Selling items for less than they cost to produce is known as "dumping" in international trade (where it is generally disallowed by trade organizations) and can be illegal in the US if the intent is to eliminate competition [0]. That last factor can be hard to prove, and I don't think the FTC is doing much about anticompetitive behavior these days.
Yes, I can imagine it’s hard to prove, which is a pretty good indicator it’s a slippery concept to being with. Everyone wants to “eliminate the competition”, including your competition!
The predatory pricing pattern the FTC would in theory sure over would be: selling items at an artificially low price until the competition goes out of business, then raising prices once you are the only seller left standing. It's the second step that makes it anticompetitive instead of just competitive
What does it mean to be “the only seller left standing”? If somebody’s out there making big margins because they don’t face competition, competition is likely to emerge!
Yes, but the monopoly seller has already demonstrated that they will operate at a loss until their competitors go out of business, which is a pretty big deterrent to any new market entrants. They've also demonstrated that no one will be making any money until either the monopolist or the new entrant is out of business, so who would actually launch a new business in that environment?
Yeah, it is theoretically possible to have a marketplace where "predatory pricing" is an accepted though aggressive business strategy, and I'd say that we are roughly there in the US. But the original intent behind the law on the books was to make markets friendly to new entrants, even if that meant sometimes constraining what large participants were allowed to do.
This is an historical question I’m not equipped to answer, but I’d guess it was just the opposite: These laws were intended to protect incumbents from more efficient, better financed new competitors!
Standard grocery margins are usually lower, in the 30%-40% range, and are often much lower for promotional items. Rotating "loss leaders" to get people in the door are standard practice. IMHO that would make it hard to bring an antitrust action against a grocery chain, as pretty much every store engages in a limited amount of predatory pricing as a marketing technique.
50% is the standard retail markup, but it varies by industry.
I don't think Amazon was producing anything they sold in their grocery stores. They were probably buying the same white label items as everyone else for their store brand.
The Biden admin went slightly harder against anti-competitive actions and anti-consumer actions by companies and all the billionaires freaked out and poured money into Republican campaigns in 2024 in order to roll all that back.
What was rolled back? There was no major change in action whatsoever, only rhetoric, which is meaningless. As for funding, Trump raised substantially less in 2024 than 2020 while Harris raised more money than any campaign ever has, by a wide margin. [1] Dark money also overwhelmingly flowed to the DNC. [2] And a large chunk of all of Trump's funding came after the previous administration tried to imprison him, which rather freaked people out - even those not particularly fond of him. That also likely played a significant role in the more DGAF presidency we're seeing today relative to 2016.
To add onto sibling comment: it is specifically when they sell below cost to eliminate competition, with the goal of later being able to raise prices to recover those losses (and more) once they are the only player in town and can jack the prices up all they want. The later price elevations are what result in consumer harm, which is why it is illegal.
A big gorilla comes in and under prices the entire market. They can do that because they already have tons of money. They do this long enough to break the market and drive the competition out of business. Once the competitors are gone they jack up the prices to unprecedented levels because there's no more alternatives available and bleed the market for all the money.
This presupposes some athletic new competitor can’t enter the market and take the margin off the fat incumbent.
It’s why we have capital markets: If capturing a profitable opportunity requires spending some money, someone who wants to profit will send that money your way.
But it should only be because they indeed have lower margins or more efficient operations. It should not be funded by external money (other departments or investors), only to undercut competition too force them out only to raise prices to above the previous point after.
So a simple law could be that prices can only be raised to the point where they were at before the competition was squashed.
Antitrust laws were written in the early 1900s and updated through the 1950s. Credit cards weren't available until 1966 and didn't become widely used until the 1990s. Digital platforms weren't a thing until the late 90s/early 2000s and the Apple app store didn't exist until 2008.
The courts can only enforce the laws on the books. Congress needs to update the laws, but they won't because they are hopelessly corrupt :(
Lina Khan did try and regulate. She had some successes, but the major cases w/r/t concentration of power against Microsoft, Amazon, Google, Meta and Apple have all moved slowly and (so far) failed to result in break ups.
