It seems Valve and five publishers have attracted the attention of the EU, as they claim they're breaching EU competition rules. In particular, what the EU say they're doing goes against the "Regulation 2018/302" introduced on December 3rd last year.
The statement from the European Commission, available here, mentions that they've sent Statements of Objections to Valve and Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax.
The main concerns from the EU are these:
- Valve and the five PC video game publishers agreed, in breach of EU antitrust rules, to use geo-blocked activation keys to prevent cross-border sales, including in response to unsolicited consumer requests (so-called “passive sales”) of PC video games from several Member States (i.e. Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and in some cases Romania). This may have prevented consumers from buying cheaper games available in other Member States.
- Bandai Namco, Focus Home, Koch Media and ZeniMax, broke EU antitrust rules by including contractual export restrictions in their agreements with a number of distributors other than Valve. These distributors were prevented from selling the relevant PC video games outside the allocated territories, which could cover one or more Member States. These practices may have prevented consumers from purchasing and playing PC video games sold by these distributors either on physical media, such as DVDs or through downloads.
Valve just sent out a statement, here's what they said in full for those interested:
Earlier today, the European Commission ("EC") sent Statements of Objections ("SO") to Valve and five publishers in an investigation that it started in 2013. The EC alleges that the five publishers entered into agreements with their distributors that included geo-blocking provisions for PC games sold by the distributors, and that separately Valve entered into agreements with the same publishers that prevented consumers in the European Economic Area ("EEA") from purchasing PC games because of their location.
However, the EC's charges do not relate to the sale of PC games on Steam - Valve's PC gaming service. Instead the EC alleges that Valve enabled geo-blocking by providing Steam activation keys and - upon the publishers' request - locking those keys to particular territories ("region locks") within the EEA. Such keys allow a customer to activate and play a game on Steam when the user has purchased it from a third-party reseller. Valve provides Steam activation keys free of charge and does not receive any share of the purchase price when a game is sold by third-party resellers (such as a retailer or other online store).
The region locks only applied to a small number of game titles. Approximately just 3% of all games using Steam (and none of Valve's own games) at the time were subject to the contested region locks in the EEA. Valve believes that the EC's extension of liability to a platform provider in these circumstances is not supported by applicable law. Nonetheless, because of the EC's concerns, Valve actually turned off region locks within the EEA starting in 2015, unless those region locks were necessary for local legal requirements (such as German content laws) or geographic limits on where the Steam partner is licensed to distribute a game. The elimination of region locks will also mean that publishers will likely raise prices in less affluent regions to avoid price arbitrage. There are no costs involved in sending activation keys from one country to another and the activation key is all a user needs to activate and play a PC game.
Basically, the EU wants to prevent stores and publishers from making it so that you can't get your games cheaper if you choose to shop in a different country. It can be a pretty difficult topic, certainly one with a lot of complications. The issue gets complicated, since publishers may want to offer certain countries a cheaper price if their wages are traditionally lower but they might not do that if anyone is able to come along and just pay the cheaper price.
What are your thoughts on this?
Article taken from GamingOnLinux.com.
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Geo-blocking is BS, so for once the EU is in the right of it with their demands.
In Canada, the price for a game is the same across the country, whether you're in Ontario or the Yukon (barring GST/PST/HST differences, similar to VAT).
In the US, same deal - it doesn't matter what state you're in, the price of a game is the price of that game.
The article lists some EU member states in the Eurozone and some that aren't - sure, the requirement for currency exchange tends to mean there are winners and losers on the price difference... but isn't the point of the EU the whole 'single market' thing? So set the price of a game in Euro, let non-Eurozone-but-still-EU members buy it for whatever that converts to in their local currency, and otherwise treat the EU as a single 'country'.
I'd argue a step further and say games should just be priced globally in whatever the local currency of the developer/publisher is (e.g. Yen for Japanese games), and the rest of us pay whatever the equivalent of that is in our currency. The devs/publishers want to be paid in their own currency at the end of the day, right? If people are going to pirate it because they can't afford it, going to all the extra effort to get a pittance fraction of the cost from poorer regions just doesn't seem worth it.
