winner-take-all network principle
A CATEGORY UNTO ITSELF
John Di Palma
1

douglas rushkoff mentions this principle in an article that introduces the premise of his latest book:

Union Square Ventures founder Fred Wilson worries aloud on his company blog that digital entrepreneurs are more focused on creating monopolies and extracting value than they are in realizing the internet’s potential to promote value creation by many players. Wilson is excited about the possibility of new platforms that allow new sorts of exchange, “but,” he says, “there is another aspect to the internet that is not so comforting. And that is that the internet is a network, and the dominant platforms enjoy network effects that, over time, lead to dominant monopolies.” The fact that digital companies can build platform monopolies brings creative destruction to a whole new level.

This sentiment is echoed by Om Malik:
In Silicon Valley Now, It’s Almost Always Winner Takes All — The New Yorker

In The Age of Access, Jeremy Rifkin discusses organizational consequences of the network effect:

These supplier-user networks concentrate economic power in the hands of fewer institutions even more effectively than was the case during the propertied era of seller-buyer markets. Being able to control the ideas of commerce, rather than just the rolls, operating processes, and products, gives the new genre of global corporate suppliers an advantage unmatched in previous economic history. Having a monopoly over ideas in each commercial field allows a few firms to grab hold of the workings of an entire industry. To ensure success, industry leaders create vast supplier-user networks, marking former competitors, as well as clients and other suppliers, wholly dependent on their ideas to survive.

There seems to be some relationship here with the equally unprecedented corporate hoarding of cash. Perhaps this betrays their own anxious need to make their new, nebulous form of power tangible, in cold hard cash. From “Why Are Corporations Hoarding Trillions?” —The New York Times:

Collectively, American businesses currently have $1.9 trillion in cash, just sitting around. Not only is this state of affairs unparalleled in economic history, but we don’t even have much data to compare it with, because corporations have traditionally been borrowers, not savers. The notion that a corporation would hold on to so much of its profit seems economically absurd, especially now, when it is probably earning only about 2 percent interest by parking that money in United States Treasury bonds. These companies would be better off investing in anything — a product, a service, a corporate acquisition — that would make them more than 2 cents of profit on the dollar, a razor-thin margin by corporate standards. And yet they choose to keep the cash.