Re: Cost does not justifiy Value
Why should this 30% cut be justified by something else than people being ready to pay that price?
That's the point of having competition authorities. In some cases (luxury watches, for example) most of us would say that the buyers and sellers can sort it out themselves and the margins are indeed what people choose to pay. Where there's good knowledge, commodity or near-commodity goods (eg groceries) likewise, the market sets the price. Where you have a dominant company appearing to abuse its market power, then that's why the authorities should act.
If Tesco or British Gas had a similar market share and chose to extract a similar margin, they'd be hung drawn and quartered by the relevant competition authorities - and even then, I come back to the important point that Google's net margin is the thing to focus on not gross margin.