[scarface74]

It's ineffective in other areas like social networks because all new market entrants are swiftly taken over by incumbents without any resistance by regulators.

You act as if it isn’t the goal of every startup that takes VC funding to get acquired. Yeah going public is the other route, but statistically it hardly ever happens. Look no further than YC. Only two YC backed companies have ever gone public.

VCs wouldn’t invest in companies if they thought their only exit strategy was navigating via the very unlikely road of going public. If it were harder to sell a company to a larger tech company, most of these investments would never happen.

The definition of monopoly is important in some respects but not for the question of whether or not we can reap the benefits of markets or suffer the consequences of dysfunctional markets. It doesn't take a clearcut monopoly to render a market dysfunctional.

Facebook came in and took on MySpace with a better product - not government regulation.

I'm not sure which people in power you are talking about

The government. Everyone likes government power as long as their side is in charge.

[apatters]

The MySpace vs Facebook example is very old. The modern social media landscape is actually a great example of how the system in the US is broken.

Where is the competition to Facebook? Instagram and Whatsapp were compelling alternatives that achieved traction. The US government allowed Facebook to acquire them, reducing competition, and thus the incumbent's incentive to innovate.

Recently a new competitor achieved traction, with 500M users and over 1B downloads: TikTok. What's different about TikTok? It's from China, and the Chinese government won't let Facebook buy it. (Heck, they won't even let Facebook compete against it in its home market.)

So, American industry may lose much of the social media market to a Chinese competitor, because American regulators have been asleep on the job, and our incumbents are no longer responsive to changes in market demand.

This is how many US industries have become less competitive as a shrinking number of large firms have gobbled up their competitors.

By the way, your comments in this thread seem a bit uncharitable toward those of us who hold opposing views, we are not idiots. No one is advocating that there should be a law requiring firms to hold no more than 5% of the market. I argue that big firms in markets with oligopoly or monopoly characteristics shouldn't be allowed to acquire their competitors willy-nilly, which is in fact pretty much the antitrust law that's on the books today.

[scarface74]

Lets look at the alternate history for Instagram.

What are the chances that they wouldn’t have run out of money before being profitable? Their only realistic means of survival was being acquired. They need Facebook’s advertising infrastructure to be profitable. Who else would have acquired them Twitter? They were constantly crashing around then. Google? Apple? Microsoft?

What was to stop Facebook from crushing Instagram without acquiring them by building their best features - like they are doing with SnapChat?

[fauigerzigerk]

>You act as if it isn’t the goal of every startup that takes VC funding to get acquired.

I didn't mean to imply anything wrt that question. I don't think it matters. What matters is whether the market is actually working, and it's not. There's very little competition.

MySpace was ages ago and it never had the financial might of Facebook. So that's not a good example of an oligopoly resolving itself, but I grant you that there are such examples (IBM for one, also Microsoft although regulators may have influenced that one).

I'm actually rather skeptical when it comes to the effectiveness of competition regulation. But some of the things that are happening right now are simply unacceptable, regardless of whether or not they might eventually resolve themselves.

That 30% app store revenue cut is just ridiculous, as are lifetime bans from extremely dominant platforms without explanation or recourse.

>The government. Everyone likes government power as long as their side is in charge.

You said it was a problem if people in power were making up their own definitions, and you said it in response to a sloppy use of the term "monopoly" by an HN commenter. "HN commenter" doesn't quite meet my definition of "people in power".

[scarface74]

MySpace was ages ago and it never had the financial might of Facebook. So that's not a good example of an oligopoly resolving itself, but I grant you that there are such examples (IBM for one, also Microsoft although regulators may have influenced that one).

Regulators had no affect on MS getting caught flat footed when it came to media players in the early 2000s which led to Apple being able to dominate the mobile phone market (in terms of profit) or Google in terms of volume.

Facebook didn’t have a ton of funding early on and MySpace was a giant. Apple was basically bankrupt in 1997 and was much smaller than Microsoft when it introduced the iPhone.

If Facebook does “monopolize” social media, it is both because people chose to congregate there and if Facebook doesn’t meet the need of people, they will go somewhere else, there is no need for government to tell people that too many of them are on one platform.

If people don’t have any other place to show off their idealized life and post cat memes, who cares? The last thing we need is more government power.

As far as the 30% revenue cut. The revenue cut for retail use to be 60%. Even during the j2ME era the revenue cut was 60% for the platform owner.

But let’s not pretend that the App Store overflowing with apps from hardworking artists. Most of the money is being made from whales buying in app consumables and if all of those apps disappeared the world would be a better place.

On the other hand, most of the major content producers are bypassing the App Store payments and forcing consumers to buy subscriptions and content outside of the App Store c

[fauigerzigerk]

The threat of getting broken up has certainly limited Microsoft's options back then. They could have bought Apple outright if it hadn't been for that threat. So no, it wasn't just some media player thing that stopped them.

But I actually used Microsoft as an example for a situation that resolved itself largely without government intervention, because I don't think the threat of breakup was decisive for their failure to capture the mobile space (or the web).

It did take an awfully long time for Microsoft to lose its suffocating dominance though. Many entrepreneurs and inventors who tried to compete on merit were crushed by Microsoft or never got started. Lots of consumers paid far more than they would have if there hadn't been this near monopoly.

Facebook's funding early on is not the point. The point is that MySpace couldn't have used the strategy that Facebook is using today to rid itself of competition, because MySpace was a financial dwarf whereas Facebook is a financial giant.

>If Facebook does “monopolize” social media, it is both because people chose to congregate there and if Facebook doesn’t meet the need of people, they will go somewhere else...

Yes, and that other place will then be bought up by Facebook.

>The last thing we need is more government power.

I agree that we don't need more government power in general. But we do need governments to play the part that only governments can play and play it effectively. Markets sometimes become dysfunctional and governments need to fix that using the powers they already have.