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Comment by licnep | Hacker News Reader

What about Uber and Lyft?

Aren't they known to operate at a loss to undercut the competition, and couldn't taxi drivers bring them to court for that?

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Maybe. But the fact that Uber and Lyft are actively competing (both with taxis and each other) using that model would be a pretty strong argument to the contrary.

At the end of the day, antitrust legislation exists to protect consumers and markets, not established businesses. Prices under cost, in isolation, pretty much can't be antitrust violations by definition. They have to be used to effect a harm to the market in other ways.

The article touches on this briefly

>The paper could also spur the Federal Trade Commission to make a simple rule change that would lay bare Amazon’s practices. And, it could blow up a scheme that Uber, Lime, and numerous other startups have been accused of undertaking.

Article was written about a specific incident rather than every incident.

according to the article, if the company is operate at loss and it benefit customers, it is fine!

"Both of these outcomes reflect consumers failing to share in Amazon’s bounty, which is key for current antitrust law. Right now, anti-competitive conduct like predatory pricing is judged under the “consumer welfare standard,” which has been interpreted to mean simply whether a market dominated by a single company results in higher or lower prices. But even though prices are the same on Amazon, consumers are arguably missing out, Sussman explains, because they’re not benefiting from Amazon’s soaring profits. “It’s illegal and even the most conservative neoclassical thinker would agree,” he says."

I'd argue consumers are benefiting greatly from Amazon's profits. They have overall re-invested those profits into other businesses that benefit consumers.

Ex: Purchased Whole Foods and have brought down those prices overall plus building Amazon Go stores which offer a much better consumer experience than traditional grocery. Amazon's Web Services platform has leveled the playing field and enabled many startups. Amazon has pressured almost all other retailers online & offline to offer free or cheap delivery which is great for consumers. Walmart would likely never have done this without pressure from Amazon.

Benefiting now perhaps, but isn't the point that in the long run customers will be worse off because of what Amazon is doing?

Maybe, but Amazon faces competition from Ebay, Alibaba, even Walmart. It's unlikely they can raise prices significantly and maintain market share, nor is it likely that they can push out all of those competitors.

Free delivery isn't free; it's just amortized baked into the price. The real savings come from logistics like getting one shipment from the Everything Store instead of 5 separate shipments.

That's ridiculous. There is no law that mandates consumers get a specific percentage of the economic surplus. Amazon is worth about a trillion dollars. Amazon has 100 million prime customers, not to mention all the non Prime customers. With these very generous assumptions NOT in Amazon's favor, $10K equity per prime customer is totally on par with the amount of lifetime consumer surplus a Prime customer enjoys thanks to Amazon existing, possibly in gasoline and shipping savings alone! Amazon probably does anti competitive things, and competing vendors and their low skill employees and contactors maybe earning less, bit it's laughable to claim that customers are suffering.

This view, that prices to consumers are really the only thing that matters, is why Amazon was able to use the Justice Department to remove their only real competition in the eBook space (Apple).

That seems like you could easily circumvent by claiming the underpriced service is a loss leader, routing customers towards more profitable upsells at other points in the relationship. Printers and toner, handles and razors, banks and toasters.

These all[1], along with the general concept of a loss leader, are instances where a company is leveraging patent or protected data laws in an unintended manner to set up a moat against competition - as this is anti-competitive all these examples should be examined to see to what extent are preventing free enterprise - printer toner is a particularly egregious example of using device lock down to prevent a legitimate use of a product.

[1] Except banks and toasters which is... a weird example case

Okay, poor examples?

How about quickie marts selling underpriced drinks in the back... but you usually end up buying other things on your way to the drinks that have the big margins. The drinks are probably undercutting other stores.

I have less of an issue with this sort of an arrangement as the low saturation point for selling drinks means that the locality of the quickie mart already gives it a huge competitive advantage, under-pricing their drinks isn't likely to effect competitors - just spur on more sales as a sort of advertising.

That said if a drink stand (maybe a food-cart) was unable to match the prices offered by a quickie mart because they were selling at a loss - then I think we've returned to a situation where loss leading is creating a barrier to market entry.

The quickie mart is a really good example (I also like toy stores that sell cheap diapers to try and leverage free eyeballs as they pass through the store) where the market has a very low natural level of competition and there aren't as many specialized sellers - I think in these cases a loss-leader could be permitted on a small scale, but still be held subject to legal action if the disparity started suppressing the local market.

(Also, sorry, I didn't mean to criticize the bank toaster example, I was actually quite amused by it, I've never heard that described as a loss-leader but it totally is)

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