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0 pointsIanCal2y ago0 comments

> It's a well-established, economically rational business model to subsidize prices in order to gain market share.

Right but it means you can't depend on that price remaining low. If it's below cost, the price must rise. That may be important for anyone building businesses on top.

> it's pretty easy to switch to another.

Well that assumes the others have true lower prices.

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4 comments · 1 top-level

crazygringo2y ago· 3 in thread

> the price must rise. That may be important for anyone building businesses on top.

Well yes but every business owner knows that, or should know that. That's a known business risk. We're all adults here.

If your business fails because you naively assumed that prices you rely on will never go up, then that's on you.

IanCalOP2y ago

> Well yes but every business owner knows that, or should know that.

Know that they are buying services below cost? I don't think so.

It's a reasonable bet that compute costs generally trend downwards, and in a competitive market where the key thing you're paying for is compute that should also trend downwards.

That's different to finding out that everyone's been selling things way under the true cost.

crazygringo2y ago

> Know that they are buying services below cost? I don't think so.

To the contrary, of course you should know.

If you know anything about tech businesses, you know that startups being funded by massive amounts of VC keep prices artificially low initially, and that they then rise.

This is tech startup 101 stuff.

It's fine if you're not aware of this as an engineer. But if you're building a business and therefore have a business model where you've identified known risks, there's no excuse for you not to be aware of it.

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Eisenstein2y ago

Every business owner does not know what prices for other companies actually are -- they assume that they are being charged a price which has been determined by the market and is worthwhile to the seller to cover costs and profit.

By taking outside money and subsidizing certain market players so that they can sell their goods at below market value (because that is what is happening) you are undermining the market and punishing players who are acting rationally.

This would be absolutely no different than taking tax money and subsidizing certain companies over others to destroy competition and then claiming that it was a market decision.

'We are all adults here' is not a magical phrase that makes cheating OK.

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