> This obviously has negative externalities, because while a corporation is easy to fine, it's hard to put in prison... but trying to approach it differently would be about as fun as modeling a CPU as a bunch of transistors.
There's nothing stopping the legislature (other than their own self-interest) from passing a law that executives and board members are criminally liable for the malfeasance of their entity. We already apply that logic to positions like a medical lab director.
This is already the case. Or rather, a corporation can not (e.g.) commit murder or theft because that usually requires some physical action. That physical action will be performed by a human, who can then be found guilty. If he was ordered to do so by (e.g.) the board, the board will be held as accessory to the crime and cam also be found guilty.
The problem is just that the board can usually claim they did not know, and that they have deep pockets to afford good attorneys. To get around the first thing, you have strict liability laws.
Strict liability laws, though, are how you end up with the situation where barkeepers are criminally liable for selling alcohol to underage people, even if they could not have known the buyer was underage (and that's about the only instance of strict liability in criminal law). I personally find this very unjust and would rather that strict liability was not part of criminal law.
> a corporation can not (e.g.) commit murder or theft because that usually requires some physical action.
Not true. Consider investor-owned utility PG&E in northern California.
"While on probation [for previous felonies], PG&E pleaded guilty to 84 felony counts of involuntary manslaughter for a 2018 wildfire that wiped out the town of Paradise, about 170 miles (275 kilometers) northeast of San Francisco."
If they know about malfeasance and don't stop it, they are complicit; if they don't know about it, they are grossly negligent. In either case, they should be held accountable for the crimes. Maybe in an ideal world it would not be that way, but since we are seeing corruption run amok in corporate board rooms, it's clear they need a greater incentive to police their organizations.
What we have is a severe lack of enforcement of the laws we do have.
We do have legal mechanisms to hold the individual people criminally liable for criminal offenses the corporation commits, the problem is we don't enforce it.
Boeing just got off scott free for killing 338 people. DOJ told the judge to dismiss the case.
We've also neglected to enforce our own anti-monopoly laws for far too long, and most recently when there could have been actual, real change, we let Google go with nothing more than a slap on the wrist.
The laws aren't the problem, the corrupt and paid for DoJ is the problem.
I mean we live in a country where 'defund the police' and 'eliminate jails' are considered somewhat mainstream legal positions (In that there are many politicians elected to office throughout the country who have held these views). All of its stems from a lack of desire to enforce standards.
Given that neither the police nor jails are relevant to corporate violations of the law, do you have a point other than that you don't understand either of those?
There is already a standard of evidence for this: "Knew or should have known". Which covers needing to exercise a certain standard of care, but without the overly rigid definition of strict liability (something that tends to result in very stupid and unfair situations).
The are already liable and have always been liable if it can be shown they had knowledge of it. The logic is already applied. Corporations are not people, but they are legal persons. For some reason, using language that sounds the same makes people confused and causes a large section of society to get irrationally angry.
It's always possible to think up new rules that solve social issues. The challenge is seeing how such rules would ever robustly come into place. In your example, medical lab directors have no lobbying power and less dramatically profitable upside to their activities.
That's exactly my point. It's not hard to figure out how to "put a corporation into prison", the issue is that we've been trained to accept corruption as a normal facet of corporate personhood.
And yet the owners for the benefit of whom those high ranking employees have committed their crimes run free, keeping the spoils. Not even "spoils except for some monetary punishment" is they sold at the right time. Imprisoning CEOs solves depressingly little.
They've already been doing that, just not at scale yet. Trump's political enemies like Latisha James and officials who protest ICE or try to show up at ICE facilities to inspect them.
Kind of hard for the government to “prepare society to move forward” when the AI companies and their financiers lobby for conditions that worsen the ability of society to do so.
They are talking about US suburbs. For example, the house I grew up in is over a mile to the nearest grocery and you have to cross two large intersections on the way.