But maybe it is, because the 'actual cost' is mostly fixed, and the reproduction/transmission cost of selling additional copies is next to nil (barring translations, etc.). So a game that sells for $60 in the US might still be worth translating and selling for the equivalent of $5 somewhere else. How much of that $60 is profit vs. the $5? What if the game was just... $20 everywhere in the world?
Global economics is hard. ;) But the internet is global. Artificial barriers will get broken, so it's a difficult proposition to figure out how to position your work so that poorer countries with weaker currencies could still afford and enjoy it, while not taking a chunk out of your earnings in wealthier nations. Maybe the 'cheaper' cost version is still enough to break even or make a little bit of money, and the 'wealthier' costing version is pure profit. Maybe the sales in wealthier countries subsidize the sales in poorer ones (though I doubt it - they'd just not bother offering it for sale in said countries then, right?).
I worry for smaller, Indie devs/publishers trying to get this right. I have no sympathy for the likes of EA/Ubisoft/Activision-Blizzard/etc., though, who abuse the crap out of their employees and give their execs multi million dollar salaries and bonuses.
In Canada, the price for a game is the same across the country, whether you're in Ontario or the Yukon (barring GST/PST/HST differences, similar to VAT).
In the US, same deal - it doesn't matter what state you're in, the price of a game is the price of that game.
The article lists some EU member states in the Eurozone and some that aren't - sure, the requirement for currency exchange tends to mean there are winners and losers on the price difference... but isn't the point of the EU the whole 'single market' thing? So set the price of a game in Euro, let non-Eurozone-but-still-EU members buy it for whatever that converts to in their local currency, and otherwise treat the EU as a single 'country'.
I'd argue a step further and say games should just be priced globally in whatever the local currency of the developer/publisher is (e.g. Yen for Japanese games), and the rest of us pay whatever the equivalent of that is in our currency. The devs/publishers want to be paid in their own currency at the end of the day, right? If people are going to pirate it because they can't afford it, going to all the extra effort to get a pittance fraction of the cost from poorer regions just doesn't seem worth it.
But maybe it is, because the 'actual cost' is mostly fixed, and the reproduction/transmission cost of selling additional copies is next to nil (barring translations, etc.). So a game that sells for $60 in the US might still be worth translating and selling for the equivalent of $5 somewhere else. How much of that $60 is profit vs. the $5? What if the game was just... $20 everywhere in the world?
Global economics is hard. ;) But the internet is global. Artificial barriers will get broken, so it's a difficult proposition to figure out how to position your work so that poorer countries with weaker currencies could still afford and enjoy it, while not taking a chunk out of your earnings in wealthier nations. Maybe the 'cheaper' cost version is still enough to break even or make a little bit of money, and the 'wealthier' costing version is pure profit. Maybe the sales in wealthier countries subsidize the sales in poorer ones (though I doubt it - they'd just not bother offering it for sale in said countries then, right?).
I worry for smaller, Indie devs/publishers trying to get this right. I have no sympathy for the likes of EA/Ubisoft/Activision-Blizzard/etc., though, who abuse the crap out of their employees and give their execs multi million dollar salaries and bonuses.
7 Likes, Who?
Would be nice if this lead to disabling the annoying geoblock for us germans (not regarding price but censorship)
11 Likes, Who?
I can say valve significantly decreased pirating in my country where games about six times more expensive.
EU choose to to go along with lobbyists and i am very disappointed at EU
since i don't really like EU and USA, i will keep searching other countries to settle on even its really hard to do so :(
P.S: EU was my choice settlement before article 13 :(( What a shame...
EU choose to to go along with lobbyists and i am very disappointed at EU
since i don't really like EU and USA, i will keep searching other countries to settle on even its really hard to do so :(
P.S: EU was my choice settlement before article 13 :(( What a shame...
7 Likes, Who?
Geo-blocking is BS, so for once the EU is in the right of it with their demands.
In Canada, the price for a game is the same across the country, whether you're in Ontario or the Yukon (barring GST/PST/HST differences, similar to VAT).
In the US, same deal - it doesn't matter what state you're in, the price of a game is the price of that game.
The article lists some EU member states in the Eurozone and some that aren't - sure, the requirement for currency exchange tends to mean there are winners and losers on the price difference... but isn't the point of the EU the whole 'single market' thing? So set the price of a game in Euro, let non-Eurozone-but-still-EU members buy it for whatever that converts to in their local currency, and otherwise treat the EU as a single 'country'.
