How incumbent BIG Internet companies control the Digital Economy
Even though the internet as we know it is not even 25 years old yet, it’s been a robust industry long enough for there to be major incumbents with market and monopoly-like influence and power.
The new digital economy is set up so that there are more opportunities for everyone and anyone who has the drive and interest to set up shop, grow customers and audiences and succeed. It is a traditional pyramid however, where BIG Internet edge provider companies who are the gatekeepers hold the power and are essential for a rising digital company to excel. The big Industry players at the top can single-handedly pull a plug and disrupt rising digital entrepreneurs and startups.
In digital publishing industry, for example, it only takes a terms of service violation, some third party filing a copyright or defamation complaint against your site for it to get pulled off of a platform like Tumblr or Blogger. A hosting company can use a delayed payment to yank your business offline, thereby destroying your reputation and causing lost sales.
Last October 2014, Google took down the blog of the most popular Nigerian blogger, Linda Ikeji, after someone complained she used his public tweets about Boko Haram without permission. It was restored about a day later but not after the outage contributed to tons of damage to her reputation and she suffered lost page views.
If a website violates one of Google’s unpublished principles of authenticity or value, it could be dropped in rank which strips the site of any good will it has built and buries it on page 5 or higher in search.
And even if you follow the rules, if your company turns out to be competing with a big industry gatekeeper like Twitter, you could become victim to anti-competitive activity.
Consider the case of video streaming social media app Meerkat. It just launched at South by Soutwest four weeks ago but just got kicked off of Twitter’s social graph. Why? Because Twitter invested in a competing service Periscope that does essentially the same thing as Meerkat.
Now, Periscope has the edge because of its favorable relationship with Twitter. It’s easier to find friends with Periscope because of this move and now the 4-week old Meerkat has to start from scratch and do the same thing.
And so while normally, whomever builds the platform first wins all the loyalty of early adopters (see Vine v. Instagram Video) being able to access friends who are not on the platform matters even more. (see Facebook v. Google Plus and every other attempt to usurp Facebook’s social media reach)
Therefore, of the two services, the one which has that integrated relationship will more likely be more favored by users. People don’t want to have to rebuild circles. followings and friends lists that took them years to curate. Incumbents know that and know that’s what gives them the edge over newcomers.
It is quite ironic because in the Net Neutrality debate, its proponents had decided that traditional Broadband and Media companies were too big to be trusted and in sum, seemed to have used the FCC to impose strict regulations on that industry to make sure they don’t discriminate against non-affiliated companies.
All the while….ignoring the fact that BIG Internet is running our digital economy without any government restrictions or controls interfering with their ability to flex market dominance or make it harder for a competitor to succeed. Perplexing!
Active members in this robust Internet ecosystem who are on the lower rungs of the hierarchy are well aware and wary that their biggest fear isn’t from an ISP slowing down content but from other Big internet player with much more relevant muscle power that can yank their content and services from relevancy altogether.
The free market economy is disrupted when there are preemptive controls put in place before evidence of market failure.