Compare/Contrast — Caribou Digital

We’ve had a very busy September, and there’ll be some announcements soon on new projects, interesting stuff we’re working on, and interesting people we’re working with.

In the meantime — Peter Theil’s recent comment that monopolies are a good thing has cropped up constantly in discussions we’ve had with people. In a digital age when the viability of business models dominated by monetising attention you can be a company with 170 million active users and still pale next to the competition. Attention economies require network effects, and almost total reach, to monetise the spikes and likes that drive people to content. That suggests a tendancy towards monopolies.

In the New Republic Franklin Foer has a robust argument against a different new definition of the monopoly, more minded that monopolies are still a problem. Scale of consumer base does equate to scale of leverage over companies further down the chain. An unequal digital economy benefits nobody.

Compare Theil’s argument that scale is the only thing that matters with Mike Kubzansky and Paul Breloff’s interesting thesis on field building as an alternative view of scale:

We believe that there are not only direct pathways to scale but also indirect pathways to scale — specifically, scale through the indirect inspiration or motivation of copycats and competitive responses that build on, extend, and sometimes even replace the initial pioneer.

Theil would disagree with the field argument against total scale, but he’d agree with the argument that monopolies are vunerable to disruption themselves, and history would broadly agree with him. But, I would argue that ultimately most monopolies die not because they get disrupted by competitors, but because they get distracted by battles with another foe that isn’t a direct competitor. Monopolies are, naturally, catnip for regulators. And unlike commercial competitors, regulators don’t go out of business. Microsoft fell into a long drawn out battle with the DOJ and the EU, Google is now falling into the same pattern. Disruption is not, perhaps, what monopolies should fear most, but distraction should be.

Originally published at cariboudigital.net on October 14, 2014.