On Monopoly: It has been a though I have for some time. I wonder how could they not form monopolies. Who has 4-5 taxi apps on their phone? Who has 2-3 social profiles? Who has the habits of jumping from a searching engine to another? A minority. Their product are almost natural monopolies.
They are very difficult to fight against monopolies because when they have user commitment, the need for the product is filled entirely by one company. In addition, it is very difficult to make the user change, it's part of a habbit.
I might be wrong there. Just a though I had, but interesting to discuss. Is it really possible to avoid monopoly with these products?
There are a number of options, and not all of them are splitting the company into a bunch of fully co-equal units, which is a process that works better when things cover an area.
In telecom, it was typical, due to regulation, that you'd have different parts of the business that couldn't interact at all. I wasn't permitted to talk to people with certain badges because of their business unit. You could easily do this with the advertising business for each of these large companies, or split it off entirely, and force that ad exchange to work with their competitors, for instance. You could regulate the news feed so that the pipe was a lot dumber and configurable, so that the company would no longer be allowed to experiment on human psyches.
There are tons of options that don't result in breaking facebook into 12 facebooks. Pulling the advertising out, and regulating advertising in general, is the best solution I've been able to spitball though.
Who has 4-5 taxi apps on their phone? Who has 2-3 social profiles? Who has the habits of jumping from a searching engine to another?
Uber, Lyft, and some smaller competitors already exist yet people don't need all the apps; they just choose one and it works fine. Likewise with search engines: some people use Google, some use Bing, some use DDG. It's suboptimal but monopolies are suboptimal in different ways.
The problem with network effects was solved in the 1980s breakup of AT&T where the telcos all federated with each other. Federated protocols like SMTP and XMPP existed before Facebook and Twitter; rather than a historical accident they made a decision to pursue lock-in.
Yes, that was my point: they choose one and it works fine. It is easier in that case to ensure and keep a certain mass of users and so, for a long time. That leads to the possibility of blitzscaling and monopoly I think.
To me, the problem comes when you provide a service. The service market seems much more difficult to diversify than the product market. When the need is well filled by one company, it is difficult to keep competition alive. It is obviously not binary. It depends on the service.
For instance, for the product side; Nike, Adidas, etc. are constantly trying to improve and change their products to keep up with the complex shoe market even if they are pretty colossal companies. Because the user need for a new shoe pair is coming on a really short scale and the competition is fierce.
I'm not seeing the same kind of competition with services. When you use a service that fills the need, you don't change in general. Or at least, people change on a very long scale. Some times, it even takes a cultural shift to change habits.
On the google vs bing example: Well, ok some uses bing, but in majority because microsoft makes it easy to do so on their systems ;-). There exists some very good alternatives, like duckduckgo, but it represents a minority.
On monopoly: I don't really understand the surprise the article seems to show on this topic.
> Most monopolies or duopolies develop over time, and have been considered dangerous to competitive markets; now they are sought after from the start and are the holy grail for investors.
It's not now that they're sought, it's always been that way. Because that's literally the way a business wins this game. That's the holy grail, literally the driver behind competitiveness - the desire to monopolize a market, so that you can comfortably do whatever you want, and earn whatever money you need. That's the very carrot society uses to create entrepreneurs - the name of the game, from society's POV, is to get people working towards monopoly, creating value at low prices in the process, and once the winner is about to emerge, to pull the rug out from under them. The game is a lie, winners can not be allowed. That's the market way to prosperity.
The only thing that's changed is that some people are now not afraid to publicly say they're seeking monopoly. But they've always been seeking that.
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RE your comment, I sort-of agree. I strongly agree with the observation that I explicitly do not want to have 4-5 taxi apps on my phone, and my life would be much happier if I could just use one. Similarly, I'd prefer to have just one app for public transit, just one app for maps/navigation, and preferably integrate all three categories into single super-app, whose sole purpose is to help me get from point A to point B as quickly as possible. But that's more of an UX issue.
And it wouldn't have to be one app. Just one per user. In a perfect world, all those services - mapping, taxis, public transport - would be available through open APIs, and you could use free or commercial super-apps interchangeably. Services would be serving you, proxied by your super-app, instead of serving you on a plate to their investors. Alas, most companies seem hell-bent on capturing all the value they produce - they have this kind of greed that ruins things. I know that market pressure sort-of forces this to happen, but I wish there was a way to correct this.
That's only because/if one shop/airline/brand doesn't cover all of their needs cheaply enough.
It's not like most people choose multiple providers because they care about health of the competition. From customer's point of view, competition is noise.
Uber is actually not the best example of a natural global monopoly - because it needs to compete locally - most taxi rides are for local population. So there might be a natural monopoly (or duopoly) for a taxi app - but one per a metro area. This is different from AirBnB - where the app works truly globally. https://thinkgrowth.org/uber-is-going-to-0-and-benchmark-kno...
But maybe change contexts—would you call Coca Cola a monopoly? Certainly Pepsi gives them a good run for their money, even if they aren't as large technically speaking (I have no idea).
I mean, people will always have their preferences. I'm not sure if that makes for a monopoly on its own.
How much that preference is formed by the company's inherent pursuit of a monopoly, well...
I'm not sure if it's that different from other contexts, or if it is.
Uber is not a very good example because you can easily switch to another taxi app if there are better benefits/the costs are lower etc. Even the VP of Engineering of Uber acknowledged it in a talk a few years ago. Something that accumulates over time and has a social networking effect would be much harder to replace.
They are very difficult to fight against monopolies because when they have user commitment, the need for the product is filled entirely by one company. In addition, it is very difficult to make the user change, it's part of a habbit.
I might be wrong there. Just a though I had, but interesting to discuss. Is it really possible to avoid monopoly with these products?