Taking on the Monopoly

https://www.zaxis.page/p/taking-on-the-monopoly

by grass_1502 • 2 years ago

58 64 2 years ago

mjevans• 2 years ago

Breaking into an established market might involve extremely high barriers to entry. Just look at Intel's ARC (Xe) GPU drivers as an example.

The same is true with scales of logistics in traditional businesses where middle companies always take a cut that includes a profit, and only major chains can get some value if the decide to outsource where it makes sense.

This is all the more true if a disruptor might be more customer focused than price competition focused.

I'm not sure how to fix this. I am sure that any fix should come at things from a consumer benefits perspective and not just a broken window fallacy perspective. Maybe breaking up integrations (vertical and horizontal), and possibly higher taxes on anyone that has more than 20% of a given market, with some sort of startup support (think government agencies as VCs / prefer to go with not the >20% of the market where possible).

tomrod2• 2 years ago

I'm not sure how to fix this

Antitrust regulatory enforcement.

chii2• 2 years ago

it's a bit broad to just say "antitrust regulations".

You don't want to discourage success. You want to discourage gatekeeping. If consumers choose one company overwhelmingly over another, leading to a "monopoly", it's not antitrust worthy enough to break up.

If the company changes the landscape by making rules, protocols and standards with their products such that others cannot compete, then yes, antitrust would need to come in.

Therefore, it's a judgement, rather than a set of rules. And it is in this judgement that one must foster.

jjmarr• 2 years ago

You can't regulate away the physical cost of building millions of miles of fibre optics cables or a trillion dollar semiconductor fabrication plant. There are many barriers to entry that aren't created by companies or governments.

roschdal• 2 years ago

A small startup taking on a monopoly will get so utterly destroyed, humiliated and bankrupted, and the founders will be homeless, starving and die early. This is horrible advice.

SoftTalker• 2 years ago

And yet the author of this piece gives examples of having done it, and doesn't mention that he's now homeless.

phone8675309• 2 years ago

Well since _HE_ could do it clearly _ALL OF US_ can do it.

Thanks, Captain Obvious.

paulryanrogers2• 2 years ago

His example is weak. Spotify had to get involved to really threaten Apple's dominance. And podcasting is unique in that it was born decentralized.

Exoristos2• 2 years ago

If they're a monopoly in a sector where you could conceivably compete, you can be pretty sure they are buttressed by regulations, lobbying, and legal precedent that will put you in a world of hurt before you get far.

programmarchy2• 2 years ago

Counterpoint: Uber

Exoristos2• 2 years ago

No cab company had a nationwide or even statewide monopoly, and yet Uber was still forced to spend vast amounts on legal and lobbying, so I would consider them more of a "point" than a counterpoint.

thisgoesnowhere• 2 years ago

What? Uber bought their way into the market it's the exact problem that the person you are replying to is trying to address?

aurareturn6• 2 years ago

Adding to what others said, Uber often just ignored the law designed to help local monopolies.

Not sure how repeatable ignoring laws are in battling monopolies.

justinclift2• 2 years ago

Yeah, this is a good point. They were able to get enough VC money, for long enough, to actually affect the existing monopoly (taxi industry) in many countries.

That being said, I wonder how much money the founders spent on private security for themselves meanwhile?

Unions (including taxi unions) are known to play funny buggers in the real world against those they perceive as threats.

AndrewKemendo6• 2 years ago

They can’t and this is by design

You need capital and increasing amounts as you get closer to threatening any monopoly. Who do you think have that capital? People that want to end monopolies? No they want to just be part of a new one. So unless you’re just offering a new monopoly opportunity they won’t see the value and you’ll not even start.

