Coffeehouse Thread

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Free as in beer, not as in freedom

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  • User profile image
    giovanni

    In a recent blog post, Paul Thurrot says:

    "I further alleged that Google's "dumping" of a free Android OS into the mobile market was as illegal as anything that landed Microsoft in antitrust hot water a decade ago. After all, how is Google's leveraging of its search and advertising monopoly to enter a new market (mobile devices) any different from Microsoft's leveraging of its Windows monopoly to enter a (then-) new market (web browsers)? Answer: It isn't."

    I think Paul has a point; sooner or later we will have to deal with evaluating the cost of software the same way we will have to deal with software pantents. In many countries it is illegal to sell goods below their cost, why should software be treated differently? But how would you evaluate the cost of software?

    I know this topic is very sensitive, so pleave try to avoid flames. Also note that I am not talking about freedom of using and modifying software, but about licesning costs: free (as in beer) can serve large company to leverage monopoly positions and should be dealt with.

    P.S. edited typos

  • User profile image
    spivonious

    It's an interesting discussion. At what point is something undervalued? How much is Google Chrome worth? How much is the Live Essentials suite? How much is Linux?

  • User profile image
    davewill

    @giovanni: Also given the large breadth of resources for the actors involved how does one segment the costs to be allocated against one software offering versus another?  How does the intellectual value created for an initial software offering but later used for another software offering get allocated to form a cost basis for the subsequent software?

    After all cost + profit margin = why business exists.

  • User profile image
    cbae

    ,davewill wrote

    @giovanni: Also given the large breadth of resources for the actors involved how does one segment the costs to be allocated against one software offering versus another?  How does the intellectual value created for an initial software offering but later used for another software offering get allocated to form a cost basis for the subsequent software?

    After all cost + profit margin = why business exists.

    The same question can be asked of how you allocate certain expenses toward cost of goods sold of any tangible, manufactured product. Yet, those industries are able to calculate those costs and determine unit pricing just fine.

    Whatever the case, we all know the cost is more than $0, so giving away software for free is definitely tantamount to "dumping".

  • User profile image
    magicalclick

    @giovanni:

    free software is not illegal. But, if Android only have Google Search pre-installed, it would be like saying Windows only have IE pre-installed. I personally don't like how EU rules it, but, that's how they ruled it.

     

    Leaving WM on 5/2018 if no apps, no dedicated billboards where I drive, no Store name.
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  • User profile image
    Bass

    How exactly is Google using their search to force people to use Android? I don't own an Android phone and I use Google.

    It's totally different from the anti-trust violation Microsoft got convicted for, which was for bundling IE with Windows. Google doesn't bundle "Android" with their search engine.

  • User profile image
    Bass

    Dumping refers to inconstantly pricing a product in a way to limit competitors ability to enter a market, not some way to illegitimate loss leaders or creative business models. If something costs $0 universally, it is not dumping.

     

  • User profile image
    Bas

    I don't really see the comparison either. How exactly is this anticompetitive behaviour? Besides, the smartphone market is currently competing like crazy.

  • User profile image
    Ray7

    Have to agree. The only thing Google is leveraging is their brand. Nothing illegal about that.

  • User profile image
    giovanni

    ,Bass wrote

    How exactly is Google using their search to force people to use Android? I don't own an Android phone and I use Google.

    It's totally different from the anti-trust violation Microsoft got convicted for, which was for bundling IE with Windows. Google doesn't bundle "Android" with their search engine.

    I think that they are economically supporting Android with their advertising revenue from search while competitors have to sell a competing product for a price (another comparison would be if Microsoft gave Windows Mobile away for free using revenue from their desktop Windows to prevent others from entering the market). That is probably not illegal, but it does raise some questions that we will need to address at some point.

    But my point is more general: should it be legal for a company to leverage revenue from one source to prevent other companies to penetrate the market elsewhere?

    And that is also valid for many of Microsoft own products (Live Essentials, Security Essentials, etc.).

    ,Bas wrote

    I don't really see the comparison either. How exactly is this anticompetitive behaviour? Besides, the smartphone market is currently competing like crazy.

    The market is competing hardware wise, but software wise it is still an oligopoly.

  • User profile image
    ScanIAm

    ,giovanni wrote

    The market is competing hardware wise, but software wise it is still an oligopoly.

    It wasn't one until Google bought Android.

     

  • User profile image
    magicalclick

    @Bass:

    You got my statement backward. They are both OS bundling specific something for free.

    Leaving WM on 5/2018 if no apps, no dedicated billboards where I drive, no Store name.
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  • User profile image
    harlock123

    @giovanni:

    Well one key difference is that when google entered the mobile devices market, there was already mobile device competition that had a soup to nuts implementation. (IOS and Iphone). When Microsoft entered the market with IE they had a strangle hold on the OS market and they leveraged that strangle hold to shut out the compitition. (Netscape needs to run on Windows). Andriod does not need to run on IOS in fact it can't actually do so normally. Google had to create a hardware market for their OS to run on. Thats one difference and its not insignificant...

     

     

  • User profile image
    IsThisReally​Beer

    @giovanni:

    http://www.justice.gov/atr/cases/exhibits/684.pdf

    This is the difference.

    Specifically #2. Microsoft executives premeditated a crime and followed through and executed it. Similarly to the people who caused and profited off of the economic collapse in 2008 with selling and repackaging loan derivatives at investment banks.

    Generic Forum Image

    In stark contrast, Google saw the demand for an open source mobile OS, and filled the demand when everybody else was scared to for various reasons. Their motive was primarily "do no evil", not "do evil and destroy our competition to please our demigod William Henry Gates"

  • User profile image
    Sven Groot

    I'm fairly sure their motive was primarily "sell advertising".

  • User profile image
    IsThisReally​Beer

    @Sven Groot:

    That's true, but perhaps you should read this:

    http://www.google.com/about/corporate/company/tenthings.html

    6. You can make money without doing evil.

    While in the case of #6 it refers to advertising in a non-deceptive way, the broader notion is that they can make money without tearing down everybody else and stepping on others with a pompous attitude and unfair advantage that anybody(including somebody like Robert Scoble) could win with.

  • User profile image
    giovanni

    @harlock123: I see teh differences you point out and I can agree on most of them.

    But more generally, how far shoud any company leverage revenue from one source to enter another market with a free product (as I said before, Microsoft Security Essentials is a good example)?

  • User profile image
    harlock123

    @giovanni:

     

    Well in the case of a company coming in fresh, leveraging cash from other business lines to support a product offering that loses money is nothing new. Every person/company that start out in any new endeavor loses money on that effort at least initially. If I want to build something and then give it away then why should I not be allowed to do so. Forbidding such actions by law could have all sorts of unintended consequences. Charity itself might be shutdown, I am not sure what country you are from but in this country (USA) Knee jerk, blanket interpretations on badly worded laws are all the rage lately...

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