I'd argue a step further and say games should just be priced globally in whatever the local currency of the developer/publisher is (e.g. Yen for Japanese games), and the rest of us pay whatever the equivalent of that is in our currency. The devs/publishers want to be paid in their own currency at the end of the day, right? If people are going to pirate it because they can't afford it, going to all the extra effort to get a pittance fraction of the cost from poorer regions just doesn't seem worth it.
But maybe it is, because the 'actual cost' is mostly fixed, and the reproduction/transmission cost of selling additional copies is next to nil (barring translations, etc.). So a game that sells for $60 in the US might still be worth translating and selling for the equivalent of $5 somewhere else. How much of that $60 is profit vs. the $5? What if the game was just... $20 everywhere in the world?
Global economics is hard. ;) But the internet is global. Artificial barriers will get broken, so it's a difficult proposition to figure out how to position your work so that poorer countries with weaker currencies could still afford and enjoy it, while not taking a chunk out of your earnings in wealthier nations. Maybe the 'cheaper' cost version is still enough to break even or make a little bit of money, and the 'wealthier' costing version is pure profit. Maybe the sales in wealthier countries subsidize the sales in poorer ones (though I doubt it - they'd just not bother offering it for sale in said countries then, right?).
I worry for smaller, Indie devs/publishers trying to get this right. I have no sympathy for the likes of EA/Ubisoft/Activision-Blizzard/etc., though, who abuse the crap out of their employees and give their execs multi million dollar salaries and bonuses.
It's the fact that they sell it for a "pittance" from the point of view of developed countries, that has turned developing countries from nations full of software copyright infringers into millions of paying consumers. Even without translating games into the less spoken languages.
Setting the price globally to 20 USD (or its equivalent in local currency), for example, would just make the company lose potential profit or even incur loss on developed nations while selling nothing on developing countries.
8 Likes, Who?
Wait... the EU has concluded that Valve et al are in breach of a regulation it introduced in December 2018 with a policy last used in 2015?
It certainly sounds like the EU all right, but surely I'm missing something here?
It certainly sounds like the EU all right, but surely I'm missing something here?
0 Likes
Hmmmm... I may be wrong (and perhaps misunderstand some comments posted above) but I don't think that this is related to Valve's regional pricing policy (i.e. it has nothing to do with the fact that games on Steam are cheaper in EU member states that are not in Eurozone, which has generally the highest price looking at Steamdb data). :|
1 Likes, Who?
Geo-blocking is BS, so for once the EU is in the right of it with their demands.
I'd argue a step further and say games should just be priced globally in whatever the local currency of the developer/publisher is (e.g. Yen for Japanese games), and the rest of us pay whatever the equivalent of that is in our currency. The devs/publishers want to be paid in their own currency at the end of the day, right? If people are going to pirate it because they can't afford it, going to all the extra effort to get a pittance fraction of the cost from poorer regions just doesn't seem worth it.
But maybe it is, because the 'actual cost' is mostly fixed, and the reproduction/transmission cost of selling additional copies is next to nil (barring translations, etc.). So a game that sells for $60 in the US might still be worth translating and selling for the equivalent of $5 somewhere else. How much of that $60 is profit vs. the $5? What if the game was just... $20 everywhere in the world?
Global economics is hard. ;) But the internet is global. Artificial barriers will get broken, so it's a difficult proposition to figure out how to position your work so that poorer countries with weaker currencies could still afford and enjoy it, while not taking a chunk out of your earnings in wealthier nations. Maybe the 'cheaper' cost version is still enough to break even or make a little bit of money, and the 'wealthier' costing version is pure profit. Maybe the sales in wealthier countries subsidize the sales in poorer ones (though I doubt it - they'd just not bother offering it for sale in said countries then, right?).
I worry for smaller, Indie devs/publishers trying to get this right. I have no sympathy for the likes of EA/Ubisoft/Activision-Blizzard/etc., though, who abuse the crap out of their employees and give their execs multi million dollar salaries and bonuses.
