[PhantomHour]

"Dumping" in the context of international trade; Predatory pricing.

The standard model for tech firms has been to run at enormous losses to push competition into bankruptcy or steal their users through subsidized service.

No European social media company could compete with e.g. Twitter, running at a loss for TWELVE years.

In more recent years, it's things like Uber. Subsidizing ride costs to crush existing taxi services & European taxi startups.

This is all, ostensibly, illegal under international law. You can't do it for cars or commodity goods. It's just not been enforced on the tech industry.

[Imustaskforhelp]

Could you please share how its illegal under international law and why I couldn't do it for cars or commodity goods.

Some resources would definitely help me out here!

Also I think that I doubt how enforceable this is in tech industry as for the most part, they are selling a service and each service is different and thus have different price points and therefore the company should have the ability to decide prices technically.. so if they want to sell at a loss, theoretically nothing stops them from selling the service at a loss.

But I feel like the same logic applies to commodity goods. If two parties want to decide that they want to buy/sell at lower prices, why does the govt. interfere b/w them? Does this not impact their rights/freedom?

[PhantomHour]

To be slightly rude, there is just a wikipedia article by the name "Dumping"; https://en.wikipedia.org/wiki/Dumping_(pricing_policy)

The actual legal mechanics are complicated; "Illegal under international law" here specifically entails "WTO agreements allow retaliation in response to dumping".

> and why I couldn't do it for cars or commodity goods.

Specifically, it's more enforced. Governments care about their conventional industry. The way this'd look is say, China providing state subsidy to certain industries in order to artificially lower the price of those goods, making them cheaper than US-based industry could produce, with the specific intent of driving US industry out of business.

Just googling "predatory pricing" and "dumping" will get you examples.

> Also I think that I doubt how enforceable this is in tech industry as for the most part, they are selling a service and each service is different and thus have different price points and therefore the company should have the ability to decide prices technically.

The problem for tech is this difficulty in assessing "real value" and the assumption that running at a loss for extended periods is "normal" for tech companies.

For a clear-cut example, consider Uber, who paid drivers more than they charged the passenger(s). This is obviously predatory. Uber has tricks like moving insurance/maintenance to the driver's wallet, but a taxi can't be cheaper than what they pay the driver.

> why does the govt. interfere b/w them? Does this not impact their rights/freedom?

It does impact their freedom, but the reason why the government intervenes is long-term health of the market.

Things like a 'firesale' because you're going out of business, or moving to a new warehouse, etc, are fine. A single store (even a big-box one) going out of business won't crush the entire market and it's only of short duration.

The problem is that dumping/predatory pricing is a strategy to maintain a monopoly. (Or in the cases of extensive investment funding, build one)

Again, consider something like Uber (but the same applies to any "rental"/gig-economy company). They sell rides below cost paid for by their huge pile of investment money, no other taxi company can compete. All the competing taxis go out of business. Uber can now raise the prices to obscene levels and cash in.

Whenever someone tries to start a new taxi company, it'll be small and local, so Uber just lowers their ride prices in that region again until they go out of business. And because they're small they don't have as much money as Uber so they'll go bankrupt first. Uber keeps the monopoly.

Such monopolies are long-term bad for the entire economy.

On an international level, it's China and steel again. China subsidizes their industry, industry in other countries can't compete and goes bankrupt, China can now raise their prices.

[jjani]

Well written. The comparison with physical goods as you're making it is one I'm a big fan of, and should be made much more often.

It's laughable that tarriffs and import taxes only apply to physical goods. If the EU had even an ounce of self-respect, the second the US came out with the tarriffs, they would've come out and said:

"We think this is a fantastic idea by Mr. Trump. Aligned with his views, we are instituting accompanying digital tarriffs to fix the digital trade defecit. We're sure he'll agree that the trade balance should be corrected in both the physical as well as digital worlds".

And that's why the US is so mad at the likes of Brazil - finally, after decades of getting rinsed, countries are starting to take (wholly insufficient) measures here and rightly instituting the equivalent of digital tarriffs.

[immibis]

The EU presumbly knows they're currently very dependent on the US tech industry, and doesn't want to collapse the EU to the way Trump doesn't know the US is dependent on imported materials and will collapse the US.

(It's probably more about keeping up politicians' stock market investments though)

[_w1tm]

The EU has a homegrown tech industry that could pick up the slack, though it would be expensive.

The real problem is that the US would leave Ukraine and Europe alone against Russia which has a real chance of turning into WW3. Most likely this isn’t discussed in the US media but feels like every week some notable politician or high-ranking military is warning that Russia will invade NATO after Ukraine. Trump knows our weakness and is squeezing hard.

The mood here in eastern Europe is very much that we’re talking when, not if, Russia attacks us.