Microsoft against the free market

[Leshy]

Apparently Microsoft has now refused to supply a dutch webshop (http://www.gcshop.nl) with the Halo 2 Limited Edition. This particular webshop sells games more cheaply by simply not adding as big a profit margin as most other stores do.

The short version of the story is that they had Halo 2 for Xbox on preorder for €56 instead of the €64,99 that most stores are going to ask, but were then contacted by Microsoft who told them that if they did not raise their price to €64,99 they would not be supplied with any copies of the game. After a lot of hassle, the supplier has now indeed confirmed that where other stores will receive 30 copies each, GCShop will not be getting any.

How absolutely insane is this? Microsoft gets the same amount of money for their copies, regardless of what price stores are asking for them, but apparently one of the MS employees was quoted as saying: "Halo 2 is our crown jewel, and we don't want it sold for bottom prices."

If you can read dutch or want to give it a go with Babelfish, the full story can be read here.

I have no Xbox myself, and think Halo is shit anyway, so I'm not affected, but I'm still pretty disgusted.

[Kurashima]

In the UK , theyd be prevented from doing that as its price fixing. In Holland, its probably illegal as well, but unless they can prove it happened and provide documents from Microsoft , theres no case to answer.

[Androme]

Well Halo 2 isn't shit from the demo I played at Gamestars certainly kicks more ass than the 1st one but that sounds really stupid.

Amazing when Amazon are selling it for £31.99 and the fact €56 = £39 roughly - what the bollocks are Microsoft doing?

[JonnyBGood]

Are you sure that's the reason leshy? Having one of the microsoft employees quoted as saying that is hardly definitive proof. Especially seeing as amazon are selling it for £31.99.

[Leshy]

Originally Posted by Androme2

Amazing when Amazon are selling it for £31.99

That's not the Limited Edition. Amazon.com is already out of stock on that one.

[KoeN]

i don't see how this isn't part of free market aswell.

[wu_trax]

"Halo 2 is our crown jewel, and we don't want it sold for bottom prices."
i do understand that reasoning. some people think if it doesnt cost much it isnt good. you can ruin an entire brand with a wrong pricing policy.
on the other hand, they could just sell them to the retailer at a higher price, make more money and avoid the problem all together.

[Nodrog]

how is that anti-free market? It's their product, they can sell it to whoever they like.

[Dante Hicks]

Originally Posted by Nodrog

how is that anti-free market? It's their product, they can sell it to whoever they like.

When people say "free market" they don't really mean free market. They mean some kind of system where everyone chooses to be ultra competetive for no reason where they don't really have to.

[lokken]

Originally Posted by Kurashima

In the UK , theyd be prevented from doing that as its price fixing. In Holland, its probably illegal as well, but unless they can prove it happened and provide documents from Microsoft , theres no case to answer.

They could take Microsoft to the European Court on art.82 EC refusal to supply if what Leshy says is true.

Depends if they have the cash to take on bill and chums though.

[Minty]

Originally Posted by idimmu

i chipped my xbox so im just going to download it when an english rip comes out

Same with 75% of people I would of thought

And I like the avatar, where'd ya get it?

[Leshy]

Originally Posted by Nodrog

how is that anti-free market? It's their product, they can sell it to whoever they like.

It depends on how you look at it.

In a free market system, vendors should be able to choose at what prices they sell their products, without their supplier forcing them to ask a certain price. Doing the latter would normally be a stupid decision for a company such as Microsoft, because market vendors would then choose to sell their competitor's products instead of Microsoft's. Unfortunately, as we all know, this is a tactic that won't work on Microsoft as it's too big.

Not to mention that Microsoft is preventing free market competition from taking place.

Originally Posted by Dante Hicks

When people say "free market" they don't really mean free market. They mean some kind of system where everyone chooses to be ultra competetive for no reason where they don't really have to.

They don't have to be ultra competitive, but they should have the option to be.

[Androme]

Contact them and show them this tread

[queball]

Originally Posted by Leshy

It depends on how you look at it.

In a free market system, vendors should be able to choose at what prices they sell their products, without their supplier forcing them to ask a certain price. Doing the latter would normally be a stupid decision for a company such as Microsoft, because market vendors would then choose to sell their competitor's products instead of Microsoft's. Unfortunately, as we all know, this is a tactic that won't work on Microsoft as it's too big.