I don't think you understand the difference that is regional pricing around the world, and how much impact it made on improving the amount of legal games sold in places like Brazil. $20 rigth now is equivalent to R$80-R$100 in the local currency, but the way our economy is it can change 20% this afternoon. It would rend events like sales impossible. A product can have 15% of discount and be more expensive than it was the day before the discount came.
2 Likes, Who?
Games are not cheaper in EU member countries that are not in the eurozone - that's the problem, the *lack* of sufficient regional pricing.
Sorry, you're right (read steamdb data far too quickly)! In which currency peoples from countries that are EU members but not in Eurozone buy their games on Steam? :|
Last edited by riusma on 5 April 2019 at 5:43 pm UTC
0 Likes
The issue is complicated. Regional pricing is an absolute necessity in many places; not having it can be effectively "not available in this region". The technical measures used to implement it, however, are basically DRM, and thus have serious implications.
In this case in particular, I kind of agree the point the EU is making. Within the EU, there shouldn't be limitations on "exporting" games, even if this affects the ability to offer a "more fair price". Also, many countries already use the same currency, which is one less concern (exchange rates rarely reflect purchasing power, but besides that it can fluctuate a lot which is a big problem). But I hope that Valve can figure out a better solution so that people in those countries aren't screwed by a corner case of international trade deals... since it apparently only affects key reselling, perhaps by limiting their policy in issuing keys they could keep the fair prices for purchases in the actual store?
Of course, ideally we could have a single price worldwide and no trade restrictions. But first we would need to figure out how to solve all the inequality in the world. The idea that you could just price a product in dollars and sell it worldwide is naive at best.
In this case in particular, I kind of agree the point the EU is making. Within the EU, there shouldn't be limitations on "exporting" games, even if this affects the ability to offer a "more fair price". Also, many countries already use the same currency, which is one less concern (exchange rates rarely reflect purchasing power, but besides that it can fluctuate a lot which is a big problem). But I hope that Valve can figure out a better solution so that people in those countries aren't screwed by a corner case of international trade deals... since it apparently only affects key reselling, perhaps by limiting their policy in issuing keys they could keep the fair prices for purchases in the actual store?
Of course, ideally we could have a single price worldwide and no trade restrictions. But first we would need to figure out how to solve all the inequality in the world. The idea that you could just price a product in dollars and sell it worldwide is naive at best.
5 Likes, Who?
(I think that the best answer is @Aeder one, but I'll try to contribute with some technical words)
This is software and the marginal cost tends to be zero. So, publishers can sell at lower price in poorer countries by the fact that they should only care the maximize the function sell-price * sales-count on each country. In other words, the price you get for software is not linearly related with the cost of development but with how much the people in your area is able to pay for it.
But maybe it is, because the 'actual cost' is mostly fixed, and the reproduction/transmission cost of selling additional copies is next to nil (barring translations, etc.). So a game that sells for $60 in the US might still be worth translating and selling for the equivalent of $5 somewhere else. How much of that $60 is profit vs. the $5? What if the game was just... $20 everywhere in the world?
This is software and the marginal cost tends to be zero. So, publishers can sell at lower price in poorer countries by the fact that they should only care the maximize the function sell-price * sales-count on each country. In other words, the price you get for software is not linearly related with the cost of development but with how much the people in your area is able to pay for it.
3 Likes, Who?
Well, I wouldn't mind a bit of adjusting to local wages, because here in E-Europe, I pay ten times more for a game, than say, an US citizen.
0 Likes
Geo-blocking is BS, so for once the EU is in the right of it with their demands.But the EU isn't a single country. It does not act fiscally, budgetarily, or in terms of many regulations, like a single country. It does not have EU-wide public pension plans paying the same amount across the region, it does not have EU-wide minimum wage laws, it does not have EU-wide unemployment insurance, it does not have payments moving between wealthier and poorer states to try to equalize their economic situation (if anything the reverse--it has EU-mandated rules redistributing the wealth of poorer states to the banks of richer ones). In the absence of these sorts of fiscal provisions to pull the economy of the region together, the Euro actually tends to broaden economic disparities in the Eurozone by worsening the economies of the poorer states, because it deprives them of a lot of fiscal tools needed more by the poorer states that go with control over one's own currency. Like devaluation to encourage exports, and stuff.
