Modern day monopolies

When you look at the data industry, some interesting monopolies emerge. Amazon for shopping; Google for email, search and some other services; Apple for its media and content distribution system; Facebook for social networking; Twitter for instant communication.

5 companies.

Oh, they have some competition: Google's Blogger has Wordpress and a few other companies competing with it; their search system has Bing and Yahoo, who have a search-sharing agreement, so it's basically one company competing. None have the financial heft of Google. Yahoo has Flickr, but Facebook is the bigger photo-sharing site; Google is trying to make Picasa a destination. Amazon will fade if they don't adequately respond to the iPad; Apple has locked them out of the iPad ebook market. Twitter will eventually be bought by someone. Facebook is seriously threatening the lucrative afternoon TV market. (MySpace? What of them?)

Google is the biggest concern: it's become a Microsoft of the Internet. They want to hold your digital life; you can blog, you can share, you can do all your office work (replacing MS Office). They have astonishing financial heft and a take-no-prisoners competitive attitude. But Facebook and Apple are two others that have to be looked at.

(As an aside, Microsoft is quickly being relegated to a utility role. A powerful utility, to be sure, but the days of being locked into MS Windows have, thankfully, long gone.)

All five companies have one thing in common: they lock you into something. Either through sheer inertia, driven by the number of users, or because they control access to something you want, these companies lock you to their services. Google locks you into its data formats; Facebook is a walled garden, Apple tries to control content distribution; Twitter locks you to their servers. Amazon is perhaps the most inept; it has tried many ways to lock you into their services, but they always seem to get it wrong. Aside of Apple, there is little effort to actively squash competition; there's no need to do so. Oh, people do complain about Google, and they do act as a monopoly, but they don't lock vendors into single-source or single-vendor agreements.

ADDED: Actually, when I think about it, all of these companies lock you into their distribution systems.

Apple, Amazon and Google are astonishingly secretive. They use secrecy as a competitive weapon. Facebook is opaque, but not secretive. It's opacity comes mostly from its managerial ineptness - any other company that annoyed its customers as much as Facebook does would have gone out of business long ago! They're fortunate that they have a strong base product. Twitter is opaque, simply because no one really cares what they do. People love the service, but their business model is non-existant at best. Without injections of altruism and endless hope, Twitter would have gone away a long time ago.

Ultimately, only the top 4: Apple, Google and Facebook will attract the attention of the EU's monopoly people. Amazon is likely to quietly fade, and as I said, someone will buy Twitter. (I think it will be either Google or Facebook; I lean toward Facebook. Google has Google Wave, a system no one quite knows what to do with.) I doubt any of them will attract the attention of the American monopolies commission; they seem to be more content to twiddle their thumbs than in trying to ensure a free and fair marketplace.

The next big market, cloud computing, is rapidly becoming a two-player competition between Google and Amazon. Sure, there are some other vendors trying to get into the market, but they've got an uphill battle. Most of them either get the business model wrong (they stick to "traditional" utility charging systems, for instance), or just aren't big enough to effectively compete. Salesforce is a niche product; and it has managed to annoy some of its customers. Who have been a bit vocal about it. Amazon will, likely as not, stick to its traditional charging system, hoping to make money by differentiating itself from Google. Amazon has a habit of backing the wrong horse in the right race.

Consumer pressure is slowly growing against being locked into cloud-computing platforms; this is being driven as much by concern that the cloud computing vendor might (suddenly) go out business as it is by concern that being locked into a platform, and having one company (Google) control not just your app, but the access to it and your data. Google is currently helping to define cloud-computing formats that will help you move from one cloud service-provider to another. This is not as altruistic a move as they say it is; they stand to benefit quite considerably from this. Google has a very interesting charging model for their cloud computing service; it basically removes most of the financial risk, allowing entrepreneurial developers to experiment in ways they couldn't possibly do with Amazon's system, for instance.

At some point governments will catch up. We're not seeing that, yet: privacy laws are all over the place; Europe favors the consumer, America favors the corporation and no other market is big enough to matter. (Privacy is not a concern for China.) There are few laws that adequately respond to electronic matters; this is not entirely due to legislative complacency, but is equally about no one truly understanding the implications of some of these new technologies and systems. Inherent conflicts between the need for personal privacy and the desire to share are also confusing the metaphorical waters. Until populations become more cohesive in demanding what they want, there won't be any coherence to the current hodge-podge of laws. At some point, we will start to see international data-sharing agreements followed by coherent data standards and laws. I strongly suspect national governments will be well on their way to irrelevance by then.

Overall, the consumer is not in a position to win much in the next decade or so. Competition in one of the most vibrant parts of the global economy is all but non-existent, and there's little attention being paid by monopolies agencies throughout the world.

Carolyn Ann