What is controversial is whether this is something that should be allowed, not whether it is anti-competitive.
The question should be if the outcome of this is or is not beneficial to the end consumer.
Manufacturers have an incentive to keep their prices as close to their MSRP as possible and there aren’t many ways of doing that that are not anti-competitive on paper.
However I don’t think that a reseller in London should be able to offer a bette deal than a reseller in say New Castle or Leeds because they are bigger.
While I agree a suburban / rural / remote customer shouldn't necessarily have to pay more, how do we reconcile this with the idea of economies of scale?
If a larger retailer moves more units and can negotiate a better price from the supplier shouldn't they be able to pass (some of) that saving on to the retail customer?
I thought this is, at least one reason, why franchises existed, so retailers can take advantage of bulk purchasing power?
Franchises are a licensing arrangement. You mean chain stores.
No they shouldn't. A competitive market would continuously drive those margins lower. To the extent that a company is able to maintain or freeze margins it means they have too much market power. I'd prefer to break them up but in lieu of that we might as well just pass a law that mandates what a competitive market would do anyways: remove any negotiating power the company had.
Looking back at the history of the electrical / electronic / computer markets it seems that they have been encumbered by patents, trade secrets, trademarks, copyrights and other intellectual property, going right back to Edison.
It wasn’t markets that writ these monopolies into law, it was governments. Is it surprising that these legally granted powers would be exploited and abused?
In a free economy, a monopoly can be contrary to this idea, as it can result in a suboptimal state for society, as if there were no overall-optimizing invisible hand.
What exactly did these companies do wrong?
From the article, 'If those retailers did not follow the prices requested by manufacturers, they faced threats or sanctions such as blocking of supplies.'
Does this imply that any retailer in the EU has a legal right to sell goods at any price? If I'm a retailer reselling Asus or Phillips products at cost in order to gain market share, how is that not anti-competitive behavior as well? I don't understand why suppliers cutting off supplies to retailers is anti-competitive in this case.
As anyone who has done business with Amazon through Vendor Central can attest to, Amazon gives you no ability to control the sale price of your goods. Their pricing algorithms automatically adjust the price on most items "Sold and fulfilled by Amazon.com" to be the lowest on the internet.
To me, there is a very troubling extension of the EU's logic here. Quite famously, the high end cookware manufacturer Wusthof tried to prevent Amazon from selling its products, since Amazon was undercutting the value of its brand by offering massive discounts over prices on Wusthof's own site, and its brick and mortar distribution channels.
Does this mean that under this EU ruling, that Amazon could sue Wusthof for attempting to "block" its supply of Wusthof goods?
To take it a step further, Amazon lost money on each early-model Kindle sold. If Amazon attempted to rapidly gain market share in say the chocolate market by reselling Lindt or Godiva chocolate slightly below cost, how does the anti-trust law work out here? Amazon would arguably be engaging in anti-competitive behavior, while the chocolate maker could be fined for telling Amazon it planned to withhold future supplies?
I'm generally a big supporter of consumer rights legislation and enforcement, but this makes me wonder if the EU is going too far. Their ruling seems to have the potential to open up a huge can of worms, and may actually entrench the monopoly power of larger ecommerce sellers.
Generally speaking? Yes.
But there are a whole lot of exceptions to that. Books in most EU countries have a price fixed by the publisher. Predatory pricing is illegal.
> If I'm a retailer reselling Asus or Phillips products at cost in order to gain market share, how is that not anti-competitive behavior as well?
It can be considered predatory pricing if competitors can't sustain equal prices without going out of business and you can raise prices later.
> Does this mean that under this EU ruling, that Amazon could sue Wusthof for attempting to "block" its supply of Wusthof goods?
The anticompetitive nature and legality of vertical restraints (single supplier to retailer) aren't quite as clear-cut as horizontal ones (multiple suppliers or distributors or retailers between themselves).
Manufacturers have been allowed a certain amount of control over their distribution agreements like requiring enforcement of Minimum Advertised Pricing or quality standards for retailers, but each situation is analyzed on a case-by-case basis to the effects of the ban and if there is legitimate justification.
Isn't this the tech-VC model? Create a "new" product (same as the old product but ignore regulation), burn venture capital till the traditional players fold, profit.
Okay, I'm thinking specifically of Uber. But stil...
If you can do it cheaper it's explicitly encouraged and that's what these policies try to encourage. What they discourage, is as you say, burn money to drive out other players, then run at the same price as the previous players.
