Comment by raw_anon_1111
15 hours 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?
> 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 And it now faces several anti-trust lawsuits.
Netflix very much was priced below the cost of production for years and had to borrow money to make Netflix originals.
I'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.
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Subsidizing 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.
So 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?
The 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.
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