Does the internet create Monopolies?

[3zero]

I know people vote with there feet but in some areas online I think we face a complete lack of choice and the companies and organisations have grown to such a size as to bar any feasible competition.

Search:
1. Google
2. Bing

Knowledge
1. Wikipedia
2. ?

Social Connections
1. Facebook
2. Linkedin

Auction
1. Ebay
2. Gumtree

Micro Blogging
1.Twitter
2. ?

Blogging
1. Blogger
2. Tumblr

Video
1. Youtube
2. Vimeo

Image
1.Pinterest
2 ?

With the apparent immanent collapse of Yahoo will we see another round of internet shutdowns?

[engine]

Monopolies are when someone in the dominant position owns the market and manipulates prices to their benefit because there is only one in the market.

Most of the examples you've given show there are others in the market.

The Internet does not automatically create monopolies. The Internet creates opportunity for businesses to fill the space, or create new, disruptive services and technologies that become popular. The position 1 you indicate is the most popular service, but, for example, in video, YouTube became synonymous with online video, and Google became dominant because its competitors fell by the wayside, and Bing (Microsoft) was late to the party. Some parts of their business might be classed as having a commanding position by sheer volume of users. Users still have a choice, it's just that they don't necessarily take that option.

Popularity is different from a monopoly, and it's up to competitors to come into the market and do a better job so that they become popular.

[LifeinAsia]

Monopolies are when someone in the dominant position owns the market and manipulates prices to their benefit because there is only one in the market.

Another aspect is when the leading company actively squashes existing competition (like buying competitors then shutting them down) and/or creating insurmountable barriers to entry (like a government declaring that only the state-owned business can operate in a certain space).

[bird]

None of those listed seem to be very aggressive at fighting their competition, they just happen to be more popular. (And how exactly does Wikipedia have any kind of Monopoly on "Knowledge"?)

This is completely different with the one example you left out: Amazon.

[tangor]

If you are asking if some companies get so big and popular and famous that the little guy who wants to be in that business, too, can't be heard? Well, yes. Happens everywhere, any kind of business, media, group, government, whatever the heck it might be. However, if you want to take 'em on and provide Real Competition in that niche there's nothing preventing the attempt. (But it does help if you have several gazillions in venture capital and a Really Good Idea)

[toidi]

Money creates monopolies.

[LifeinAsia]

Also, monopolies can be created by extremely high barriers to entry that came about independently of the monopolies. In the case of search, there is so much information out there (and growing every second), that anyone seriously trying to enter the space needs a huge initial capital outlay for storage and bandwidth (as well as a huge ongoing outlay for bandwidth).

But in all of the areas listed, there is certainly room for niche providers. They may not be able to get to the number 1 spot, but certainly they have opportunities to create a viable business model in those spaces.

[tangor]

Eggsactly! ^

[graeme_p]

Yes, it does create monopolies, but I am not sure that everything you cite is an example of the same problem. Google's near monopoly is created by the high costs of entry LifeinAsia already mentioned. This is a problem in a lot of industries (semi-conductor fabrication, car manufacturing, etc.),

The other problem lies in "network effects". The simplest example of these lie in things such as telephone networks. Consider a simple voice telephone network. The value of a telephone network depends on the number of people you can phone using it. This means that the largest network has a huge advantage so it almost inevitably becomes the dominant network, and once a network becomes dominant, smaller competitors become unviable and new entrants stand no chance unless they can interconnect to the dominant network, which the largest network has every incentive to refuse.

In telecoms the problem has been dealt with through heavy regulation that force dominant networks to offer various forms of access to their network to competitors (and, more generally, force all networks to interconnect). Unfortunately there is no similar regulation for internet businesses that benefit from network effects (e.g. Facebook, Skyp etc) and I do not think that anyone has even devised a workable form of regulation.

Another problem is vendor lockin - e.g. if you buy KIndle books, you can only read them on a Kindle device or using Kindle software. Ditto for operating systems and software.

There are not just an unsolved problem in internet services either, but in pretty much all high tech, and as more products become high tech (e.g. cars) the problem will spread.

My own feeling is that it will take long time to evolve, will need and require big changes - I mean not just changes to regulation as required to deal with monopolies that formed in telecoms, but major economic and political change, more like the transition from feudalism to capitalism.

[tangor]

One can complain about monopolies, or one can use that against them. A number of cottage industries (all kinds, including internet based) thrive because they will work in places the "big boys" won't, and in the process gain all the business creds (and credits) needed to expand. And it helps to have investors who can see where the biz is going when those critical expansion dollars are required.

As for websites/ecommerce by the little guy.... either market the best mousetrap and have the best fulfillment, or find another hobby. If the site exists only for the purpose of hanging ads... well, be happy with whatever you get... there are no guarantees in this world of BILLIONS of sites doing the same thing.

[graeme_p]

@tangor, two different perspectives:

1) if you are running an SME you have to make business decisions, you have to plan on the basis that this is how things are
2) if you are discussing public policy, economics, the future of the industry etc. then youo need to say that monopolies are a bad thing and its worth talking about what can be done about them.

[tangor]

I like monopolies. I truly want to be the only one. The Go To and all that other happy stuff. :)

There. I've said it. Best of the best, cream of the crop, and become a company most likely to pi$$ off a large number of people when the internal inertia of "monopoly" bites its own A$$ simply because it is a monopoly. And it will. At which point governments get involved. Usually to the unhappy of EVERYONE.

As for SME, you (the players) already recognize you are not a monopoly, and thus can continue your biz and grow, as you can, until you, too, become a monopoly!

Or, more correctly, manage your business, costs, investments, and a reasonable (or better than) rate of return. I am reminded of the fellow down the street who happens to fix lawnmowers out of his garage. He lives there and the mortgage has to be paid one way or the other, and in spare time does this other little thing. His day job takes care of one side (premises) and the other takes wife and three kids on vacations twice a year.

All kinds of biz, all kinds of results. In the above, that fellow has a monopoly with his family and children. Nice return!

One has to be careful with the use of the word monopoly.

Google is not there, believe it or not. Not yet. Close, but not there. MS is not there, wants to be, just isn't. Linux as web servers... headed the right direction to monopoly, just ain't there yet.

[graeme_p]

@tangor, yes, you would be as much a threat to the efficient functioning of the economy as Google or MS if you had the chance.

If I had a monopoly on something it would be good for me personally, but bad for society. The same thing applies to other monopolies.

Linux is unlikely to be the base for a monopoly because it is open source and therefore any dominant version can be freely redistributed by anyone who wants to, forked etc.

[lawman]

Uber seems to be on the way to busting up taxicab monopolies. That's good. When Uber becomes a monopoly I guess that will be bad.

[tangor]

Best part?

We can all dream.

Fortunately there's no expense in that (unless a beer helps that illusion along).

And in that, there's nothing wrong, the beer is Weekend Anyway! :)