It's also somewhat why the EU fined google, at least in part, because Google's behavior did not allow phone vendors to compete on their merit in the market by being unable to offer alternative Android variants if they want Google's variant.
It's a different free market philosophy than the US free market similarly to how other philosophies (like Freedom of Speech) work different in the EU.
> Generally speaking? Yes.
In France, you're not allowed to re-sell goods at a loss if you're a business, outside of the "Sales" (Summer, Winter, and now more). So Fnac, Boulanger, etc. can't fix prices any lower than they actually bought it from their supplier. See https://fr.wikipedia.org/wiki/Vente_%C3%A0_perte
If companies A and B agree to sell at X price, the consumer loses since there is market stagnation.
If company A sells under cost, then they are effectively losing money. I believe this is also penalized, but it's still not sustainable long-term, very risky and with no direct (but indirect) negative effect on the consumer.
Note: IMHO the Amazon Kindle main point is not about being sold under cost, it is about being sold as a loss leader, which is quite different.
However, unless I'm missing it in the article, I don't think that's what happened here? Asus wasn't colluding with other laptop makers to inflate what you buy for a laptop.
Regarding below cost selling not being sustainable long-term, I think that's debatable. Amazon lost money on every "super saver" free shipping item it sold a decade ago. But, eventually it was able to negotiate better and better rates with UPS and FedEx.
In the book market, their free shipping and low prices have led to them being the overwhelming big fish for books in the US. And, after they've gained market share, they're able to raise prices on books (https://www.businessinsider.com/amazon-accused-of-raising-pr...).
> The Commission found the manufacturers put pressure on ecommerce outlets who offered their products at low prices
So it is literally company A telling/forcing company B to sell at X price.
Your previous comment said:
> If company A improves their margins and can sell for a lower price, then company B has to either improve their margins, differentiate somehow or stop selling the product.
This comment implies that companies A and B are in direct competition.
The case you're now describing is a supplier/customer relationship. What we're talking about here is a Company C (Asus) having stores A and B as retail distribution customers.
Store A decides to undercut Store B's price. Store B says to Asus, I can't compete with those prices. So Asus has two options now.
-It can allow Store A to continue selling at whatever price it wants. Long term, this likely removes Store B as an Asus customer. Store A becomes a more and more important customer to Asus, and is able to demand additional wholesale price decreases in the future.
-Company C tells Store A, you need to maintain X price, so that both Store A and Store B can continue to sell our products.
Now imagine that Store A is a giant retailer like Amazon. If your interest is in protecting consumers and ensuring the long term competitiveness of the market, how do you achieve that by allowing the better funded player to sell at a cost that Store B can't match?
Further, Store A is notorious for low wages, and the health costs its workers incur in the physical nature of the job are socialized losses borne by the broader state. Store B may be "inefficient", but it pays its workers a better wage, spends in its local economy etc.
Lastly, we're talking about pretty commoditized markets here. If Asus's "price fixing" leads to higher priced mediocre laptops, consumers have hundreds of other options.
I appreciate you engaging in this discussion with me.
EDIT: Not to mention, unless Asus has some kind of wild brand loyalty in Europe that I'm unaware of, Store B is free to find a different laptop supplier if it finds Asus's terms unacceptable.
This doesn't change the fact however, that the antitrust considerations remain because Store A can likely beat Store B's prices on EVERY product.
> Further, Store A is notorious for low wages, and the health costs its workers incur in the physical nature of the job are socialized losses borne by the broader state. Store B may be "inefficient", but it pays its workers a better wage, spends in its local economy etc.
This is a larger issue that IMHO should be solved independently, and I think the EU is doing quite well there compared to other parts of the world (I'm from Spain working in Japan now and I've heard way too many horror stories around here).
> How do you achieve that by allowing the better funded player to sell at a cost that Store B can't match?
Even if Amazon is better funded, they still need to make money per-sale (with few exceptions) so the prices won't be disproportionately different. And you can achieve that with differentiation in many ways, from the sales channels to the support, localization, etc. And that is the whole point, if Amazon innovates and everyone else is protected so they can stay behind then there would be no progress at all. They should be allowed to offer better prices if their processes allow for it and not be forced to sell more expensive because another company is very wasteful.
Now look at it this way: if the manufacturer says to all resellers “you have to collude and use this price” then it’s way to see that price cartels and resale price maintenance aren’t so different. Whether the resellers actively collude to use the same price, or are forced by the manufacturer to do so is practically indistinguishable from the consumer end. Which is why in general neither is accepted.
