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Re: Hey Terekhov: Wallace lost. Who'd guess.... ;)

From: David Kastrup
Subject: Re: Hey Terekhov: Wallace lost. Who'd guess.... ;)
Date: Thu, 22 Jun 2006 00:34:59 +0200
User-agent: Gnus/5.11 (Gnus v5.11) Emacs/22.0.50 (gnu/linux)

Alexander Terekhov <> writes:

> David Kastrup wrote:
> [...]
>> Then there is no predatory pricing since RedHat is not selling below
>> cost at all. 
> RedHat sells support, delivery, and maintenance contracts on annual
> subscription bases.  RedHat's GPL'd IP in pooled derivative and
> collective works is price-fixed at "no charge" and is available
> gratis.

How can one talk about "price-fixed at no charge" in the same
paragraph with "sells delivery contracts"?  The price obviously is not
fixed but variable, and people make use of the variation.

>>              They are turning a profit.
> Which just proves "a dangerous probability" that RedHat will
> "recoup[ ] its investment in below-cost prices." Brooke Group, 509
> U.S. at 224.

But there are no "below-cost prices".  From the outset, RedHat has
been profitable selling operating system copies.  Yes, they aim to
change their business focus, but not because their previous prices
would have been below-cost.  They turned a profit with their
"below-cost" prices.

> [...]
>> But RedHat has no monopoly power in operating systems, 
> True, but that's beside the point. Wallace doesn't claim violation
> of § 2 of the Sherman Act (Monopolizing trade a felony). His case is
> an action under § 1 of the Sherman Act (Trusts, etc., in restraint
> of trade illegal), not § 2. It has really nothing to do with
> monopoly power.

Sure, but without that implication there is no point in viewing the
business model of RedHat as disparate branches.  Their way of dealing
with their intellectual property (and capacity) as their primary asset
is turning a profit for them.  They don't need to "recoup investment
in below-cost prizes" since they are operating profitably in their
total business.  And it is nonsensical to talk about "recoup" when the
branches are as intimately related as they are.  That makes about as
much sense as a supermarket talking about "recouping" the costs it
pays for gasoline by selling above the net cost.  That's not
"recouping", it is "balancing" since the gasoline is an inseparable
part of the operation, like the intellectual property of RedHat is an
inseparable part of their service and delivery business.  Without it,
their business would fall apart.

David Kastrup, Kriemhildstr. 15, 44793 Bochum

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