Microsoft aren't forcing anything. MS is saying gcshop can sell Halo 2 for a certain price or not at all. Think of it as gcshop acting on their behalf to some extent. Agreeing to terms forms part of the "price". Are you sure other manufacturers don't make similar demands? I know in other industries it's common to make demands about shelf space or price.

Microsoft isn't even a monopoly in gaming so this is quite a bastardised argument. Games are very different from conventional products, in being unique in a sense, meaning few substitutes => low elasticity, but this is a reason to be less skeptical of MS's ethics rather than more skeptical.

Not to mention that Microsoft is preventing free market competition from taking place.They don't have to be ultra competitive, but they should have the option to be.

Why don't gcshop take the money and give away pens with each copy of Halo 2 or something like that? You can compete on other terms than retail price. For a game producer it can be extremely convenient to set a minimal retail price. It raises the apparent value of an object - very important for things subject to fashions (low price elasticity of demand or whatever it is). More directly, it seems that MS have decided some retail cost is reasonable, and if someone can undercut that then that's nice but not their concern. It's very valuable for them to be able to provide guarantees on the money provided to retailers. Letting the price float destroys those valuable guarantees, and at some point it's just not worth it. It is plainly banning price competition among retailers, but it can still be efficient overall when you consider allocating resources to retailers who have invested in assets etc.

And it's not anticompetitive - that would mean MS were damaging their competitors by abusing natural or artificial systems of competition. So it's not "price fixing" as such - it's not being done by the retailers (afaik), it's not being done to exclude competition on MS's part. [clarification] The entity fixing the prices is vitally important. It is a problem of economics that it's never obvious where competition should occur. MS take on the hazards of fixing retail prices themselves because it allows them to make money for subtle reasons. Competition then could occur because someone could undercut MS by producing other games and giving the liberty of fixing retail prices to the retailers. That this isn't easy, that MS are "big", is a problem, but it's not an easy problem. It's very tempting to assume competition should occur at some particular point such as the point of sale, but if MS can be more efficient by arranging things themselves then more power to them.[/clarification]

[LHC]

Originally Posted by lokken

They could take Microsoft to the European Court on art.82 EC refusal to supply if what Leshy says is true.

That's disgusting.

[Nodrog]

Originally Posted by Leshy

It depends on how you look at it.

In a free market system, vendors should be able to choose at what prices they sell their products, without their supplier forcing them to ask a certain price. Doing the latter would normally be a stupid decision for a company such as Microsoft, because market vendors would then choose to sell their competitor's products instead of Microsoft's. Unfortunately, as we all know, this is a tactic that won't work on Microsoft as it's too big.

Not to mention that Microsoft is preventing free market competition from taking place.They don't have to be ultra competitive, but they should have the option to be.

A vendor decides he is going to charge black people double the asking price for my product because he thinks that they smell and doesnt really want them in his shop. Do I have the right to refuse to do business with him, or should I be forced to supply him with my creation in order to to promote the 'spirit of competition'?

[Phil^]

Originally Posted by queball

Microsoft aren't forcing anything. MS is saying gcshop can sell Halo 2 for a certain price or not at all.

anyone have the definition of "Price-Fixing" handy? ( which is illegal ) , and microsoft isnt exactly in the EU's good books ( see microsoft vs eu on windows media player bundling where they got a massive fine )

[SYMM]

Price-fixing is to do with competitors agreeing not to undercut each other...

[Phil^]

http://dictionary.reference.com/search?q=price+fixing
2 entries found for price fixing.

1. The setting of commodity prices artificially by a government.
2. The result of an unlawful agreement between manufacturers or dealers to set and maintain specified prices on typically competing products.

#1 definately doesnt apply as microsoft isnt a government ( god forbid that happening )
#2 doesnt really apply either as its just them selling it.

Tho, for certain the tactics stink, it doesnt fall under price fixing

Edit: heh ta symm

[wu_trax]

i know its illegal here. thats why producers here have 'not binding' price recommendations (which in the past didnt make much of a difference to the real thing, but todays retailers advertise with offering at lower price than that recommendation)