Apple does it (https://www.macworld.com/article/2024257/how-apple-sets-its-...), high end brands like Tiffany or Coach do it, beverage makers like Bai do it.
In American physical retail/distribution negotiations, any vendor agreement is going to specify very clearly what kind of markdowns are allowed, whether or not the vendor has to take back unsold inventory ("consignment basis"), and whether the vendor has to provide allowances to dispose of unsold inventory.
As I've mentioned in the adjacent comments, the most troubling implication of the EU ruling is that if something like it was adopted in the US, Amazon would have an even greater competitive advantage. If I'm now no longer allowed to set policies that allow my various distribution channels to compete on roughly equal footing, it leads to the party that is willing to accept the least profit taking virtually all market share for a given product.
Apart from fears of oligopoly/monopoly, isn’t that the market working as it should? EU Regulation usually doesn’t allow for predatory pricing to take market share either
Walmart and Amazon are the largest US retailers in the physical and online retail spaces, respectively. Yes, they have helped reduce prices on goods for the average American consumer.
The question is, at what cost? The US taxpayer also picks up the welfare tab for Walmart and Amazon employees, as well as the costs associated with un- or under-insured people getting sick from physically demanding work. The American taxpayer directly subsidizes these companies .
If you create a system where the lowest cost retailer now has government-backed authority to lower prices to whatever it wants, this means that stores that pay their workers a fair wage are naturally at a disadvantage. Over time, the consumer may benefit from lower prices, but on the supply side (retailer + manufacturer), an increasing share of the profits accrue to the retailer as they are able to negotiate lower and lower prices from the manufacturer due to their increased scale.
The kicker is that the enforcement of predatory pricing laws is difficult. Short of selling the goods at a cost below the invoice price paid to the manufacturer, on what basis can the government intervene? Physical retailers generally need to markup goods 50-100% depending on the industry. If Amazon is willing to sell the goods at a 0.5% markup to gain market share, can the government intervene? What's the brightline for markups below which the state can intervene?
Re: predatory pricing: I’m no expert but I think “how low can you go” is basically no lower than what any other retailer can go at your scale, without making a loss. Others explained it better elsewhwre in this discussion.
They'd pick up the welfare tab if Walmart or Amazon didn't employ them, too; the only area where that might increase with their employment is EITC, since EITC goes up with earned income to a point.
While Walmart and Amazon should be cashed out for our labor practices, the idea that welfare that their employees qualify for is a subsidy to them is odd. The subsidy is favorable tax treatment of the capital income of their shareholders compared to the labor income of their workers, but that's not something particular to low-paying employers.
Amazon, Walmart, et al. have put several industries out of business. The effect of the big box stores and ecommerce sites on traditional retail is visible anywhere malls are failing.
Their distortionary effect on the number of people who need welfare occurs through 1) putting traditional businesses out of work and 2) placing its warehouses in areas where wages are depressed (sometimes due to their own competitive behavior). In the second case, wages are anchored at a lower level, and factors like hysteresis further depress potential earning potential.
I would agree that strictly speaking, you're correct that the burden on the social safety net is maybe reduced when workers take a low wage job at Amazon vs. being completely unemployed. But, Amazon and Walmart have collectively displaced hundreds of thousands, if not millions of jobs in industries like corner stores, grocery stores, bookstores, appliance shops, etc.
Regardless of whether you believe that Amazon type companies are responsible for displacing people from jobs, my argument is that someone who works at a legacy retail outlet is likely making a better wage. Amazon can swoop into areas where the labor market is depressed, and then offer a lower wage than is offered in legacy retail. They can offer a wage that might be considered not-livable, because the social safety net will make up the difference.
It seems pretty uncontroversial that Amazon's cost per unit of labor is lower than that of a legacy retailer. Do you see any reason why this isn't the case?
But would the American taxpayer subsidize the entire retail market any less if it were the same size but split up among several smaller and less efficient (meaning consumer prices were higher)? I could see that being possible, but I see no reason to assume it would be likely.
Yes, one way that Amazon and Walmart reduce their costs (and thus their prices) is by paying certain employees as little as possible, but it seems to me that smaller firms can and probably often do the exact same thing, but are still less efficient than Amazon and Walmart due to economies of scale that are unrelated to labor costs.
