It boggles my mind to imagine how many verticals in the technology space have been kneecapped because of google. There could be so many companies that could offer amazing services but they just can't compete with a half-assed "free" service made by Google, which is just a temporary cost center for all the ad revenue they don't know what to do with.
>A limit price (or limit pricing) is a price, or pricing strategy, where products are sold by a supplier at a price low enough to make it unprofitable for other players to enter the market.
>It is used by monopolists to discourage entry into a market, and is illegal in many countries.[1] The quantity produced by the incumbent firm to act as a deterrent to entry is usually larger than would be optimal for a monopolist, but might still produce higher economic profits than would be earned under perfect competition.
wasnt this the main issue with small startups and Microsoft 'embracing' them with half-assed projects back in the day. some would even say that this was the main cause of dot-com bubble. thats when VCs realized that Microsoft cant touch these web based companies so now they can finally invest in these emerging businesses, thereby triggering a goldrush.
as always govt has failed everyone by failing to prosecute these big behemoths where the only 'innovation' they do is centralize and capitalize on an already emerging solution from the rise of internet and computing.
what we need is a philanthropic fund that funds startups like craigslist & does it completely open sourced from the getgo.
Yes, there was this "but what if Microsoft releases a competing product?" typical VC question in the 90's that became "but what if Google releases a competing product?" in the 2000's and early 10's.
You’ve just made the core argument of anti-trust legislation, which is far broader in scope than discussion of monopolies and far subtler. At root, monopolies are easy to detect, and it follows fairly uncontroversially from basic economics that’s been agreed-upon for centuries that if there are no (potential) competitors than there is no competition, rent-seeking/profit-gouging behaviour ensures by the incumbent, and capitalism basically dies. Anti-trust, however, it a great deal less clearly defined.
Let’s imagine a firm, and let’s call it Adobe. Adobe makes Photoshop. Photoshop has a full set of features and is sold for a high price to a market segment comprised of professional users who need the features provided by Photoshop, and are happy to pay the price since it enables them to make a decent living even once the cost of the tool is deducted. Adobe gets a decent revenue that allows it to cover expenses, capital costs, and develop future versions.
On the other side of the spectrum, you have Microsoft. Microsoft ships Paint for free. Paint has very few features, but it covers some (mainly ironic) usage cases, and it gets used by those who wish to manipulate images but have no need for the complex features of Photoshop. Sure, some people who wish to do high-level image manipulation but cannot afford Adobe’s asking price for Photoshop are not well-served by this arrangement, but hardly anybody would argue that Microsoft’s inclusion of Paint would be anti-competitive towards Adobe: it’s not worth adding all the features of Photoshop to Paint only to give it away for free (and the argument that you would give it away for free only long enough to bankrupt Adobe and then start charging for Mega-Paint might be profitable, but it’s uncertain and depends on costs of capital and expected rates or return, plus the costs of an almost certain lawsuit).
Nor can Adobe be anti-competitive against Microsoft: dropping the price of Photoshop to zero just to stop people from using Microsoft’s own free product would be... pointless as it would zero their revenue.
These are two extreme cases, and it’s easy to just think in these dualistic terms and come to the wrong conclusion (or wonder what I’m getting at with this bizarre and apparently off-topic rant).
Now to tie it all together, introduce a middle-ground player such as Affinity. Affinity makes Photo, a product that is midway between Paint and Photoshop both in terms of price and features. People who need the full features of Photoshop (including those not present in Photo) will still choose Photoshop, which might slightly dip Adobe’s revenue. Microsoft’s will however remain stationary at zero. Affinity has captured the market of those who are defined by Paint being unsuitable but who do not wish to pay Photoshop’s full price (because Photos contains all the features they need).
Now, finally, the final step: say Adobe turns a blind eye to piracy of Photoshop. It still gets paid by its professional customers so it’s revenue remains unchanged. However, people who found Paint to be frustrating are now faced with an interesting choice: steal Photoshop (which has all the functions they could possibly want, and is free) or buy Photos (which has all the functions they want, albeit a subset of those offered by Photoshop, but does so for a higher price).
This is one obvious case that comes under the broad rubric of ‘dumping’ (selling at prices that damage one’s own short-term interest in order to damage one’s competitor and increase one’s net long-term advantage) but there’s plenty others where that came from. The tech industry is rife with them. Mainly, lack of successful prosecution is probably due to regulatory capture by way of lobbying.
This is a great summary! The thing I see Google doing that I believe is even worse is that they swoop in early on in an innovative space and get their subsidized free offering on the market first or early. This seems to prevent these tiers from forming entirely, since even if a competitor can beat "free" they have to constantly be looking over their shoulder to make sure Google doesn't give away their killer features, so no one ends up even playing!
Can you please not post in the flamewar style to HN, regardless of how wrong another comment is or you feel it is? Perhaps you don't owe it better, but you owe the community better—we should all be posting in a way that protects the container for future discussion. It's fragile, and it's under more pressure than ever these days.
A better way to respond to that one might be by saying something about all the people who can't afford to pay for email, who benefit from the free services we're talking about.
Not that I necessarily agree with the GP commenter, but this doesn't address his point. Things "used to" be this way during a time period with a billion less Internet users, who've come largely from the poorer parts of the developing world. The claim is that a high-quality free email service doesn't matter as much to someone with lots of disposable income in the first world as it does to people who aren't as fortunate.
I don't know what to say. I don't claim to be an expert on what life is like in the developing world, so I'll have to defer to people like missedthecue and yourself to tell me what it's like there.
