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The dirty little secret that could bring down Big Tech

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Summary

This article examines the business model of Big Tech and argues that venture capital can be used to engage in predatory pricing, which is illegal under the rules of capitalism. It explains how the Chicago School of Economics argued that predatory pricing is irrational and the Supreme Court agreed, shutting down the government's ability to prosecute companies for predatory pricing. However, the article argues that the venture capital model incentivizes predatory pricing, and it presents Uber as an example. The article concludes by suggesting that if people recognize the predatory pricing scam, late-stage investors will start asking questions, and government regulators may take action.

Q&As

What is the "dirty little secret" of Big Tech?
The "dirty little secret" of Big Tech is that venture capital is being used to illegally dominate the market through predatory pricing.

What is predatory pricing?
Predatory pricing is when a company uses its size to bully competitors out of the market by offering products at prices below market rates.

What is the main argument of the Chicago School economists regarding predatory pricing?
The main argument of the Chicago School economists is that predatory pricing is irrational and therefore does not exist.

What is the new argument proposed by Wansley and Weinstein about venture capital and predatory pricing?
Wansley and Weinstein argue that venture capital is a form of predatory pricing in which venture capitalists profit by disrupting the marketplace with predatory pricing and leaving the losses to the investors who buy into the IPO.

What kind of impact could Wansley and Weinstein's new argument have on the tech industry?
Wansley and Weinstein's new argument could have a transformative impact on the tech industry, as it could open the door for the prosecution of tech investors and their anticompetitive behavior. It could also lead to late-stage investors asking more questions about the companies they are investing in.

AI Comments

👍 This new insight into venture capital as predatory pricing could be transformative; it could provide a pathway for courts to follow in determining whether companies' practices are anticompetitive and help to restore competition and innovation to the marketplace.

👎 The paper's argument that venture capital is predatory pricing in a new wrapper could be dangerous; it could lead to the unjust prosecution of tech investors without providing any tangible benefit.

AI Discussion

Me: It's about how venture capital funding could be seen as a form of predatory pricing. It looks at the idea that tech companies backed by venture capital are effectively subsidizing the price of their products until users can't live without them. It argues that this is an anti-capitalist behavior that should be prosecuted to promote free and fair competition in the marketplace.

Friend: Wow, that's pretty eye-opening. It's interesting to see the argument being made that venture capital itself could be seen as a form of illegal behavior.

Me: Yeah, it's a really thought-provoking article. If the argument proves to be valid, it could have some major implications for tech companies and the entire venture capital industry. It could lead to more aggressive antitrust enforcement and regulation in the tech industry. It could also mean that investors may start to be more wary of investing in tech companies that are using predatory pricing to monopolize the market.

Action items

Research the legal implications of predatory pricing and the potential for antitrust cases against tech companies.
Reach out to venture capitalists and ask them about their investment strategies and how they view predatory pricing.
Follow the news and research to stay up to date on the latest developments in the tech industry and the potential for antitrust cases.

Technical terms

Venture Capital: Money invested in a business by venture capitalists, typically in exchange for an equity stake in the business.
Predatory Pricing: A pricing strategy in which a company sets prices for its products or services below the market rate in order to drive competitors out of the market.
Chicago School: A school of economic thought that emphasizes the efficiency of markets and the importance of consumer welfare.
Matsushita Electric Industry Co. v. Zenith Radio Corp.: A 1986 Supreme Court case that established the legal standard for predatory pricing.
Brooke Group v. Brown & Williamson Tobacco Corp.: A 1993 Supreme Court case that established the legal standard for recoupment of losses in predatory pricing cases.
IPO: Initial public offering, the process by which a company sells shares of its stock to the public for the first time.
Millennial Lifestyle Subsidy: A term used to describe the subsidies given to consumers by tech companies in order to entice them to use their products.
Exit: The process of selling a company or taking it public in an IPO.
Scaling: The process of rapidly expanding a business in order to gain market share.
Blow-off: The final stage of a con, in which the con artist leaves the victim without them realizing they have been conned.