Who determines whether pricing is ‘predatory’?
"Mr. Lonsdale argues that Amazon’s cloud-computing division, Amazon Web Services, is cross-subsidizing Amazon’s other services. But he makes inferences about cross-subsidies for a multiproduct firm with fixed and common costs on the basis of one atypical year’s financial data. As has been widely reported in the financial press, Amazon’s e-commerce business ran into headwinds last year due to rising labor costs, labor shortages and supply-chain constraints.
Modern antitrust law has set a high hurdle for predatory-pricing cases, because consumers benefit from lower prices. A more activist and populist predatory-pricing policy runs the risk of evolving into a form of price regulation, whereby enforcers implicitly establish a price floor, but without a sound basis for doing so. We should be wary of a policy that makes successful firms liable for lowering prices or improving quality—normally considered pro-competitive activities.
Thomas Lenard
Technology Policy Institute
Washington"
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