The intersection stuff sucks, but "over a mile" seems to be between 1.5 to 2km, is that considered far to walk in the US? Measuring where I go to have my morning coffee at a cafe each day, it seems to be 1.3km away, and I walk there and back every morning...
Go to Google Maps, drop the StreeView person anywhere in the US 10 times and count how many times you find yourself in a place where you would be happy to be walking right now. Try and look for sidewalks and pedestrian crossings. It's hard to understand the layout of American cities for the European and Asian mind.
I've been to the US many times and I'm still shocked when I need to drive from this parking lot to that parking lot across the street because it would be dangerous and possibly illegal to just walk there.
Are you carrying your groceries to the coffee shop? Also, walking places in US suburbs is a miserable experience, especially in the Southwest where it gets hot. Everything is spread out with large parking lots, sidewalks are a maybe, the roads are busy and there is no shade or sound dampening.
> Are you carrying your groceries to the coffee shop?
Obviously no. But where I lived ~20 years ago the nearest grocery was a 20 minute walk there and then 20 minute walk back with two or four shopping bags with stuff, and I wasn't the only one walking there when needing to do shopping.
I think it's more common than not out in the world that things are far away so you need to spend awful amount of time on just getting places. Unless you live in a city of course.
We need to (once again) define “free” pricing models as predatory and broadly outlaw them. They distort the idea of a free and fair marketplace by poisoning consumer expectations of what things should cost.
That rips off the advertisers and/or leaves the poor poorer.
For any given ad supported service, one of two things must be true:
(1) the ad spend was more than or equal to the cost of the service for those users
(2) the ad spend was less than the cost of the service for those users
From fork (2), it follows that the service isn't sustainable anyway.
From fork (1), it follows that the buyers of the ad slots in turn only make a profit if those ads led to sales higher than the ad spend.
But for any given poor person, buying that which was advertised on the ad supported service necessarily means spending more than they would have on a non-ad-supported version of the same ad supported services.
or (3), the non-obvious, or non-advertised effects of the service may be valuable enough for powerful people to make the service "profitable" through artificial money flows (e.g. by paying for ads, endless investing, stock price manipulation, etc).
Paying for ads like that is still a subset of fork (1). Even as propaganda, it has to somehow be "worth it" to spend the money.
Endless investing is, depending how you look at it, either not (just) ad supported and preceeds the premise, or it still is ad supported (and hence (1)) just with extra steps to badly hide who is doing it.
Hmm… I suppose the purchase of a vote in a democracy is something that a poor person might not otherwise be able to sell, and where "we advertised and convinced you" is (depending on campaign finance etc. rules) one of the legitimate ways to do it… but even then, for reasons too long to type on my phone, I'd say in this case it would still make the poor poorer.
This assumes that poor people's attention is liquid and can readily be turned to cash whenever they please.
It doesn't matter how much you think my attention is "really worth". If I want the service now, have no cash, but can pay with my attention, I am strictly more enabled than if the service only accepts cash.
The fork between (1), (2) is how much cash their attention is actually turned into.
To put it another way: what's the attention of a poor person really worth, in dollars? Answer is always less than or equal to the amount they can spend.
The comment you were responding to said that the free tiers were a boon for the poor and you responded that they (under the fork of interest) "left poor people poorer".
I mean I supposed every transaction leaves someone poorer of something and richer in something else. I'm not sure of the point though.
I concede that if the ad companies are willing to forgo collecting X dollars in exchange for showing you an ad then it must be worth >=X dollars to the ad company for the person to see the ad.
But it remains true that the poor person has no way to convert their attention directly into X dollars, and all that taking away the free tier does is make it so that someone who would have made a trade (of their attention for a service) cannot do so.
I fail to see how. Having ad-subsidized access to Facebook and YouTube has not reduced poverty, hunger or made housing and healthcare more affordable for them. The overwhelming majority have not used it to up-skill or improve their income prospects. Predatory "free" pricing appears to have simply made the poor more easily targeted by propaganda and advertising.
Have they though? Have you seen the scammy, misleading, trash ads that litter most sites and wondered, "who falls for this crap and gives these people money?"
reply