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Comment by AnthonyMouse | Hacker News Reader

Context: Liz Lemon has been buying two products together because one of them creates a need for the other.

    Jack Donaghy: The only thing I will be discussing with the House Subcommittee on Baseball, Quiz Shows, Terrorism, and Media is vertical integration.
    Liz Lemon: What's vertical integration?
    Jack Donaghy: Imagine that your favorite corn chip manufacturer also owned the number one diarrhea medication.
    Liz Lemon: That'd be great, 'cause then they could put a little sample of the medicine in each bag.
    Jack Donaghy: Keep thinking.
    Liz Lemon: [beat] Except then they might be tempted to make the corn chips give you...
    Jack Donaghy: Vertical integration.

https://www.youtube.com/watch?v=ZZ7oht6TD9c

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That's not vertical integration though. Vertical integration would be the corn chip maker buying corn farms for example. I don't think there's a name for "buying makers of complementary goods".

vertical integration

"In microeconomics, management and international political economy, vertical integration, also referred to as vertical consolidation, is an arrangement in which the supply chain of a company is integrated and owned by that company." [emphasis mine]

https://en.wikipedia.org/wiki/Vertical_integration

horizontal integration

"Horizontal integration is the process of a company increasing production of goods or services at the same level of the value chain, in the same industry. A company may do this via internal expansion or through mergers and acquisition" [emphasis mine]

https://en.wikipedia.org/wiki/Horizontal_integration

Anything else you care to throw at the wall to see if it sticks, just go ahead and assume I disagree with you given how our interaction has gone so far.

diagonal integration

It's called a private equity. :-)

> I don't think there's a name for "buying makers of complementary goods".

That's still vertical integration, you're just looking down the tube from the wrong end.

Suppose a company that sells PCs also makes CPUs. That's obviously vertical integration, right? CPUs are part of the supply chain for PCs. Likewise if they make SSDs.

But CPUs and SSDs are also complementary goods. They're both sold to PC OEMs in order to produce the downstream product, or end customers when they build their own PC or want to upgrade a component or two.

Entering both of the complementary markets is vertical integration because the obvious reason for a company to do it is to integrate the separate goods into a single offering:

> then they could put a little sample of the medicine in each bag.

But then they have a perverse incentive. You get a bag with five servings of chips and one serving of medication -- the first hit is free. And you shouldn't need the drug to begin with.

You have merely described vertical integration and something that isn't vertical integration and claimed they are the same thing.

That's because they are the same thing. Integrating the complementary goods into a single offering is obviously vertical integration. Not integrating them would make the acquisition pointless -- or even more nakedly anti-competitive, when the purpose is to inhibit integration with competitors rather than improve integration with the company's own products.

The sinister nature of that integration doesn't make this one sinister at all.

Do you expect Hugging Face to remain a neutral platform with no preference for any given GPU vendor's technology?

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