14 November 2010

New Monopolists ~ Downsides of Convenience...

Columbia Law Professor Tim Wu writes in the WSJournal that we are alas In the Grip of the New Monopolists ~ Do away with Google? Break up Facebook? We can't imagine life without them -- and that's the problem...
"How hard would it be to go a week without Google? Or, to up the ante, without Facebook, Amazon, Skype, Twitter, Apple, eBay and Google? [...] a real pain. [...] For most of us, avoiding the Internet's dominant firms would be a lot harder than bypassing Starbucks, Wal-Mart or other companies that dominate some corner of what was once called the real world. The Internet has long been held up as a model for what the free market is supposed to look like -- competition in its purest form. So why does it look increasingly like a Monopoly board? Most of the major sectors today are controlled by one dominant company or an oligopoly. Google "owns" search [etc]. Consider that, in the late 1990s, there were many competing search engines, like Lycos, AltaVista and Bigfoot. In the 2000s, there were many social networking sites, including Friendster. It was we, collectively, who made Google and Facebook dominant. The biggest sites were faster, better and easier to use than their competitors, and the benefits only grew as more users signed on. But all of those individually rational decisions to sign on to the same sites yielded a result that no one desires in principle -- a world with fewer options. Every time we follow the leader for ostensibly good reasons, the consequence is a narrowing of our choices. This is an important principle of information economics: Market power is rarely seized so much as it is surrendered up, and that surrender is born less of a deliberate decision than of going with the flow."

No comments: