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Comment by armaautomotive | Hacker News Reader

Do you think OpenAI plans to trade the semiconductor market? This would only apply in that scenario.

It's interesting that this isn't actually illegal to do except in the specific context of an exchange market. I did a very cursory search of the US Code and the Securities Exchange Act of 1934 and yeah, unless there's some additional legal precedent or other applicable law I didn't find, then this might just be a gap in the law.

It even seems to skirt around notions of illegal vertical integration. For example in this address from 1998, a former FTC commissioner describes several types of illegal "vertical alliances", all of which rely on both the upstream supplier and the downstream consumer being aligned in anticompetitive intent, which (if the article is to be believed) they couldn't have been here because there are two suppliers who were unaware of each other's deals.

Is it really not illegal to just buy up a huge chunk of a critical input for an industry and stockpile it for the purpose of locking out competitors? Seems hard to imagine that some robber baron of the 19th century didn't already do this.

Let's not forget that if it's not illegal now, it could be illegal in a matter of days. Add 12 if a president decides to sit on their thumbs, it's happened before.

> Seems hard to imagine that some robber baron of the 19th century didn't already do this.

They tried it and lost their shirts. When you hoard a critical input, that input doesn't just disappear. You spend huge amounts of money pushing the price up, and then the market price turns against you as people finally figure out that the hoarding was just a stunt, that you don't really have a higher-valued use for the stuff you hoarded, and all of it is going to be right back on the market sooner or later.

It's hard to tell from the news but it sounds like they've negotiated contracts for a recurring stream of DRAM rather than just trying to buy a ton of it on an open market. Wouldn't we be stuck with high prices until manufacturing capacity increases and/or the deal expires?

Not exactly the 19th century, but in 1980 Softsoap bought up a year's worth of manufacturing capacity of hand pump mechanisms in order to block competitors from entering the consumer market for liquid hand soap.

I didn't know about this history. Looks like it actually worked out great for them.

Oops I forgot the link to the FTC document https://www.ftc.gov/news-events/news/speeches/vertical-issue...

and here's a followup from the same commissioner https://www.ftc.gov/news-events/news/speeches/vertical-issue...

No, they want DRAM to be expensive to give them a competitive advantage over their competitors.

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