In Canada, the price for a game is the same across the country, whether you're in Ontario or the Yukon (barring GST/PST/HST differences, similar to VAT).
In the US, same deal - it doesn't matter what state you're in, the price of a game is the price of that game.
The article lists some EU member states in the Eurozone and some that aren't - sure, the requirement for currency exchange tends to mean there are winners and losers on the price difference... but isn't the point of the EU the whole 'single market' thing? So set the price of a game in Euro, let non-Eurozone-but-still-EU members buy it for whatever that converts to in their local currency, and otherwise treat the EU as a single 'country'.
I'm not sure of my position on this, but using actual countries as an analogy to the EU is a poor argument for whichever side and as a side effect leads to a misunderstanding of the nature of the EU.
4 Likes, Who?
FirearmsUnited Apr 5, 2019
You're all doing it wrong. Let me explain this from a very simple economist point of view:
I don't know how old or young most of you are but the older ones among us will remember how almost all the big companies, especially those that used manual labour or first level it-support, moved to eastern Europe or even further to India, China, Taiwan, and so on, forcing many long time employees into unemployment.
Our politicians and the media called this "globalisation". They told us that this is inevitable and that we must adapt to it. Still it will benefit us all in the long run because the same way how work force can be bought and sold globally for the best price, we the consumer will also profit from lower prices because we as well are allowed to buy and sell goods from all over the world for the lowest price possible.
We all now that custom duties often make this promise a stale one but after around 10-20 years we actually are able to buy goods directly from Shenzhen or Hong Kong for a reasonable price even with custom duties paid. Still only a fraction of consumers is actually using this option. Most people buy the same products for a huuuuuge mark-up at their local distributors. This makes companies happy because they enjoy giant profit margins
Now for a couple of years digital goods have risen to an insane amount of popularity. The major benefits from them are (among others) no custom duties and instant delivery from all over the world directly to your client devices. It's actually so very easy that many more people are using their right to do so. And why not? They also suffer from the downsides of globalisation. This is their promised compensation. However this makes companies that sell mainly digital goods nervous. Now they don't earn (as much) giant profit margins as in the past. So they install geo blocking and thus destroy the already very lacking balance in globalisation to further the disadvantage of the normal consumer.
Remember: We are only talking about EU wide geo blocking! Actually we should have the right to buy our digital goods from countries like India or Trinidad and Tobago since the companies that are producing those digital goods have also the right to safe a lot of money by not produce these goods in our countries and they make extensive use of it.
So everyone who is defending geo blocking in this thread does either not know or understand about the concepts of globalisation or should ask themselves why they are willingly accepting all the downsides of globalisation without demanding at least a tiny bit of fairness in their own favour by being allowed to participate in the same global market like the companies that try to deny them this right.
Last edited by FirearmsUnited on 5 April 2019 at 8:08 pm UTC
I don't know how old or young most of you are but the older ones among us will remember how almost all the big companies, especially those that used manual labour or first level it-support, moved to eastern Europe or even further to India, China, Taiwan, and so on, forcing many long time employees into unemployment.
Our politicians and the media called this "globalisation". They told us that this is inevitable and that we must adapt to it. Still it will benefit us all in the long run because the same way how work force can be bought and sold globally for the best price, we the consumer will also profit from lower prices because we as well are allowed to buy and sell goods from all over the world for the lowest price possible.
We all now that custom duties often make this promise a stale one but after around 10-20 years we actually are able to buy goods directly from Shenzhen or Hong Kong for a reasonable price even with custom duties paid. Still only a fraction of consumers is actually using this option. Most people buy the same products for a huuuuuge mark-up at their local distributors. This makes companies happy because they enjoy giant profit margins
Now for a couple of years digital goods have risen to an insane amount of popularity. The major benefits from them are (among others) no custom duties and instant delivery from all over the world directly to your client devices. It's actually so very easy that many more people are using their right to do so. And why not? They also suffer from the downsides of globalisation. This is their promised compensation. However this makes companies that sell mainly digital goods nervous. Now they don't earn (as much) giant profit margins as in the past. So they install geo blocking and thus destroy the already very lacking balance in globalisation to further the disadvantage of the normal consumer.
