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The Winner-Take-All Trend In Tech (newyorker.com)
An anonymous reader writes: A pair of articles about the tech industry serve to highlight a growing trend. First, Om Malik writes in The New Yorker about the failure of ride-sharing company Sidecar, backed by Richard Branson, and how it's one more example of the winner-take-all tendency with modern tech firms. "This loop of algorithms, infrastructure, and data is potent. Add what are called network effects to the mix, and you start to see virtual monopolies emerge almost overnight. ... The more we use it, the more data we give the company, and the more it is able to control where we turn our attention."
The second article is from Jacques Mattheij, who notes a different side of the trend toward one winner and a whole lot of losers: unnecessary reliance on cloud-based components to force vendor lock-in. "In many of these cases if you look a bit more closely at what is being sold you'll realize that these are just instances of a business-model that was grafted on as an afterthought onto something that would have worked really well stand-alone but where the creators weren't happy with a one-time fee from potential buyers." Companies who hit it big early can't help but stay dominant if they force users to rely on their servers.
The second article is from Jacques Mattheij, who notes a different side of the trend toward one winner and a whole lot of losers: unnecessary reliance on cloud-based components to force vendor lock-in. "In many of these cases if you look a bit more closely at what is being sold you'll realize that these are just instances of a business-model that was grafted on as an afterthought onto something that would have worked really well stand-alone but where the creators weren't happy with a one-time fee from potential buyers." Companies who hit it big early can't help but stay dominant if they force users to rely on their servers.
But. But. But.
The Free Market doesn't WORK THAT WAY!
Does it? Does it?
A lot more negative way to look at it is this: companies that fear to not be the winner will help build standards to prevent other companies to be the winner.
Look at this:
https://www.opencontainers.org...
A company like VMware might be afraid Docker could be the winner because of the network effect of Docker, a company like Microsoft might be afraid Google could be the winner. CoreOS might be afraid Docker could kill their business. Who knows. Maybe I'm wrong.
But whatever the motive of the companies or the individuals, they are making standards and even open source code: https://runc.io/
I personally prefer winner-takes-all standards over that over winner-takes-all companies.
The market can deal with the rest of the problem: making products and services around standards.
New things are always on the horizon
Yet some models and explanations are solid and work. One of them is the concept of the natural monopoly. I would argue that Facebook, Microsoft (Windows and Office) operate in markets with natural monopolies.
Yes, but for different reasons. Software is in general a natural monopoly. There's a mostly fixed development cost, hardly any marginal cost. That means there is a strong cost incentive to reduce the number of implementations until there is only one, which is the definition of a natural monopoly. On the bright side there are two alternatives, a proprietary solution monopolized by one company or an open source solution shared by everyone. Both are theoretically efficient since there's no reinventing of the wheel. Of course once you introduce a few more real world conditions like whether there's is really one product to fit every need, how the feedback cycle from profit/benefit to new development works etc. it's a bit more complicated.
Social networks on the other hand have a huge network effect. That is to say, the value of an empty Facebook is almost none. Even they gave away all the source, said you can build your own site but not take any accounts or anything posted on Facebook, it would be almost worthless. So while software is a natural monopoly on the cost side, Facebook is a natural monopoly on the benefit side. Like the phone network, if you couldn't call someone with a different provider it doesn't matter even if the technology is trivial. That one is much harder to solve because you can always build better software, open source carries on even with almost no market share. But even if you have a better service, getting all the users to jump sides is incredibly hard. It's like how I'm sure it'd be easier if we all agreed to drive on the left or the right or 50Hz vs 60Hz or 110V vs 220V but the costs involved are absolutely massive compared to the gains.
Live today, because you never know what tomorrow brings
In a dog-eat-dog world, you end up with one very fat dog. Not always one, sometimes two. Most of the world's beer is made by two megacorporations. Most of the world's cars are made by less than a dozen companies, and a few megacorps have the lion's share among them (Volkswagen Auto Group, General Motors, Toyota). Most of the world's computers are made by Foxconn. It's the same with everything. Capitalism only sort-of works with a small population and lowish amounts of automation, and with a credible communist rival to keep it in check. Outside of capitalism's narrow butterzone, it's just low competition between exploitative megacorps and runaway inequality until the system implodes.
I also hate the way tech has been going for a long time now, towards walled-garden computing, unnecessary use of centralized online systems, user privacy violation, and worker exploitation. A disgusting industry that I hate and would like to get out of now.
"When information is power, privacy is freedom" - Jah-Wren Ryel
Software is in general a natural monopoly
You clearly don't know jack shit about technology.
It's like how I'm sure it'd be easier if we all agreed to drive on the left or the right or 50Hz vs 60Hz or 110V vs 220V but the costs involved are absolutely massive compared to the gains.
I'm glad you brought up power mains. Because I was thinkning about this very topic the other day and power mains was the analogy I came up with to explain it. If Apple/Google were around when power mains standards were made it would be like this:
Apple outlets would have a special patented configuration of pins. No one can use their configuration without licensing fees. It has a chip in the plug and outlet to make sure they are geniune. It runs on a variable voltage that is constantly recalculated to further ensure that non-apple plugs/appliances won't work. If you don't want to buy a house with Apple plugs, you can buy a house with android plugs. This standard runs on top of a modified version of java. If you use this modified version of java, you can write your own drivers on top, and you can set up your own voltage standard, but only if you can also get a power generation company to also run your java driver. But it's not really java. It's Google's special java. You also can't use any other language without rewriting the entire operating system stack. So no one does it.
But all the Google and Apple microwaves/tv's/computers/etc are expensive. What if you can't afford it? Well there are some houses that are on an independant "open-source" standard (the 110V 60 hz we have today). If you want to use this standard you can get generic appliances and such that cost half as much as the brand name ones, but there's lots of propaganda out there trying to scare you not to. They say that it doesn't work as well. It catches fire from time to time, etc. (even though it has been shown time and again that the more complex ones catch fire more often, not the simple ones). Since people listen to the propaganda, they think 110V outlets are inferior, and should be outlawed. They also clamor that Google and Apple should get together and make a standard so they can interoperate. Eventually they do, by adding yet another layer on top of both of their standards that really just gets in the way and costs more so most people don't use. Despite the existence of the standard, you still have to choose whether to buy a Google house or an Apple house.
Natural monopoly :-PPPPPPPPPPPPPPPPPPPPPPPPPP and arrowhead bottled water is a natural monopoly. You fucking moron!