaming service is that they were borrowing billions of dollars to both license content and create new content over the course of years. Netflix borrowed $16 billion over a decades https://www.nytimes.com/2021/01/19/business/netflix-earnings-debt.html https://www.nytimes.com/2021/01/19/business/netflix-earnings... Because subscriptions didn’t make enough money to fund its business. Were they being “anti competitive”?
- tovej 8mo agoYes. They were. The US just hasn't enforced antitrust laws in decades.