Remember: We are only talking about EU wide geo blocking! Actually we should have the right to buy our digital goods from countries like India or Trinidad and Tobago since the companies that are producing those digital goods have also the right to safe a lot of money by not produce these goods in our countries and they make extensive use of it.
So everyone who is defending geo blocking in this thread does either not know or understand about the concepts of globalisation or should ask themselves why they are willingly accepting all the downsides of globalisation without demanding at least a tiny bit of fairness in their own favour by being allowed to participate in the same global market like the companies that try to deny them this right.
Last edited by FirearmsUnited on 5 April 2019 at 8:08 pm UTC
5 Likes, Who?
You're all doing it wrong. Let me explain this from a very simple economist point of view:
(...)
So everyone who is defending geo blocking in this thread does either not know or understand about the concepts of globalisation or should ask themselves why they are willingly accepting all the downsides of globalisation without demanding at least a tiny bit of fairness in their own favour by being allowed to participate in the same global market like the companies that try to deny them this right.
This EU regulation attempt actually seems to be about reselling "physical copies" that happen to be only access-codes these days. And for these I tend to somewhat agree with you and the EU stance, as it is a minor market and is a customer's right.
But your "simple economist" view when expanded to general regional pricing is indeed too simple, as other's tried to explain already. In the end you need to also consider supply and demand curves VS. investment costs, and in the current market the price equilibrium seems to tend towards not lowering the prices for everyone (like you suggest), but rather asking the same high price everywhere if regional pricing is not possible (Edit: mainly because of rampant software piracy and "key smuggling" in poorer countries, which obviously isn't included in your simple economic view developed based on physical goods).
But high prices everywhere are IMHO in the greater view of things not a desirable outcome for anyone involved, nor is optimal from a pure business perspective.
P.S.: You can easily benefit from cheaper regional pricing yourself if you get a local SIM card during holidays and switch your store setting temporarily (you need a local IP and for most places a valid local telephone number). You can actually recover quite a bit of the holiday costs if you plan to buy a few AAA titles ;) You can not gift them to others, but in your own library or via Family sharing they work just fine even after setting the store back to our high price home country. Oh and don't try this via a VPN from home... that will get your account suspended!
Last edited by Julius on 5 April 2019 at 9:27 pm UTC
2 Likes, Who?
The EU is not a single country, it's just a weak union. The EU countries doesn't have a shared tax collection and they wouldn't share it anyway because it would hurt richer countries very badly.
IMHO the EU is a bunch of egoists, that claim to be a union. But in nearly all serious matters they do not manage to get something sensefull working.
So they try to show, that they care for us with such important things like game prices between different countries.
5 Likes, Who?
Game dev is trying only maximize their income, and that is good for them and gamer community, they have more money and they are moro motivated for making games. When poorer country citizen can’t afford buy it, they lower prices for them. Problem is, if they can’t do that. they have 3 options: higher price everywhere, compromise price everywhere, or lower price everywhere. Option 3 is worst option from game dev point of view, and never happens.
EU, like always is trying impoverish citizens of poorer countries for benefits of richest. For year 2016, median household income has been for czech republic 7,838 euro and for germany 21,263 euro (in Purchasing power standard czech republic 12,478 and germany 21,139). When capitalism introduce partial solution for this inequality, there is another communist regulation from EU protecting this inequality and making us second class EU citizens.
EU, like always is trying impoverish citizens of poorer countries for benefits of richest. For year 2016, median household income has been for czech republic 7,838 euro and for germany 21,263 euro (in Purchasing power standard czech republic 12,478 and germany 21,139). When capitalism introduce partial solution for this inequality, there is another communist regulation from EU protecting this inequality and making us second class EU citizens.
4 Likes, Who?
Kimyrielle Apr 5, 2019
The EU is in that fuzzy "not yet a nation, but not individual states anymore either" state. It's written goal actually IS full confederation one day. It's taking a while, because there are too many dumbass nationalists around that don't understand the "the sum is greater than its parts" thing.
People that defend that disgusting corporate practice of having no problem with moving your jobs to cheaper regions, but charging you prices as if the thing had been made in a high-wage country fail to understand that for the practice of trade the EU -is- one nation already. Goods, money, ideas and people can move absolutely freely inside the EU and did so for decades, so banning regional price discrimination is just a logical step. Nothing more, nothing less. Our our side of the pond, we don't allow corporations to block someone living in Texas from shopping in North Dakota either. Same thing.
