[danilocampos]

"Yes, because Google isn't forming a cartel to stifle competition."

Hmm. I'm not so sure. There's a way to see Google's behavior where what they're doing is precisely that.

Predatory pricing exists when you try to take over a market by selling something so cheap, other competitors are driven out – or prevented from entering, since they couldn't recoup the costs involved in developing a product.

In league with their manufacturing partners, Google has their own cartel, attempting to homogenize the smartphone landscape under a single, free OS.

The incentives are obvious: it's much easier for Google to make its ad money if it controls the next big platform.

They may have dressed it up as pious and open – but for their purposes, it's a land grab. Is it anticompetitive? I'm not sure. My antitrust scholarship began and ended with The Microsoft File back in the 90's. But I'm also not sure it's any better than whatever satanic pact they are intimating has been formed by Apple and Microsoft.

Google's argument here is summed up as "You could trust us with those patents. But we didn't get them. You can't trust the guys who did get them." I'm pretty sure at this scale, with this much cash on the line, business just doesn't work that way. Google will run over anyone to keep their ad money flowing, just as Microsoft will run over anyone to keep their license money flowing. Why should we side with one cause over the other?

[smokeyj]

> Predatory pricing exists when you try to take over a market by selling something so cheap, other competitors are driven out

This is what happens when innovation threatens dinosaurs. Phrases such as "predatory pricing" exemplifies a fundamental misunderstanding of how pricing works, or markets in general.

People forget the whole point of the market is to serve the consumer. The point of the market is not to protect the interests of old tech giants because they can't compete with free. They're willing to prevent consumers from enjoying the satisfaction that Android has to offer because they want money for doing what Google offers for free. By this logic I should start a search engine that charges $10 a search, then sue google for anti-competitive practice.

Everything about business is predatory. Every time a company releases a better product it is predatory to their competition. Offering an edge your competitors can't handle is kind of the point. If Google's pricing is so "predatory", why doesn't the competition do the same? Because they're ethical?

[danilocampos]

> Everything about business is predatory.

By that reasoning, Google should have either bought the patents or taken their lumps when they lost, right? If business is inherently predatory, whatever predatory groups wish to form are free to do so in the advancement of their own interests. Why is it for Google to bandy about anticompetitive concerns, crying "DOJ!" but not their competitors?

[Rusky]

No, because patents aren't a normal part of business. They're an artificial limitation by the legal system intended to promote innovation but instead are promoting senseless law suits by companies who can't/don't want to deal with normal business.

[smokeyj]

Anti-competition isn't an empirically observable phenomena. In theory it was supposed to serve the consumer, but there is a disconnect between the alleged intention and reality. Kind of a big problem. Preventing a company from offering a free product in no way serves the consumer.

I don't want to imply google is more ethical than the competition, but in this instance calling for an abolition of patents is in line with my personal views, which is markets should serve the consumer. I have no unconditional support for any of these companies.

[triaboat]

Preventing a company from offering a free product in no way serves the consumer.

In a general context, a company practicing 'predatory pricing' may do so to drive the other competitors out of business. Once that happens, it's free to raise prices to monopolistic levels which would end up hurting consumers eventually.

[smokeyj]

> Once that happens, it's free to raise prices to monopolistic levels

These fears are not based on evidence. When has someone released a free product only until they wiped out all the competition, proceeding to jack up prices? I mean, once they jack up the prices there is an established market ripe to pick customers from. Furthermore, the temporary profits, if any, would only be temporary and would be a greater cost to their corporate image.

[Elepsis]

Jacking up prices isn't the only potentially-negative consequence of driving its competitors out of business, nor is it a requirement to be considered anti-competitive. The history of Internet Explorer is an interesting illustration of both.

[mung]

Adobe InDesign hiked in price once it was clear that Quark was no longer a real threat. That said, InDesign was a better product almost right from the start. But just sayin'

[gaulinmp]

Thank you for raising this point, because it's only in this case that lower (free) prices are anti-competitive. If the company raises prices to _above_ fair market value after their artificially low prices have driven out competition then the DOJ comes after them. If they leave the product free forever, that's not a problem because it's good for the consumer.

So my question to the Google nay-sayers is do you expect Google to raise prices on Android once they have forced MS and Apple out of the smartphone market? Or do they just have a superior product model in which they can offer free software and make money on ads while their competition must charge for the software. I personally don't think they will ever raise Android prices so it's just good competition.