Noah Smith summarized the findings of another recent economics research paper, which found that there's a significant difference in wages offered in areas with multiple employers hiring for a similar position (https://www.bloomberg.com/view/articles/2017-12-29/monopolie...).
It's about intent and effect. Resale price maintenance isn't illegal per se, but it can become illegal if it is intended to stifle competition to an unreasonable extent.
Manufacturers are within their rights to choose distribution and retail partners, but those rights aren't unconditional. They can't coerce retailers in ways that are detrimental to competition and the proper functioning of the market. I can refuse to supply a retailer because they provide inadequate customer support or they don't order enough product for it to be worth my while, but I can't refuse to supply a retailer with the specific intention of stifling competition.
For the corollary in US law, see:
There are other laws for price dumping https://en.wikipedia.org/wiki/Predatory_pricing#European_Uni...
But how do these two concepts interact?
If someone is price dumping, and I cut off supply to them, are we both in violation of the law?
Probably, yes. Price dumping laws are there to protect other resellers, not the brand image or whatever they were going for here, so the OEM doesn't have any stake in a price dumping case.
If you are a multi-channel retailer, like ASUS is, where you're selling through physical and online channels, if a large retailer like Amazon decides to cut the final sale price of your goods, this definitely has a cascading effect on your other business relationships.
In particular, your physical distribution customers are going to wonder how Amazon is able to sell for such a low price, and may pressure you to offer them a better wholesale price.
We may hope that the threat of EU enforcement dissuades an Amazon-type retailer from this type of price dumping/cutting, however by the time the law is actually enforced, you (the manufacturer) may have already suffered irreparable damage to your business relationships with your other customers, and may have suffered a permanent hit to the margins you can make.
In a situation like that, I'm having trouble seeing why it would be unreasonable to stop selling to that price-cutting retailer, particularly if they are a player with entrenched market power.
If they're acting illegally you should apply for an injunction, but you would have a reasonable defence if you decided to cut off their supply. Your intent in cutting off supply wasn't to make the market less competitive, but to prevent an abuse of the market.
Below-cost selling would also be illegal in many cases: https://en.wikipedia.org/wiki/Predatory_pricing#European_Uni...
No, Amazon doesn't have a right to carry any particular brand of goods.
I'm not sure. I mean, I hope it never will be. At least I think there are actually a lot of people like me: once I heard (as a kid already) the huge difference between what even a moderately proper hi-fi system makes music sound like in comparision with e.g. some portable radio or (god forbid) laptop speakers or even highly rated headphones, I cannot imagine not wanting that. Though I admit for video I care way less. But that's just because I watch things mainly for the plot and not for the visual effects.
Nearly every single kid commented on how good the sound was. Several insisted it must be a surround-sound system. As far as I could tell, none of them had ever watched a movie with anything but the speakers built-in to their television.
I think it's all about the sound bars these days. I don't have one, but there seem to be dozens of them for sale every place you can buy TVs.
Won't that highly depend on the location you put your AV system in? You basically need a dedicated area with decent acoustics if you want to beat good quality headphones. For non-audiophiles like me a good pair of headphones seem like a much more rational investment.
Of course if it's about watching movies or TV then headphones are not always practical, but then for that I admit that I don't care much about audio fidelity beyond using cheap-o dedicated speakers instead of the TV's builtin set.
But yes if you really don't have the space for speakers it's not ideal. But still i prefer it over headphones even though they usually can yield more detail.
I do have a dedicated receiver, but I wouldn't recommend it for most people because it's not worth the hassle.
It is not difficult to imagine a machine with multiple sensitive recording and analytics devices that could measure the reproduction of audio in a room and generate a score based on how well it matches the original recording itself. This device, in fact, is not even imaginary but actually exists, and can legitimately give scores to audio configurations that differ on "orders of magnitude".
Certainly there is a point where this device would rate sensitivities far beyond human ability to distinguish, but I would argue that the difference between sound bars and AV+speaker setups is well within the range of standard human perception. We're not even close to the controversial $5-10k+ setups.
I also did not say that the difference between sound bars and receiver setups is too close for human hearing to detect. This is clearly not the case, since it's entirely possible for humans to detect sound differences even between two sound bars or the same receiver with different speakers. However, sounding different doesn't mean one is actually better. When two setups differ in volume slightly, human listeners will consistently choose the louder one as "better" unless the sound is clearly low quality (i.e. no bass, laptop speakers), disregarding the supposed intrinsic superiority of the "better" system.
> human listeners will consistently choose the louder one as "better" unless the sound is clearly low quality
This is news to me, and very interesting. Thank you for sharing.