People that defend that disgusting corporate practice of having no problem with moving your jobs to cheaper regions, but charging you prices as if the thing had been made in a high-wage country fail to understand that for the practice of trade the EU -is- one nation already. Goods, money, ideas and people can move absolutely freely inside the EU and did so for decades, so banning regional price discrimination is just a logical step. Nothing more, nothing less. Our our side of the pond, we don't allow corporations to block someone living in Texas from shopping in North Dakota either. Same thing.
3 Likes, Who?
The EU might be a weak union at the moment, because it's trying to go through unification without an equivalent to the US civil war, by unifying slowly and methodically. However, the EU is slowly turning into a real country - in 2021 it'll start using retaliatory visas against the US for discriminating against 3 countries within the block, the Eurozone has only been growing, banking has been unified, unified corporate taxation talks broke down at the end of last year, but they'll come around, and for good(GDPR) or ill(Article 13), the internet rules are being standardized.
One of the first steps of Internet unification was the Digital Single Market, which requires all companies to treat the EU as a single country and makes price discrimination against EU citizens illegal. It is price discrimination that the EU commission is prosecuting here. I'm hoping they'll go after geoblocking for TV shows/movies next.
One of the first steps of Internet unification was the Digital Single Market, which requires all companies to treat the EU as a single country and makes price discrimination against EU citizens illegal. It is price discrimination that the EU commission is prosecuting here. I'm hoping they'll go after geoblocking for TV shows/movies next.
1 Likes, Who?
You're all doing it wrong. Let me explain this from a very simple economist point of view:
I don't know how old or young most of you are but the older ones among us will remember how almost all the big companies, especially those that used manual labour or first level it-support, moved to eastern Europe or even further to India, China, Taiwan, and so on, forcing many long time employees into unemployment.
Our politicians and the media called this "globalisation". They told us that this is inevitable and that we must adapt to it. Still it will benefit us all in the long run because the same way how work force can be bought and sold globally for the best price, we the consumer will also profit from lower prices because we as well are allowed to buy and sell goods from all over the world for the lowest price possible.
It is perhaps worth pointing out that the rationale for modern globalized free trade is fairly explicitly based on Ricardo's theory of comparative advantage. But there are problems with that:
(Uh, I fear I'm drifting off topic here. I'll spoilerize this)
Spoiler, click me
First, Ricardo's theory of comparative advantage assumes that capital is not mobile, whereas "free trade" globalization is in fact as much about free investment as about trade, and is very explicitly premised on capital being mobile. As soon as investment moves around the world, Ricardo's math falls apart. So for instance, if you have two countries, we'll call them "country crap" and "country awesome", and two products, A and B. If country crap is half as efficient at making product A, but 80% as efficient at making product B, compared to country awesome, under Ricardo country awesome should specialize in making product A and trade with country crap to get product B even though country crap is still not as good at making product B--because country crap still has a comparative advantage at product B. This holds as long as country crap has local investment funds that will stay in country crap and have to be invested in something. But, if investment can just flow from country crap to country awesome, the result is that all the investment should go to country awesome and country crap should make . . . nothing, and country crap's citizens should buy all their products from country awesome until they starve because they aren't making any money. The pursuit is not of comparative, but absolute, advantage.
Clearly from the point of view of the public good in country crap, this kind of free trade does not produce a lot of advantages. They would be better off erecting trade barriers to keep production at home, or at least investment barriers to block capital flight so that local capitalists would have to invest in local production. Not that the latter is easy to do . . .
Second, the basic idea behind comparative advantage, like much economics but particularly neoclassical, assumes a timeless present, or at least a country having eternally static characteristics. But generally, no country has an eternal comparative advantage or disadvantage at making manufactured (and other technological) goods. Stuff like that applies to bananas, which Hawaii is always going to be better at than Canada unless global warming really gets out of control. With manufactured goods, it is possible for countries to gain efficiency at doing it until they have an advantage against other countries they previously had a disadvantage against. However, gaining efficiency at manufacturing production is best accomplished through the co-ordinated use of protectionist measures. The United States immediately post-revolution successfully used a raft of protectionist measures to nurture local manufacture away from British competition. Ricardo's arguments about the superiority of free trade were in part a colonialist argument dedicated to blocking economic development in colonies. It is no accident that there were often much more explicit blockages on competition from colonies--many Caribbean colonies, for instance, were explicitly banned from producing most manufactured goods, from cloth to nails, so they would be forced to import them from the colonizing country. India had similar bans under the Raj.
