Slashdot Mirror
The Monopolies That Dominate the Internet
Tim Wu has a piece up at the Wall Street Journal pointing out that the free-market, open Internet — "competition in its purest form" — has evolved to be dominated by monopolies. Wu argues that this is nothing new, and that each wave of information technology in the US has followed a similar pattern. "Today's Internet borders will probably change eventually, especially as new markets appear. But it's hard to avoid the conclusion that we are living in an age of large information monopolies. Could it be that the free market on the Internet actually tends toward monopolies? Could it even be that demand, of all things, is actually winnowing the online free market — that Americans, so diverse and individualistic, actually love these monopolies? ... Info-monopolies tend to be good-to-great in the short term and bad-to-terrible in the long term."
Something I've come to see and realize over the years (yeah I'm getting a little older) is that as long as the market is free, there will always be competition. Always. No matter how big, no matter how dominant a company might seem, there is always some other equally big and successful company - usually in a slightly different market and looking for new opportunities.
And they are particularly attracted when a market has "fat" in it - which is usually the case when de facto cartels or monopolies have formed. But even in low-margin businesses, it remains the case. People are always scared that some big company is going to take over everything. The free market can seem 'scary' in that regard - but isn't.
Competition acts a bit slower than we'd usually like, but it always acts.
I find the article a bit ridiculous actually, and its basic premises are completely false ... the author claims there is monopoly domination, and proceeds to "prove" this by giving a long list of all strong companies that compete with one another, some fiercely. Apple, Google, Microsoft, all fierce competitors, all quite capable of providing similar services to the others. And the very existence of both Google and Facebook ARE textbook cases of how the Internet has allowed one or two 'garage coders' to become billionaires and compete with the other major players practically overnight. Apple, also started in a garage in the first place, was also almost dead very recently, and re-started itself afresh. These companies are proof of how incredibly competitive the industry is, and how easy it is for new small players to get in and grow.
Facebook had competition even when it launched, from services like MySpace and Friendster, both still going, and would step in in a minute. Google Buzz is another potential competitor to Facebook. They are everywhere. If Facebook disappeared, users would simply migrate to another service.