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Comment by blazespin | Hacker News Reader

Not sure what he means by sourcing from the gray market? Does he mean that it's illegal to produce pop sockets because of copyright or patent infringement and Amazon is facilitating this? Or is he thinking that anyone who produces a competitive product is somehow wrong?

If the former, that truly is (or should be) illegal and I hope Amazon is punished dearly. If the latter, what a wimp. This is capitalism baby, and you need to buck up.

You think walmart doesn't use it's market dominance in retail to try to push prices down? How do you think we've got so much progress in our consumer markets. Understand, that Amazon is not profiting here when it pushes prices down. It's just trying to deliver a better service for it's customers and compete with other companies like Walmart.

In fact, Amazon's margins decrease when it pushes prices down.

That all said, I really have no idea what he means by gray market and willing to learn.

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Grey market is buying a companies items (not counterfeit copies) outside of the official supply chain. For example, many goods are sold cheaper in other markets. So someone could buy the item there and bring them to a market where they are usually sold for more and be able to undercut the the official supplier's prices. This is perfectly legal thanks to the First Sale Doctrine. Companies don't like this though, because they don't make as much, so they brand these goods grey market to make them seem shady to consumers.

> Grey market is buying a companies items (not counterfeit copies) outside of the official supply chain. For example, many goods are sold cheaper in other markets. So someone could buy the item there and bring them to a market where they are usually sold for more and be able to undercut the the official supplier's prices. This is perfectly legal thanks to the First Sale Doctrine.

You're mixing up a bunch of ideas. The traditional definition of "grey market" is buying an item oversees at a low cost and then importing it into the US. For example, the identical textbook usually sells for much more in the U.S. than it does in Asia. The supreme court has indeed ruled that the First Sale doctrine allows people to buy that book in Asia, then sell it back to someone in the U.S. for more.

However, the first sale doctrine only applies to copyright, not patents. It hasn't yet been decided as to patents.

More meaningfully though, the meaning of the term "grey market" has expanded. It used to refer to authorized items sold overseas, but now it more generally refers to items with questionable IP rights. When Amazon is using the term "grey market", they are referring to counterfeits and infringing products as well.

Something else to add is that when you don’t buy through official channels you actually may end up with counterfeit parts. This is a huge issue in the electronics component industry.

So it’s entirely possible that what Amazon sources on the grey market were actually counterfeit items (whether or not they know it for sure, or care to to know).

Correct me if I'm wrong, but the difference is amazon is telling the company to make up the difference between grey market price and the price they're selling the non-grey market ones on amazon.

In other words:

- amazon price $100

- grey market version amazon threatens with: $90

- amazon asks company for $10 for the ones sold at $100

Do I understand this correctly?

Gray market = not using official supply chain.

This may mean not buying from official distributor for a region, but sourcing from another (ie because another region is cheaper) or bypassing local distributor - this is not uncommon for camera lenses for example (see Adorama).

In this context he seems to imply "any source providing the goods without looking too closely if they are counterfeit or not"

> Gray market = not using official supply chain.

That is the traditional meaning of grey market, but I don't think that's what Amazon meant here. Amazon isn't threatening to import Tile and Sonos devices from other countries, they are threatening to use cheaper no-name knock-offs. The meaning of "gray market" has expanded over time.

I think that's exactly what Amazon meant here. See the comment someone posted elsewhere in the discussion about PopSockets suing companies who resell their actual, genuine products sold by them at wholesale for lower retail prices than they want under the dubious pretext that they become counterfeits simply through leaving the approved retail chain.

> I think that's exactly what Amazon meant here. See the comment someone posted elsewhere in the discussion about PopSockets

I can't speak to PopSockets, but both Tile and Sonos are companies that are small enough to still have a huge amount of runway within the U.S., Europe, and Japan. I would be very surprised if this dispute was because Tile/Sonos were selling their products at a discount abroad and Amazon was threatening to bring that discount into the U.S. The far more likely scenario is that Amazon is threatening to promote cheaper knock-off goods that likely infringe patent and trademark rights.

The reason that Amazon can get away with this, is that enforcing those patent and trademark rights is incredibly expensive, potentially millions of dollars a year. Amazon is smart and knows the cost of litigation, and likely asks for discounts close to (but a bit less) than the amount that it would cost the company to actually defend their rights.

I don't think he is describing activity that is outright illegal. That's why he's calling it "bullying" and "incredibly shady" rather than suing for breach of contract or patent infringement.

The whole idea of grey market products is shady to begin with. If the genuine product is available for sale elsewhere for less, I as a consumer should be able to purchase it at that discounted price. If Amazon is strong-arming manufacturers by sourcing genuine grey market products, that's a good thing for consumers and we should support Amazon. If Amazon is strong-arming manufacturers by sourcing counterfeit products, that's bad for consumers and we should not support Amazon.

What if Amazon wasn't going to look too closely if the gray market stuff is counterfeit or not?

then you would have a problem different than the one being discussed.

Philosophy professor ‘invents’ something not particularly amazing; easy reproducible.

Tries to build his empire on a cheap piece of plastic glued to the back of a phone.

Incredulous when someone comes around with improved design or more efficient distro network.

Our economy is blessed to not regard the pop-socket as the sacred cow he thinks it is.

> In fact, Amazon's margins decrease when it pushes prices down.

Exactly. That’s why this guy sounds butt-hurt and far from having any meaningful antitrust evidence.

Retailers always have the leverage that comes from rightfully owning their distribution channel. Amazon, Walmart or the little store in the corner are all in the business of sourcing products and they can set all the conditions on how those things are sold on their side. Pushing prices down isn’t hurting the final customer, so if PopSockets feels that their product is not profitable due to Amazon pricing policies they should not sell there.

This guy is basically saying that he doesn’t like how Amazon treats his business, and to be fair Amazon is probably treating them poorly. But besides that, there’s little to argue.

As Amazon said in their statement he is free to stop selling with Amazon and go somewhere else. His customers can buy the product through other channels.

You only have an antitrust case when you can prove that customers are being hurt. Pushing prices down and sourcing similar products is not evidence for monopolistic behavior, at least not until you can prove that they are doing this to put your business out and then raise prices on that type of product you produce.

Problem is that this product is so useless and easy to copy that even if you can prove that somehow, it’s hard to imagine a way to claim in the bigger picture that Amazon is building a monopoly on “pop-sockets”. That’s just as ridiculous as it sounds.

...and definitely not defending Amazon here, but this is a very weak angle/evidence to prove that Amazon is engaging in shady anticompetitive practices. There's probably a stronger case somewhere else.

This would be allowed if Amazon was small.

Amazon gets >50% of US retail online sales (by total spend) and it's largest competitor (ebay) is almost 10 times smaller. Next is Walmart, below 4%.

His company can't afford not to be selling on Amazon and Amazon is strong-arming him into lowering prices from a position of power due to it's market share.

If that's not enough for antitrust laws to apply then what is?

Remember that US e-commerce sales still only account for 15% of total retail spending. That doesn't completely invalidate your point, but I think it recontextualizes it.

I wonder how that number would look like if we excluded food.

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