Remember When the Web Was Competitive?

A fascinating piece by Columbia professor Tim Wu on the Wall Street Journal‘s site this weekend about how the big internet giants have been invincible for years now…

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; Facebook, social networking; eBay rules auctions; Apple dominates online content delivery; Amazon, retail; and so on.

There are digital Kashmirs, disputed territories that remain anyone’s game, like digital publishing. But the dominions of major firms have enjoyed surprisingly secure borders over the last five years, their core markets secure. Microsoft’s Bing, launched last year by a giant with $40 billion in cash on hand, has captured a mere 3.25% of query volume (Google retains 83%). Still, no one expects Google Buzz to seriously encroach on Facebook’s market, or, for that matter, Skype to take over from Twitter. Though the border incursions do keep dominant firms on their toes, they have largely foundered as business ventures.

Wu talks about how information firms throughout US history have tended toward the monopolistic – going so far as to hide their own innovations in the name of remaining in control of their carved-out fiefdoms.

Wu argues that the early days of a young information monopoly feel like a golden age of convenience and innovations.  The days of decline, however, tend to hurt the public interest as a dying giant destructively clings to relevance.

Can anyone dislodge the Googles and Amazons of the world?  It certainly hasn’t been a question of money so far.


In the Grip of the Internet Monopolists (WSJ)