Don’t forget, you don’t accidentally become a monopoly, the govt protects you. So beyond a certain point, you start dealing with government impeding you on behalf of corporations you’re affecting

In my opinion the only way to end this process without just making a new set of monopolies is with non-stock cooperatives but it’s going to be a long road

exabrial2• 2 years ago

* political party, not government (in the us at least, up until you start selling internationally)

aurareturn6• 2 years ago

You don’t think both parties protect the same corporations?

bamboozled• 2 years ago

So what you’re saying is capitalism is broken or “has evolved” ?

ekianjo• 2 years ago

crony capitalism

AndrewKemendo6• 2 years ago

It’s actively destructive at this point - arguably been so for quite some time now but now the only way to not see it is to be actively deluding yourself.

It’s impossible to sustain even for an individual so they are only benefiting from it temporarily.

asdfasdfasdf222• 2 years ago

There's a field of study in economics called industrial organization that is all about oligopolies, monopolies and forms of imperfect competition. This is known stuff. I have no idea what you mean by your comment about capitalism, but I think you're likely just confused about different forms of competition.

Michael Porter basically just took IO texts and rewrote them for business people. He's a nice entry point if you're interested.

toomuchtodo3• 2 years ago

Matt Stoller refers to it as “Counterfeit Capitalism.”

https://www.thebignewsletter.com/p/counterfeit-capitalism-wh...

https://www.forbes.com/sites/patrickwwatson/2019/02/27/fake-...

https://www.wiley.com/en-us/The+Myth+of+Capitalism%3A+Monopo...

laurex• 2 years ago

Highly recommend the book Technofeudalism by Yanis Varoufakis which argues that the dominance of platforms has surpassed “monopoly” or other market metaphors and is becoming a kind of post-capitalism in favour of something much worse.

AndrewKemendo6• 2 years ago

The Miseans call it “Anarcho-Capitalism”

Basically everyone for themselves with no rules and total corporate control of the economy

exabrial2• 2 years ago

Please, one of these billionaires, take on the mobile os market. The internet was way more weird and fun back in the day when variety existed.

aurareturn6• 2 years ago

Yes but consumers have killed the old internet through ad block usage.

cwbriscoe• 2 years ago

The old internet had no need for ad block. The old internet wasn't infested with sites trying to make ad revenue.

hollerith3• 2 years ago

The old old internet (1969 to 1992) banned all commercial activity including of course all advertisements.

(The ban was imposed by the US government, but most or all of the internet's backbone was under US jurisdiction back then, resulting in the ban's scope being global in practice, or at least that is my guess: I only ever used the internet in the US. The main reason for the ban was lobbying by telecommunications providers who objected to the US government's competing with them for commercial customers.)

The old old internet was very cool, but of course most people had no idea it existed, and with the exception of the web (which was quite small in 1992) consisted entirely of terminal user interfaces in my experience.

Despite the ban on commercial activity, by 1992, the internet was the largest network of computers in the world.

j454• 2 years ago

Old internet didn’t have as much of a reliance on ads

It was just for surfing

CatWChainsaw• 2 years ago

Ads track you everywhere and sometimes use popups, redirects, and disabling the back button. The people serving ads have way more resources and capital at their disposal to be obnoxious than any one user does to evade their obnoxiousness. Blaming users is blaming victims.

justinclift2• 2 years ago

On that note:

https://genodians.org/nfeske/2024-02-15-fosdem-aftermath

It clearly still has a ways to go, but Genode is looking like it'll become an actual option (for basic use) on the PinePhone over the next year.

DrDroop• 2 years ago

Here a formula for a class of business ideas that sounds great for anyone but the founder:

Given a company A that does B for C, create a company A' that does B++ for C--.

choilive2• 2 years ago

I think the author is confusing monopolies and being the only effective player in a market.

Apple did not have a monopoly on podcasts, they were basically the default option for consumption on iOS and a LOT of people have iOS devices. Anyone can make a competing podcast app - that is not to undermine the difficulty of getting any significant market share here - but the barriers are not that high.

True monopolies have built in market barriers that is impossible without nearly unlimited monetary and political capital.

An example of a true monopoly might be your local electric utility company. They have a monopoly on delivering electricity to your home and (in certain areas) a monopoly on generation as well.