That should be easy to test with a blindfold. If they can clearly figure out the difference between the two.
The simple fact is that most people don't really care about sound quality and the 'good enough' sound they get out of TV speakers or a soundbar is plenty.
'Proper' Surround speakers - as in ceiling mounted speakers in a dedicated home theater room with acoustic treatment, as opposed to a soundbar with an atmos badge attached - have always been expensive and cumbersome and have only grown even more so with the proliferation of fancy new formats like ATMOS and DTS:X. Of course, part of the reason they are so expensive is because of price fixing by AVR companies like Denon, making an already niche market even smaller by erecting a taller barrier of entry.
When companies have to resort to underhanded tactics to prop up their margins rather than creating compelling products that people want to buy it is a pretty good sign that the industry is in dire straights.
when I was young I would have killed to experience Jurassic Park in such a way. But nowadays movies are so meh to my mind.. as said above, nowadays I'd kill to have a good plot and good editing.
ps: bonus dire straights.
Which is the great scam of 2018 and beyond so far, convincing people that they need 4K video when they absolutely don't.
 4K does matter for large projection screens, and is a generally good thing because denser screens spill over to monitors, too.
As a tech savvy rural resident that pays extra for faster internet, I just barely got fast enough internet last year for a single 4K video stream (assuming nobody else in the house is browsing Facebook or something).
Although anecdotally that is changing quickly. My ISP (Comcast) has consistently for the last 24 months been increasing my internet speeds roughly bi-annually by about 30% each time. It's hard to tell if this is due to pressure from nearby Google Fiber, which is not available in my area, or something else entirely.
: there are workarounds that exist
Sure maybe I don't need it, but I can afford it and it brings me delight...
* Many folks have not yet migrated from DVDs to Blu-Rays
* Maintaining production lines for DVD, Blu-Ray, and 4K probably would not be offset by customers willing to spend even more above the Blu-Ray pricing for a 4K disc.
* The mainstay product sold by media is a combo package - DVD + Blu-Ray + Digital. Adding a 4th offering to these combos is very difficult.
* Monopolistic ISPs have little incentive to upgrade bandwidth to support 4K streaming, despite Netflix's apparent willingness to provide that content.
Most of the above fortunately does not apply to video games. There is no need to package or sell the "4K" version of a game. (Or is there? OH GOD THE HORROR. Please don't tell EA about that idea.)
However, the late 2010's saw the conjunction of budget 4K displays and the cryptocurrency boom. Although graphics card prices are just starting to normalize, the crypto boom seems to have forced graphics card pricing to be 1-2 years behind the display market.
If I had a 4k projector, even with a 1080p source, the quality of the projection would presumably be higher.
Watching the news in 3D is... well... something else.
…and more. Switzerland has a vibrant market from what I've seen living here the past few months with pretty competitive in-country shipping (I once got a package via normal post the next day after ordering at 16:00 local time).
Good thing too. Audio brands like these rely on smaller shops to get in front of customers. People showrooming then buying online will close out the small stores, which will likely kill off those brands.
Why cant the brands setup their own showrooms?
$500 each for SVS Prime towers seems reasonable when the flagships are $1000 each.
I dropped about $2000 into my setup between speakers, amp, dac, and sub; doubt I'll ever need to buy anything in the future.
guess who owns them now..
Excessively tight retail margins also degrade the customer experience. As a manufacturer, you generally want retailers who can provide good pre- and post-sales support. If a retailer makes almost nothing from selling a product, they aren't particularly inclined to help customers. They'll spend more time upselling accessories or additional warranties than actually advising the customer and will just deflect all problems to the manufacturer.
Online stores often indirectly benefit from brick & mortar retailers - customers browse in store, then buy online. Again, hence RPM.
If I do eat into my margins, there's a good possibility that the online retailers will figure it out and demand a discount too. Big online retailers have good market intelligence resources and considerable negotiating power, so they can demand as good or better wholesale prices than anyone else despite having very low overheads.
Left unchecked, everything converges to the margin. I'm making just enough money that it's worth keeping production running, most retailers are making just enough money to justify the shelf space, but we're just barely scraping by. I can't afford to invest in R&D, so I just churn out cheap me-too products. Retailers with high overheads will be driven out of business, leaving only the most efficient of box-shifters. Customers get low prices, but very little more. Sound familiar?
