
Competition, not break-up, is the cure for tech giants’ dominance - lukecameron
https://www.economist.com/business/2019/03/13/competition-not-break-up-is-the-cure-for-tech-giants-dominance
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NoPicklez
Right, but how do you create competition if the monopolies are so big that
they will either continue to beat you in market share, or simply acquire you.
Given that to rise up and "compete" you will likely need to have a product
they don't have that appeals to the market.

My understanding of "breaking up" is the artificial creation of competition
when organic competition cannot come to fruition on its own.

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whb07
They just don't simply "acquire" you, with a gun to your head. They make an
offer and then one presumes they would mull it over. It is publicly known that
Yahoo tendered the $1 billion USD offer at Facebook in its infancy. Obviously
they said no, and then they disrupted the market.

I'd also like to point you to Clay Christensen's theory of disruptive
innovation. One of the parts is that well run companies while doing everything
optimally will lead themselves to destruction because they will laugh and
scoff at the idea of being involved at the lower-end market brought on by new
technologies.

Then theres also the internal resistance within the company. Imagine trying to
staff up a small team to checkout a possible new technology to do X. No
rational manager will want to take that opportunity as it is clearly a fool's
errand. They'd rather stay and be the manager for the profit generating
center, rather than go pursue some foolish idea that clearly will never go
anywhere.

So what you end up with is many, many reasons why the best companies miss the
ball on where the market was moving to in an obvious (in hindsight) way.

[0][https://hbr.org/2015/12/what-is-disruptive-
innovation](https://hbr.org/2015/12/what-is-disruptive-innovation)

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mannykannot
In many cases, a large company can "hold a gun" to a small company by
undercutting it until it acquiesces or goes out of business - see Amazon vs.
Quidsi, for example [1]. This may well be proscribed anti-competitive
behavior, but the damage is done before the courts rule, even if the startup
can afford to see it through the legal process.

And for publicly-owned companies, resisting is rarely feasible because a
majority of shareholders will find it to be a risky proposition (and a
majority may have invested in hopes of a takeover, anyway.)

It is rare for a startup to grow large enough to challenge an entrenched
incumbent in a large market without taking on a majority of investors who are
not necessarily committed to fighting for independence.

[1] [https://www.recode.net/2017/3/29/15112314/amazon-shutting-
do...](https://www.recode.net/2017/3/29/15112314/amazon-shutting-down-diapers-
com-quidsi-soap-com)

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shishy
(I can't find the full article as I'm not an economist subscriber)...

Isn't the general idea behind breaking them up that in their current state,
these companies are near monopolies and make it impossible for new competition
to thrive? Even more so because when they did have competition in the past
(e.g. Facebook with Instagram), they just acquired them?

I wonder if regulators were not fully aware of this when that merger was
happening -- I think Ben Thompson at Stratechery hinted at this in an article
some time ago.

~~~
heliodor
There are different causes for monopoly and maybe they should be considered
and addressed individually.

Type 1) Very high costs

You are free to build a competitor to Google Search. No one has the resources
needed to build it or they don't think it's a good way to spend their
resources if they do have them.

Type 2) The nature of the product renders competition difficult

You are free to compete with Facebook. Unfortunately, it's naturally a winner-
take-all market because the more users you have, the more each user gets out
of the product.

Type 3) The company behaves unfairly

You are not free to compete.

This is the one that most people think of most of the time when they say
monopolies are bad. Once you have power, you take actions to maintain your
power and crush newcomers.

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m-p-3
I was reading some comments on Slashdot regarding the Spotify vs Apple story,
and some where saying "Spotify just wants to sell music subscriptions while
asking to be hosted for free on Apple's app store. If they don't like paying
30% they can just make their own device and app store".

Yeah, as if you can build an ecosystem as big as Apple from scratch just on
the premise of selling music and nothing else. Some people are just out of
touch with reality. Microsoft, with far more resources, tried with Windows
Phone and it failed.

~~~
chillacy
What if: because building these things is hard, therefore it should be
rewarding.

Instead the hard stuff gets commoditized over time.

Photolithography and operating systems are hard, but now social networking is
where the money is at.

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sfopdxnonstop
Oh look, someone arguing for the result of continued monopoly.

