“Antitrust to the right of us (Google). Antitrust to the left of us (Amazon). It’s time that antitrust behind us volley’d and thunder’d. Into the Jaws of Unicorns I storm with shot and shell all of them. While these horsey things fell. That had fought so well. All that was left were 1200 (unicorns in the U.S. exactly 2×600) :-)” — Charles, Lord Benaiah.
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For as long as there have been monopolistic conglomerates who set prices, reduce choice, generally aim to screw us over, and cause us to lose trust, there has been antitrust law. Well, no. Not nearly that long. But for the last 150 years anyway.
You see, We the People don’t like it when companies gouge us so we like to be protected.
You know who else doesn’t like unfair pricing? Competition. Let’s say I’m Ford and I’m embattled with my union. Now, let’s say I sell the luxe Limited F150 for about $84,910 before freight, taxes, PDI, and other charges our dealers foist on customers. Ish. Ford makes about $13,000 per truck.
There’s a key word there that I chose not to emphasis. Makes. You see, Ford sells their trucks for more than it costs them to make them. Seems pretty simple, right?
Rivian sells it’s “feature-packed’ E.V. pickup for the same $80,000. But, they lose $33,000 on each one. Now, you may love getting 59% more truck for your money. To be clear, I don’t drive a pickup. Just like I don’t own a gun rack, play sports, or know how to use tools. I’m just pointing out that it costs Rivian $113,000 to make their truck and it costs Ford about $71,000.
Look, it’s reasonable to sell your first few products at a loss to get some market share. People need that incentive to try something unknown. But the incentive model has gone crazy. If investors believe you have a way to get to scale, they will give you nearly limitless money. So you don’t have to make any.
I can get lots of people to ride in someone else’s car because I will subsidize the first billion rides. Uber. I can get retailers to discount stuff for groups because I will subsidize the first billion coupons. Groupon. I will get people to order burgers from me because I subsidize the first billion Whoopers I deliver. DoorDash.
But, this is not “first few.” It took Uber fourteen years and a gadrillion rides to turn a profit. This year, Rivian used $9 billion (of their $18b) to subsidize the sales 24,699 vehicles through the first half of this year. Actually, it was this quote from Rivian CEO RJ Scaringe in the WSJ from October 2nd that prompted this story, “We’re competing to build something that’s truly better than all the alternatives, and to try to do that on a limited budget would be detrimental to us achieving our mission.”
Again, I’ll emphasis the key words, “…limited budget…”. Or, he could make money selling cars. For context, Ford made $8 billion selling its F150. Ford’s budget isn’t limited to fund raising.
We the People aren’t clamoring overtaxed government people like Lina Khan to make rides cost more. Or deliveries cost more. Or the Internet starts to charge us. Yeah, bogus ad numbers keep most digital things free. Or to get Rivian to sell their pickups at higher prices.
But in the long run endless incentives hurt us. Because… When Uber kills taxis, Uber gets a monopoly. When Doordash wipes out enough restaurant profits, they will raise prices. If Rivian hurts Ford financially, Ford will get a bailout. In every case, we all pay.
We spend so much time anti trusting the big companies who screw us over we’re not seeing how these baby monopolists come to power. Sadly, it’s not glamorous enough for anyone to care.
No point in waxing poetic. But, I’ll end with it anyway.
Pass’d all electrons there,
Pass’d as they turn’d toward air,
Leaving the protons bare,
Charging the membrane, while
Mitchell stared at ‘em:
Strong like a battery charge,
Right thro’ the chain they barged,
Q10 or Flavin
Lord, that would have been sweet if it had closed with R1T or Rivian.
Charles Benaiah is the CEO of Watzan, a techy company for medical media. When he’s not running a media company, he reads about media, thinks about it, pull out what’s left of his hair dealing with it, and, then, he writes about it at Substack/unCharles.