[danmaz74]

Don't forget that Android is open source (except version 3, but we're talking about phones now). This means that if Google decided to charge for it, they could only do so on new versions, and anybody could start from an old one, fork it and bring it further. This is completely different from free non-open-source software, where it could be actually possible to raise prices once the competition is wiped out.

[dstein]

Google almost certainly does not intend to suddenly start charging for Android once iOS and Windows7 are out of the picture.

More likely their intention is to keep it free, but with additional "conditions" such as Google search being the only way to find information. Mandated use of Gmail, Google Docs, Calendar, Contacts. Heavily integrated Google Plus social features like chat, blog, and photo sharing.

Google won't need to charge for Android because there will not be a way to avoid a Google tentacles if you use their OS. Google is trying to burn down the ecosystems of it's competitors with free products and make money by being the gatekeeper of your every activity with a smartphone.

[extension]

Competing in a free market is ethical. Abusing a flawed legal system is unethical. Who wins or loses is irrelevant. The issue is who is playing fair and who is cheating.

[davorak]

Andriod is offered under Apache License, Version 2.0[1]. Which is a part of Open Source Inititive[2]and part of their mission statement is "an end to predatory vendor lock-in."

Reading Apache 2[3] it looks like "an end to predatory vendor lock-in" is acheived by making it possible for anyone to use the source including Microsoft and Apple. If the land can be used by anyone it is hard for me to think of it as a land grab.

[1] http://source.android.com/source/licenses.html

[2] http://www.opensource.org/

[3] http://www.apache.org/licenses/LICENSE-2.0

[joebadmo]

That argument is fair and interesting, but it has no bearing on the current issue:

"So if Google had acquired the rights to these patents, that would have been OK."

It's in no way hypocritical for Google to try to acquire the patents and then, on subsequent failure, condemn their acquisition by the opposing consortium.

I'd be willing to entertain arguments along the lines of Google's anti-competitive behavior, but I find their stance on patents is cogent and consistent. I find Gruber's argument to be, OTOH, totally disingenuous.

[kelnos]

Predatory pricing exists when you try to take over a market by selling something so cheap, other competitors are driven out

This doesn't really hold for something that doesn't have to be physically "produced" like a software license. If that were the case, you could accuse every open source alternative of engaging in predatory pricing. Usually you see this term applied to physical goods, when a company sells them at or below cost for the sole reason of forcing out a competitor who cannot stay in business doing the same.

... or prevented from entering, since they couldn't recoup the costs involved in developing a product.

Well, Android started as a little company that Google eventually bought. There's no reason why someone couldn't do something similar. The barrier of entry is pretty low, at least for the software stack. Getting it onto real devices is another matter, but I don't think that part is particularly relevant here.

Hell, there's no reason why MS couldn't license WP7 for free. They just choose not to.

[Drakeman]

It's been a while, but a long time ago I heard the phrase, "The Rolling Stones are not in the music business, they're in the t-shirt selling business." In that way, I think if you examine Google's practices and its strategy with Android, it's that Google is an advertising company. It's where all their money comes from. Microsoft, Apple, and Oracle are traditional software companies in the sense they derive their profits from consumers and businesses purchasing services.

> They may have dressed it up as pious and open – but for their purposes, it's a land grab. Is it anticompetitive? I'm not sure.

Well, then, isn't GNU/Linux in general anti-competitive? Or free-libre software since many developers don't charge for services?

As for Google's trustworthiness with patents versus patent-abuse, anyone know a site with a good summary of Google's patent disputes?

[statictype]

Predatory pricing exists when you try to take over a market by selling something so cheap, other competitors are driven out – or prevented from entering, since they couldn't recoup the costs involved in developing a product.

Fair point, and that got me thinking:

Would you say the same about the iPad?

Would you say that Apple is stifling competition in the tablet space by making a tablet that's really good and reasonably priced? That's also technically speaking, stifling competition right?

Yet, I don't think anyone would argue that Apple is doing anything unfair.

So what's the difference?

[danilocampos]

I think you'd have to look at the margins and intent involved.

If Apple was foregoing any margin, and perhaps even operating in the red in attempt to prevent competition, that would get a little touchy. For example, if tomorrow Apple slashed the iPad's price to $150 just to fuck over the rest of the market, that'd be weird.

But the thing is, Apple isn't invoking the DOJ or crying "anticompetitive." Google is. So they need to have competitively clean hands if they want that to mean something. I'm not sure they can claim that.