In the absence of regulation, goliaths will inevitably become monopolies and startups have no real chance to compete. The best a startup could be is to hope to be bought by the goliath.
How exactly will startups will have “no real chance to compete”? What is the mechanism that will stop them?
Unless prevented by governmental regulation or similar (like patents) startups move faster and are more innovative and creative. They are not the cheapest but competing on price is not a good idea for a startup anyway, and the monopoly cannot be the cheapest possible since that would diminish profits - then what would be the advantage to be a monopoly?
A monopolised market is ripe for disruption and VC are dying to fund startups who can claim a chunk of that market. Any startup bought out by a Goliath will fund another 10 in its stead.
I know zero cases of unbeatable monopolies in a free market. All monopolies had government support. Do you have any examples?
> How exactly will startups will have “no real chance to compete”? What is the mechanism that will stop them?
The established monopoly company will, either by strong-arming suppliers, service providers, and marketplaces into not doing business with the startup, or by just buying them.
At least, that's how it's traditionally been done.
> strong-arming [...] into not doing business with the startup
Isn't that illegal already?! I don't see how extra regulation can change anything. Any company is liable to try anti-competitive behavior and that is why it's illegal, monopoly or not.
And even if the government fails to stop Goliath from doing illegal stuff, a free market will route around it. See how Microsoft/Intel - monopolies in the 90s got out-innovated and made irrelevant by pure market forces while the anti-trust government action merely delivered a slap on the wrist.
Free markets work. Unless we regulate them to discourage startups.
Example of highly regulated markets: health care, energy, transport, education, telecoms. The result? It's almost impossible to compete, prices are high and products crappy.
> or by just buying them
Thus funding 10 new startups in the field since it's now known that the Goliath is exiting newcomers. Gold rush for any VC!
> Isn't that illegal already?! I don't see how extra regulation can change anything
I'm not sure what you mean by "extra regulation" here. Yes, it is illegal, and that's an example of appropriate regulation. I had the impression you were arguing against regulation, though. I think I don't understand your stance here, so my responses may be off the mark.
> Free markets work.
They do, although they aren't a magic panacea. And a free market cannot exist in the absence of appropriate regulation.
> Unless we regulate them to discourage startups.
I agree. Appropriate regulation is not intended to discourage startups.
Rule of law stays at the base of any civilized society. Contract law, antitrust, anti cartel and the like are necessary to simply establish the rules of the game. It is the government’s role to implement them, together with taxing externalities. Simple and clear. I am not contesting that. I am not an anarchist.
What I am against is crap like “don’t bundle a browser in your OS”, “you must have an USB-C port”, net neutrality, “censor your users”, “your cars must have backup cameras” and even “you’re too big so we’ll call you a monopoly and split you up” or “you’re a billionaire we should tax your wealth. These regulations (even if well intended) will always have unintended second order effects and a significant chilling effect on startups. Compliance costs add up and are much easier supported by incumbents. Startups are fragile and founders easily discouraged.
I want competition and startups and looking around us and at history it is clear to me that the less regulated (freer) a market is, the healthier it is. Just look at computing and the Cambrian explosion of hardware and software we enjoyed during the years governments were too surprised to wreck it.
Reversely, I look at heavily regulated markets (against, with good intentions, I am sure) and I see huge market failures. Take housing for example: countless rules, zonings and regulations - it takes years before you can even start building. The result? People are paying through the nose to live in places that are illegal to build today.
The free market mechanisms work and they are incredibly powerful. We should be extremely reluctant to mess with them every time we feel something is not quite right in the world and just a little regulation would fix it - the odds are we’ll do more bad than good. Free markets are after all the best wealth creation engine we know and we owe it the incredible abundance we are living in right now.
Unless prevented by governmental regulation or similar (like patents) startups move faster and are more innovative and creative. They are not the cheapest but competing on price is not a good idea for a startup anyway, and the monopoly cannot be the cheapest possible since that would diminish profits - then what would be the advantage to be a monopoly?
A monopolised market is ripe for disruption and VC are dying to fund startups who can claim a chunk of that market. Any startup bought out by a Goliath will fund another 10 in its stead.
I know zero cases of unbeatable monopolies in a free market. All monopolies had government support. Do you have any examples?