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Comment by pgt | Hacker News Reader

This seems like a fallacy. VC subsidies benefit consumers until they run out of money or raise prices. As long as the market remains free, there will be new entrants. The problem is regulation that keeps competitors out. In some cases Big Co. lobbies for this regulation, but often it is government that kills competition by attempting to tax said Big Co., or adds expensive compliance.

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Dumping always benefits consumers until it stops.

the cost for the user to change from one competitor to the next aren't 0

Especially when the service is of the social networking sort. Your friends don't move just because you do, or they might not move to the same place.

We want to build a new car. A fancy electric car. We raise money from investors, build plant, hire engineers, designers and workers, establish a supply chain and a distribution chain. How should we fairly price the product?

A. $0 for the next 10 years. We've got really rich investors.

B. $X0,000, in line with the fair market price for a new vehicle.

The role of capital money is to cover capital expenses (duh), especially in the early stages, not to subsidize selling the product at a dumping price for a prolonged time period.

I can see an argument for this for Tesla, because of the capital costs. I can see an argument for this for Uber, because of the network effects. But I cannot see an argument for this for Google Photos, because the network effects are not that strong, and the capital costs are directly proportional to how many users you have. (You don't need to scale our your datacenter/cloud until you actually have users to justify doing so.)

So while I agree this can be an issue in general, I'm not seeing the argument for it here. I think it would actually be relatively easy for a competitor to get started in this space.

I think you're underestimating the cost of leaving Google Photos.

Sure, it's not too bad but I need to migrate off a new platform literally 5 years of photos (+ face tagging), explain it to all my relatives, make them install another app.

Or I can just start paying 2$ per month. I'm not too bothered but it's a clear bait and switch.

To be fair I wasn't sure if this was coming or not given Google is not exactly a small business and could afford to spend some storage money to lock people in better in their ecosystem.

I didn't say that was the role of capital.

What I said was it's a fallacy re: your statement, "SV's dirty secret is that it's an enormous dumping scheme: .... to gain a dominant position in the market... then jack up the prices and fleece the customers."

Consider there is also a capital cost to rapidly accelerating change in consumer behaviour, e.g. app-based ride-hailing, which can also open up new markets.

*edit: typo

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