The US remains the largest economy in the world. If you succeed in regulatory capture there, and use it to exclude foreign competitors from the US, you've still captured a market worth hundreds of billions.
Yeah, an extreme position is the typical opening move in this sort of game. Then you negotiate, walk back from the extreme, and meet somewhere in the middle.
The more extreme your opening demand, the greater the likelihood that the eventual equilibrium point will be closer to your actual target.
And in this case the actual target is to entrench the position of the current market leaders, and then effectively close the market to new entrants. That's itself a very extreme position, so the opener has to be even more extreme than that.
> I'm probably losing it, but just based on OpenAI's behavior and public communications, it seems to me they want to be taken over by the government?
Well, as people say over and over again, they've got no moat. The actual LLM models are destined to be commoditized over time, and the real money is in the hardware to run them on. The endgame winners are going to be Nvidia and AMD, not Anthropic or OpenAI.
So what's the typical playbook for large firms seeking to insulate themselves against market compensation? Push for regulation. If there are no natural barriers to entry, create artificial ones. And how do you get regulation passed? Present yourself as the target of the regulation, rather than its beneficiary, and start publicly doing things that make others think you need to be reined in.
These stunts, especially from OpenAI, aren't just trying to hype up the power of their own product, they're trying to hype up the perceived threat of the entire category, so they can provoke political intervention that they can comply with, but few others can.
That is not actually a typical playbook. Normal businesses do not want to be regulated, and will fight it tooth and nail. So regulation happens when bad things happen, the public wants change, and the businesses can't fight it or set favorable terms. (At most they can minimize the badness of the terms). Regulatory capture happens much later, and slowly. It's not where you start at.
> so they can provoke political intervention that they can comply with, but few others can.
See Meta et al complaining about Section 230 of the DMCA. Meta would be entirely able to moderate in an environment where mass scale moderation/censorship would be required to prevent a host's liability for UGC. Almost no one else would be able to do so.
That means no upstart could possible come along to dethrone Meta as they did with MySpace. It would also be impractical to run a FOSS social network (or forums). Meta could literally just have bots sign up on a FOSS social network until its DAU count ran over the statutory minimums to be subject to UGC liability.
Regulatory capture is a de facto ban on competition in a market.
Its pretty clear OAI and Ant live in fantasy land - the US govt doesnt care if they go bust. There's plenty of other tech firms that generate immense cash flows from operations who they can be sold to - no problem. And the shareholders and employees have no right to be pissed - they invested/ accepted SBC knowing there is immense risk.
The private market price is irrelevant - supply and demand determines what they will be sold for in liquidation.
Quite frankly Im bored of this drama. Get it over with already - go IPO, show your financials, find a path to being a healthy going concern or die! Simple! Nobody has a divine right to exist.
It's almost as though market competition precisely refers to lots of vendors targeting lots of different criteria to win business from differentiated market segments, with many being successful within particular niches, but with the largest overall at any moment being the one that's currently most adept at optimizing its operations to serve the preferences of the widest segment. Who could have guessed?
> It’s not possible for another store to compete with that. There is no competition.
That's an interesting theory. How do you reconcile it with the observable reality of there being thousands of e-commerce stores, marketplace platforms, and other sales channels operating in direct competition with Amazon?
That seems like a reasonable policy for Amazon to have. It's pretty normal practice for wholesale/distribution contracts to include clauses prohibiting the manufacturer from undercutting them in other channels after the contract is signed.
Why would Amazon want to bear the cost of people using their store as a free product billboard, or using their warehouses as cheap transient storage space, while trying to push customers to actually make their purchases elsewhere?
I'm not sure how this can be considered 'regulation' of the market, however -- to the contrary, it signifies that Amazon itself is sensitive to price pressure coming from competing distribution channels.
A monopoly store is charging (according to sibling posts) about a 50% tax to its suppliers, and will ban them if they sell their products for a fair price anywhere else. The tax percentage keeps increasing over time, as the monopoly uses this policy to prevent anyone else from competing on price.
50% "tax", or 100% markup, is the typical reseller markup for consumer products across the market, and anti-undercutting clauses are also universal.
Every bit of what you're describing is the way retail distribution works across the industry in general. Amazon isn't doing anything out of the ordinary in any way.
It's insane that it's legal for a major marketplace platform to prohibit vendors from using their platform to engage in manipulative price discrimination?
Online stores should be forced to allow manufacturers to use their sites as free advertising platforms to expose consumers to their products, while incentivizing them to actually complete the transaction someplace else?
Should brick-and-mortar stores not be allowed to offer price matching either?
You would have a point if not for Amazon's exorbitant fees which it expects to be absorbed by the seller and then requires that seller to set the same prices everywhere.
This is clearly manipulative and is regulated outside the US.
You have all the info you need in the article. Technically, Amazon's basic commission is ~15%, and that is in line with other marketplaces.
The issue is that when you pay only that basic referral fee, you won't make a lot of sales. You have to pay more to actually make those sales, which amounts to ~46%. Advertising, fulfillment, and other fees. You have to pay for all of this while being required to keep your price "fair," so you have to raise prices on other platforms to stay afloat.
You could just ignore selling on Amazon altogether, but in the US that's rather unrealistic at this point, and they know that.
Yeah, I'm with you. I also have a very specific set of requirements, including only buying from companies headquartered in the Seattle area that have at least one 'o' in their name. That narrows it down to Amazon and Costco for general merchandise. But I'm also considering adding a criterion that the vendor's logo needs to include a swoosh or arrow of some kind, which would eliminate Costco, at which point I'll be stuck only with Amazon.
I know people are going to chime in and say "the fact that all of your personal criteria align maximally with the strengths of one particular vendor doesn't represent an uncompetitive market, but to the contrary, represents an extremely competitive market in which all of the participants are distinguishing themselves by maximizing the value they offer to different market segments with diverse preferences."
But as a presumptuous narcissist, my expectation is that everyone in the market should be optimizing their business practices to satisfy my preferences in particular, rather than limiting my options by trying to appeal to anyone other than me.
AFAIK, they are two completely disjoint sets of individuals. But could you clarify what that has to do with the goods and services offered by large publicly-traded firms that members of those families happened to be the original founders of?
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