Offering goods or services below the cost of their production is often illegal, though. It's called "dumping".

Although in this case it's probably impossible to define, given the complexity of calculating the true cost of tokens.

> Offering goods or services below the cost of their production is often illegal, though. It's called "dumping"

No.

Dumping is an international-trade term. It doesn’t even require pricing below cost, just aiming “to increase market share in a foreign market by driving out competition and thereby create a monopoly situation where the exporter will be able to unilaterally dictate price and quality of the product” [1].

Loss leaders are common in commerce and entirely legal, as are free trials. I struggle to think of a competent jurisdiction that bans them.

[1] https://en.wikipedia.org/wiki/Dumping_(pricing_policy)

So every company that is not immediately selling enough to cover its fixed costs and its variable cost should be illegal? Every company and every new initiative must be profitable from day one in your world?

First of all, I doubt they’re losing money in inference. Even across subscriptions. This is a tired argument that has been repeated so many times on HN.

Second, that’s not what dumping means. It’s a specific term for international trade.

Third, it’s not illegal to sell something for below the cost to make it. That’s another common misunderstanding.

And in this case the subsidy is paid for by tied sales from other users that don't actually use the service, which is another illegal business practice.

This obviously cannot be true, otherwise Costco would have been sued to oblivion for “dumping” their rotisserie chickens.