If we use the Amazon and Best Buy example, if I'm selling to both Amazon and Best Buy, and Amazon cuts its sale price to the end customer, in the short term this doesn't affect me. Amazon is still paying me wholesale.
Long-term however, if Best Buy is unable to compete with Amazon's price to customers, it may stop being a customer altogether. Amazon may now be my biggest, or even only, customer. At that point, they WILL ask for further discounts on the wholesale price.
Jeff Bezos has openly and repeatedly said that he read a lot of Sam Walton's writings to help shape the vision for Amazon. CNBC did a 2-part documentary on Walmart a few years back (a "CNBC Original"). The two parts were shot years apart. In part 1, they showed a couple of entrepreneurs who had triumphantly become Walmart vendors, and were delighted that they now had such a huge retail distribution channel. In part 2, many of those vendors had soured, since Walmart had put pressure on them to offer increasingly lower wholesale prices etc.
For these vendors, Walmart was often their ONLY large customer, so they had little power in negotiations.
When the USSC ruled that manufacturers had a right to set the prices for their products, suddenly there was a lot more competition in the online market. The big discounters still got a lion's share of business, but it wasn't impenetrable like it used to be. The flip side is that some of the smaller guys came up with the idea of password protected member's only sites with discounted prices which were impossible for the bigger guys to duplicate because of their volume.
One common response to this is to charge different wholesale prices to different channels, but this can also be difficult to control or subject to price-fixing regulations.
Keeping the margins high for resellers = spending more on sales and marketing for your product.
I don't think non-commodity products in competitive markets should be subject to price-fixing rules in terms of setting the market price, but that's how it is in many jurisdictions today.
Even if the price discrepancy isn't quite that bad, if an outlet does not feel it is worth their while price matching they just drop the product to make room for more profitable brands. The brand then suffers due to the lower visibility.
How does this differ from US-wide enforcements of MAP (Minimum Advertised Price) where even e.g. Amazon is fully complicit?
Whether that should be legal or not is another matter though.
Where does the money go?
Once final judgment has been delivered in any appeals before the Court of First Instance (CFI) and the Court of Justice, the money goes into the EU’s central budget, thus reducing the contributions that Member States pay to the EU.
I don't even know where all the EU money goes to. Bailing out Greece and co? Subsidies?
You can't deny that at least Germany made hefty profits from "bailing out" Greece.
Sources in German (maybe DeepL can help translate):
In fact, GGP is also wrong in indirectly claiming that subsidies are bad. Every country on earth gives out subsidies to its economy and as the EU acts like a country in many ways (esp. wrt trade), it should give out subsidies to its economy.
GGP just tried to bash the EU with baseless arguments, as it almost always happens in such threads.
About 6% is administration.
EU budget goes mostly to funding long-running development and cooperation programs (Erasmus, Euratom, infrastructure in poorer areas, etc etc).
Cash eviction: EU writes-back to most recently-used RAM manufacturers
They aren't setting any minimum floors or requiring retailers to set any floor. Heck, they don't even sell to retail directly anymore.
There is no law about an upper ceiling on pricing. Would you say Nvidia is price fixing because their volta products are priced "suspiciously high"?
> There's no smoking gun, but there have been lawsuits 
There are lawsuits like these left and right, read any company's 10-Q about how random law firms file suits in the name of investor losses or consumer rights. Doesn't mean those suit hold any ground.
> A lot of water cooler talk is happening right now that something is going on.
> Given that there is only 3 major players in the market these days with Samsung doing most of the heavy lifting, it wouldn't take much.
Still more diverse than Google Search, Microsoft Windows, Intel/AMD CPU, Nvidia/AMD GPU.
Monopoly (or Tripoly?) does not equate to price fixing and collusion.
No, but AMD would (I have no clue if they do) release a cheaper product and therefore get the biggest market share.
The problem is not about Samsung setting a high price.
It's about all three companies setting that high price, seemingly together.
And how many AMD cards have you seen being used for DL? Hint: 0
> The problem is not about Samsung setting a high price. It's about all three companies setting that high price, seemingly together.
Parent is implying collusion and fixing on the sole basis of prices being above historical means, that's not price fixing.
Also, you're describing price fixing, not providing an evidence that it is possibly taking place. I work in Azure, so I know quite a bit about the current pricing environment around semis. It isn't as much as fixing as is the sudden explosive demand for their products.
* Take a look at the historical earnings for these companies, they were barely scraping by a couple years ago (Micron was under >$10B debt which was more than 50% of their market cap at the time). You can't justify capex on growing supply when you don't even have money to cover debt.
