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Comment by nl | Hacker News Reader

"Price dumping" isn't an economic term in common use.

"Dumping" in international trade is somewhat similar but the reasons that is illegal are very different: https://en.m.wikipedia.org/wiki/Dumping_(pricing_policy)

Pricing at a loss by VC funded companies is great for consumers. It rarely is at a loss though - they look at the lifetime value.

Pricing at a loss by big tech could be viewed as anticompetitive. Personally I like that Gemini keeps OpenAI prices lower but one could argue it has stopped OpenAIs growth.

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> Pricing at a loss by VC funded companies is great for consumers. It rarely is at a loss though - they look at the lifetime value.

It's great for consumers only in the short term, the strategy to drive out competition that are not as well-funded has only one goal: to remove competition in the long-term to drive up prices at your will since most competitors won't have the chance to exist.

Edit: yes, technically dumping is a specific type of predatory pricing, so swap "price dumping" on my first comment to "predatory pricing" instead.

It doesn't have one goal.

In fact driving out competition is rarely the goal at all.

Instead the goal is usually to reduce the barrier to people trying the thing - especially when it is a developer API which you hope developers will incorporate into their product.

> In fact driving out competition is rarely the goal at all.

Driving out competition is definitely a goal, the further you can snowball that makes your company a much more attractive investment since your competition will be bleeding money, attrition is definitely used as a tactic by VCs when a startup gets traction. Hell, it's one of the arguments they use to run further rounds of investments to others "this startup is very well capitalised and the competition has 1/10th of their funds, investing elsewhere is a losing proposition".

> Instead the goal is usually to reduce the barrier to people trying the thing - especially when it is a developer API which you hope developers will incorporate into their product.

I thought we were talking about unicorns such as Uber, AirBnb, etc., not some dev startup packaging APIs to serve other startups which is a whole other incestuous industry.

AI company founder and CTO defends those practices… yawn.

I wouldn’t assume Gemini is being run at a loss, though. At least not that, if it weren’t, that would help OpenAI much.

Google uses Google hardware, which costs them 1/10 what nvidia hardware costs everyone else.

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