Slashdot Mirror
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.
That is why standards are so useful and we need to keep making them.
When winner-takes-all happens, it's better to have the standard be the winner. Not some company.
Because when winner-takes-all happens with companies you get a monopoly and abuse of that monopoly (possibly from the pressure of the stock market demanding better and better numbers).
New things are always on the horizon
From a business point of view, the use of cloud components is not unnecessary but required, since they want to lock us in. Built-in vendor lock-in is nothing new either, companies have attempted it with patents, diverging standards and underhanded business practises for over a century.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
I know that economics has a bad reputation. Rightly so. Keynes doesn't make sense, but seems to work and the crazy libertarians make a lot of sense in theory, but got us 2008.
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.
Markets with a natural monopoly don't work well in a market economy. They either need to be heavily regulated or simply taken over by the state and out of the private industry. Both models aren't ideal.
But Microsoft isn't regulated. Facebook neither. This happens because of globalization. Nation states would need to regulate them, but since those companies operate on a global scale, there is little interest by national regulators to step in. Since there is no international regulator, there is no regulation. Hence these companies are free to exploit their natural monopoly.
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
At the end of the day, it is just a matter of risk assesment. Joe six-pack might follow the right path some of the times. An educated Slashdot reader shall fare far way better than that.
Crazy Libertarians caused government created entities like Fannie Mae and the FHA to get people to take out mortgages they couldn't afford to pay?
That's the pre-Enlightenment view of economics. In fact, the reason the Wealth of Nations was such a breakthrough is because it recognized that individually selfish actions in a free market promote the "common good".
And it's the best way of promoting the "common good" that we know, because if you try to replace the free market with politics and government, you end up with not a few players at the top (where "few" in reality means tens of thousands or even millions, depending on how you count), you end up with one player, namely the government. And that one player is run by people who are just as selfish, power-hungry, and greedy as the CEOs of major companies. But unlike those CEOs, they are not constrained by market forces, and they can use violence against anyone with impunity.
Yes, free markets suck, but they suck a lot less than all the known alternatives.