* Look at the trend of DRAM attach rates and software requirements for memory, nowdays everyone is happy running an entire instance of chrome for their communication, editor and what not; Deep Learning and data economy have taken off in the past few years which is requiring records amount of both logic and memory chips.
The current prices are a function of demand and supply. I do see them heading slightly lower on better margins due to lower debt and better yields on more mature processes (possibly even 1Y nm process node this year) but we'll be here for a while without any price fixing.
Price fixing is a serious allegation, you can't just come up with price history and throw allegations around.
If you want a high-end phone, you have to pay proportionally more. But that's normal and applies to nearly everything else, too.
Regarding €1000 — if a country like France wouldn’t have a 20% VAT, prices would be lower obviously. So perhaps we should “investigate” the 20% VAT? Maybe we should “investigate” the French labor laws that contribute to the cost of goods sold? There are a lot of things we “could” investigate — or we can just accept that companies will price their good appropriately based on the market demand. This isn’t like it’s an essential item required for basic life. Maybe we could investigate why France has strict milk quotas that necessarily increase the price of milk? Investigating milk prices has a lot more relevance to people than the pricing of a luxury item like a high end smartphone.
To be clear, I am not suggesting we investigate anything, only pointing out the absurdity of complaining about smartphone pricing when the EU has plenty of other products that are subject to price manipulation based on political interests. The EU has had tariffs for decades on imports, making everything more expensive. But sure, let’s complain about Apple and Samsung while ignoring textiles, food, cars and machine parts all of which are subject to tariffs that raise prices.
Of course iPhones are ridiculously overpriced, and Apple has huge margins. But that's absolutely fine. There is plenty of competition in the smartphone space and people willing to bite the Apple are welcome to do so.
PS, yes, the agriculture rules in the EU are sometimes crazy, but to a certain extent they do actually serve the purpose of guaranteeing local production capabilities, which is important.
So many companies do it and it's not even hidden.
I find it pretty hard to see why price fixing is better when dictated by a manufacturer than by collusion between resellers.
These days, we have a handful of companies racing to be "the first traded trillion dollar company," with a business model built around >50% market share.
We have platforms, with their digital versions of the infrastructure-monopoly problem, just without the capital cost part. We have social networks, with their telephone-like network effects. The value (to users) is in everyone else using it. We have ads-and-data businesses like Google, where the value to ad-buyers grows exponentially with network size.
We have investors betting on monopolies. Peter Thiel's definition of monopoly (the only worthwhile strategy) is basically a spectrum. On one end you sell commodities, at cost. On the other end you have a perfect monopoly. Invest in ideas closer to the 2nd type.
All sorts of powerful reasons for companies to cut themselves an island of monopoly. All reasons that are not economies of scale. If monopolies really do come with stagnation, higher prices and such... We are headed for trouble. Our current antitrust frameworks don't touch on most of the problem. The likes of fb just don't fit into it.
Price fixing, pricing power, dumping and such are the symptoms of last year's flu, not this year's.
Specifically, EU fines represent about 3% of EU revenue. The funds from the fines may not be used until the fine has passed all chances of being overturned by courts, which can take up to 8 years.
Finally: the fines reduce EU funding from member countries by the same amount. Even if the member nations decided to subsequently give more money back to the EU, there is a cap on how much money the EU can take.
Of course fines are a revenue source, the EU operates on multiyear fixed budged which they supplement with fines and tariffs.
The bulk of that wealth transfer is reliant on the coffers of US companies.
> Please don't use Hacker News primarily for political or ideological battle. This destroys intellectual curiosity, so we ban accounts that do it.
Also I balance it with the variety in my submissions.
Please share your sources.
And, just assuming you are right, those coffers are full of untaxed revenue from EU markets.
Are you suggesting that it's legitimate to fine US companies on antitrust grounds to supplement tax revenue?
You make that sounds like its insignificant, but it really isn't.
Fines that go in to the 'consolidated budget' for a country or region doesn't seem right; it's blatantly in their own interest to lay out fines, regardless of if the behaviour warranted it or not.
This seems very familiar to the US property seizure laws; the line between 'justice' and 'flat out corrupt' is fine, and there's significant financial gain to walking the corrupt side of the line.
I don't think this is anything to be proud of.
Over 4.5 years, from 2013 to 2017, EU fines totaled nearly $10b. That's $2b a year, or just over 1% of the EU's total revenue.