Even if you had the political backing - the enormous amount capex to acquire any amount of marketshare just to deliver a commodity with relatively slim margins means no startup could ever tackle it.

chii2• 2 years ago

a true monopoly

a natural monopoly.

ipaddr3• 2 years ago

Using your position in other markets to eliminate competition in other areas is acting like a monopoly. Apple does it in your example and many others areas.

jkoudys• 2 years ago

You're saying that with the benefit of hindsight. If their dominance was broken, then retroactively they were never a monopoly.

choilive2• 2 years ago

Lets say in a town there is a McDonalds. Its open for 10 years with no competition. Someone might claim that McDonalds has a monopoly on the burger market because they're the only game in town. Now lets say the population of that town grew 2x in that time. If Burger King then opens up across the street, was there ever a monopoly or was there simply no incentive for competition to show up?

For at least a decade - nobody made any significant money off podcasting - neither service providers nor the shows themselves. It wasn't until probably 2015 that it really started taking off (with the likes of Joe Rogan) and Apple did not truly monetize it until 2019 when they introduced subscriptions.

Now that podcasting is a multi-billion dollar industry, its easy for people to point the finger and cry that Apple has had a "monopoly" on podcasting since 2005 when in reality it was a very niche market for a very very long time and there was no competition simply because there wasn't much money to be made.

aurareturn6• 2 years ago

You can’t beat monopolies by doing the same thing as them. You can only beat them through a new tech breakthrough.

For example, mobile phones for taxis, LLMs for web search.

A startup can only take on monopolies at rare opportunistic moments.

veunes• 2 years ago

I think that it may be more difficult for startups to directly challenge monopolies head-on, they can often find success by taking advantage of changing market dynamics for instance

Sytten• 2 years ago

I am doing just that with my startup. Competing with the effective monopoly in security that is Burp Suite. The only reason we succeed is because I could afford to spend 3 years without pay to build it and we are barely starting to generate revenue.

There are a lot of monopolies that are hard to break because VC won't touch them (this is our case). But at some point the incumbent becomes so full of themselves that customers have enough and then you can compete. But it can take many years.

j454• 2 years ago

There should be a slack or mailing list for founders playing the long game because the competition is even slower.

I’m game to join or kick one of :)

ipaddr3• 2 years ago

Taking on a monopoly is not the worst idea. You can do things they can't. There is a build in percentage of people who won't use the monopoly because of past bad experience.

Taking on a monopoly and taking over their position are two different things. If you can carve out 1% of any monopoly you have a huge success.

3np• 2 years ago

What tends to happen to budding challengers is acquisition and assimilation. It takes the right people and circumstances to persist not selling out. The dating app marketplace and Match Group was discussed here recently, for one example.

abetusk• 2 years ago

I don't really think this is a well thought out position. I suspect the author is succumbing to some combination of survivorship bias and not being introspective about their methods or conditions of when their methods are successful.

The article talks about these things in a roundabout way but doesn't seem to address the core issue. Yes, there's gold in the "no trespassing" hills, but any startup that does succeed in going that route is often blind to the legion of failed startups before it, in addition to being blind of what conditions have changed to then allow them to overtake the monopoly at the point in time they were successful.

The way to attack monopolies is often obliquely. One method is to serve a market that they don't want to serve because the margins aren't good and they prioritize short term rate of return. The monopoly isn't only not serving that market, they're often happy when they can outsource that part, removing the cost of their balance sheet to then focus on the higher end and higher rate of return products.

Eventually this is done for every service and the competitors eat the ladder from the bottom up, overtaking the monopoly on their high end services.

This is my interpretation of what Christensen is talking about in his "Where Does Growth Come From?" talks [0].

The other way is to serve an adjacent need, often creating their own market, and then overtaking the monopoly.

I would like to see a more introspective analysis of startups overtaking monopolies than a "move fast and break things" kind of article.

[0] https://youtube.com/watch?v=rHdS_4GsKmg

Taking on the Monopoly

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