Finally, all else being equal, with machinery, regulations, transportation, taxation et cetera all costing the same, investment will go to wherever wages are lowest if there are no barriers, because lower wages is higher profits. From the point of view of investment, this is an advantage, or higher "efficiency". In the long run it is possible to maintain higher wages than, say, Bangladesh's, only by trade barriers. And since the difference is all about higher percentages of the selling price going to profit, less to employees, the lower prices will never ultimately make up for the lower wages.
Clearly from the point of view of the public good in country crap, this kind of free trade does not produce a lot of advantages. They would be better off erecting trade barriers to keep production at home, or at least investment barriers to block capital flight so that local capitalists would have to invest in local production. Not that the latter is easy to do . . .
Second, the basic idea behind comparative advantage, like much economics but particularly neoclassical, assumes a timeless present, or at least a country having eternally static characteristics. But generally, no country has an eternal comparative advantage or disadvantage at making manufactured (and other technological) goods. Stuff like that applies to bananas, which Hawaii is always going to be better at than Canada unless global warming really gets out of control. With manufactured goods, it is possible for countries to gain efficiency at doing it until they have an advantage against other countries they previously had a disadvantage against. However, gaining efficiency at manufacturing production is best accomplished through the co-ordinated use of protectionist measures. The United States immediately post-revolution successfully used a raft of protectionist measures to nurture local manufacture away from British competition. Ricardo's arguments about the superiority of free trade were in part a colonialist argument dedicated to blocking economic development in colonies. It is no accident that there were often much more explicit blockages on competition from colonies--many Caribbean colonies, for instance, were explicitly banned from producing most manufactured goods, from cloth to nails, so they would be forced to import them from the colonizing country. India had similar bans under the Raj.
Finally, all else being equal, with machinery, regulations, transportation, taxation et cetera all costing the same, investment will go to wherever wages are lowest if there are no barriers, because lower wages is higher profits. From the point of view of investment, this is an advantage, or higher "efficiency". In the long run it is possible to maintain higher wages than, say, Bangladesh's, only by trade barriers. And since the difference is all about higher percentages of the selling price going to profit, less to employees, the lower prices will never ultimately make up for the lower wages.
Last edited by Purple Library Guy on 5 April 2019 at 9:02 pm UTC
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However, we are talking about positive price discrimination towards poorer countries here... almost like development aid for poor gamers ;)
And it is not really evil companies price discriminating against rich countries, but rather an attempt by them to cut down on key "smuggling", which you would probably also want if you would lets say buy & donate cloths to a poor country, just for some not so poor people to take those cloth and sell them in your own country for a slightly lower price than what you bought it for.
Anyways, its unrealistic to believe such "anti-discriminatory" EU regulation will result in anything but higher prices in those poorer places and ultimately also higher prices for everyone as overall less units are sold.
Edit: I think the EU is a great idea, but run by economic idiots. The last guy who actually knew what he was doing was Yanis Varoufakis :( (who btw worked as an economist with Valve for some time!)
Last edited by Julius on 5 April 2019 at 9:21 pm UTC
And it is not really evil companies price discriminating against rich countries, but rather an attempt by them to cut down on key "smuggling", which you would probably also want if you would lets say buy & donate cloths to a poor country, just for some not so poor people to take those cloth and sell them in your own country for a slightly lower price than what you bought it for.
Anyways, its unrealistic to believe such "anti-discriminatory" EU regulation will result in anything but higher prices in those poorer places and ultimately also higher prices for everyone as overall less units are sold.
Edit: I think the EU is a great idea, but run by economic idiots. The last guy who actually knew what he was doing was Yanis Varoufakis :( (who btw worked as an economist with Valve for some time!)
Last edited by Julius on 5 April 2019 at 9:21 pm UTC
2 Likes, Who?
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