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• @masek@infosec.exchange 2026-09-27 10:39

  @reflex@retrogaming.social Telecom and Internet infrastructure: Governments had already funded much of the research and institutional infrastructure behind the Internet, including ARPANET/NSFNET and university networks. In the 1990s, telecom liberalization, tax treatment, municipal incentives, rights-of-way, and in some places direct public funding helped expand infrastructure. On top of that came an extraordinary amount of debt and equity financing for private fiber networks. Companies such as Global Crossing, WorldCom, Qwest, Level 3 and others built enormous long-haul capacity. The result was a fiber glut. After the crash and bankruptcies, later Internet businesses could buy bandwidth at prices that did not remotely reflect the capital cost of constructing those networks. Free or absurdly cheap Internet access: ISPs routinely priced below fully allocated cost to acquire users. AOL famously carpet-bombed America with free CDs and free trial hours. In Europe, the late-1990s “free ISP” model went even further: Internet access itself was nominally free, with the business hoping to live on telecom revenue sharing, advertising, portals, or later monetization. Venture capital and telecom economics absorbed customer-acquisition and operating costs that users did not directly pay.E-commerce shipping and fulfillment: This is probably the cleanest analogue to today’s AI subsidies. Dot-com retailers discovered that customers liked “free shipping” much more than they liked paying the actual cost of picking, packing, warehousing, returns, and last-mile delivery. Investor capital paid the difference. Pets.com is the caricature, but the phenomenon was widespread. Selling a bulky bag of dog food online and shipping it to someone’s house for less than the economic cost was not technological disruption so much as investors temporarily buying dog food delivery for customers.Goods sold below cost: Many e-commerce startups treated gross margin almost as an optional feature. Discounts, coupons, introductory credits, loss-leader pricing and enormous marketing expenditure were justified as “customer acquisition.” IPO and VC money effectively subsidized consumer purchases. Webvan is a particularly good example: customers were buying groceries and delivery while investors were paying for warehouses, automation, delivery infrastructure and much of the operating loss. I had to compete with that subsidized offerings and it really hurt.

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