But anyway, fines going into the general budget is a very usual situation which poses no problem in a stable administration.
The reason is mostly that the corporation also got the profits from such actions, so it makes sense to target that entity with sanctions as well. The system is also designed to encourage companies to create processes to root out bad behaviour, instead of silently encouraging it and denying all responsibility, instead making individuals take the fall.
Another reason is that in many of these cases it's not obvious where and when a policy originated, at what point it started breaking the rules, etc.
Of course there are still crimes that can get managers into trouble, such as bankruptcy, all sorts of counterfeiting, fraud, etc.
Really, we are talking about difference in between them selling 250 euro laptops vs 270 euro laptops.
Taiwanese consumer electronics industry got, kinda, ossified.
Their mainstream products are almost as boring as "white goods" these days.
There is a gigantic "commodity laptop" market and the less than 10% enthusiast/gaming niche in it.
And YES, Intel is chopping down the tree it sits on. A lion share of their desktop CPU/Chipset/Wifi sales are in the commodity sector. If they strangle Taiwanese guys to the point they drop them in favour of ARM SoCs, it will trigger a magnitude 9 earthquake in the market.
This thread has people hailing Dell and HP as quality laptops. In other threads, there is no end to the troubles people have with Dell XPS. HP has a poor reputation as far as I remember, without remembering any specifics, except that they had overheating issues at one time.
I guess the difference is probably between business and consumer laptops, where the former tends to be Dell or HP? Except Acer, as noted, because Acer is trash. Don't buy Acer.
It's because it's expensive paid repair service so I bought it, but I don't think I really like to repair my laptop so many times. (And not to mention classic power adaptor problem with has built-in it for pretty long time)
For Asus and Acer, we always joked them with a "built-in timer", they will break when time is up. Just like all those eco-friendly things. Very environment-friendly company.
I gave them a second chance, but the 419 Euro T100TA convertible also failed me after just about two years (doesn't turn on anymore; no idea why). Oh, and that device was probably affected by the price fixing.
So, my decision is simple: No more Asus. (And that's the nice way of putting my personal opinion).
That's not how markets work, except in the lowest of the low end (where margins are already awful).
That doesn't mean the entire company/product lines operates this way or the market as a whole is incentivized to do the least amount work effort possible.
It is nihilistic, but is it any less true?
Also, not price, profit. Revenue minus costs. It costs company to make a product make user happy, so if they can skip that without impacting their sales, they will - doing otherwise would be leaving money on the table.
> That's not how markets work, except in the lowest of the low end (where margins are already awful).
I argue that's how markets work in any highly competitive space.
> the market as a whole is incentivized to do the least amount work effort possible.
But isn't it? As a company, you want to make money. Existence of competition causes you to make less money. If you don't fight back this pressure, you'll get pushed out of the market. This incentive structure applies to all your competitors as well. This is exactly how competition makes products cost less.
There are some good ways to decommoditize and get people to pay $399 instead of $349.
* "Modest Rugged". Robust hinges, maybe some sort of drop-protection. Not Toughbook quality, but at least "I can leave it with clumsy people and children and not worry about it". I get more of that out of a used-to-death X230 than from a new HP Stream or the like.
* Premium packaging experience. I've bought some nicer-grade PC PSUs and they come with fancy fabric sleeves and pouches to hold the spare cables. Why can't my laptop come in a basic travel sleeve, maybe with a matching pen and mouse? It would probably add $5 to the BOM, yet make the product feel dramatically more premium.
* Longer warranty. I know the Europeans get 2 years by law, but really, saying "here's our unit with three years of guarantee on it for $20 more than theirs with 1 year" at least provides the signals of quality.
* Experimenting outside the touchpad. I can recall when you could get all sorts of different pointers-- side trackballs, eraser pointers, things with the buttons on the back of the case. There are a lot of people who prefer Thinkpads just for the eraser, or love Apple's touchpads... but there's no reason Asus or MSI couldn't come up with something to build the same loyalty.
* Better out-of-box experience. Throw a 16Gb flash drive, worth maybe $5 in quantity, with a clean software image on it, so you don't have to pester the user to make a backup themselves. Install a decent set of freeware people will actually use. I can see there's probably incentives to push MS Office trials, so it's not surprising nobody pre-installs LibreOffice, but why not paint.net, 7-zip, VLC, Firefox? Think of how Microsoft's stores do a significant business on "you can get a laptop without a bunch of crap installed"as a selling point.