Competition in Tech; A Tale of Behemoths and Dreamers.
If you don’t have a competitive advantage, DON’T COMPETE. That was one important lesson I got from my years of learning from books and seminars as a budding entrepreneur. Over the years we’ve seen capitalism at its best and we’ve quite regrettably also seen it at its predatory worst. BIG tech companies have ruthlessly guarded their poll positions in their different segments, wading off competition and suppressing calls for more transparency in the use of data by consumers, responsibility in the way they conduct their business from regulators, and more accountability from public officials.
On Friday 24th April, Mark Zuckerberg announced a new feature for its Messenger platform called ‘Messenger Rooms’, a video conferencing capability said to accommodate up to 50 persons per room. A development some industry observers believe is aimed at taking on Zoom, whose cloud based video conferencing platform has become very popular in the wake of the lockdown orders across the globe, as people sought innovative ways to stay connected virtually through video hangouts and meetings.
Facebook itself has seen a surge in the usage of its applications. Going LIVE on Instagram has become a global trend. This feature has been widely used by musicians, motivational speakers, lifestyle coaches and even preachers to engage their audience and this has proven very successful. We’ve seen Asa hosting live acoustic sessions from her living room to thrill fans (myself inclusive) after the social distance restrictions forced her, like many others, to cancel her scheduled concerts in different cities. We’ve also seen how successful the VERZUS matchup shows started by Swizz Beatz and Timbaland has been, attracting up to 450+ thousand viewers from around the world. That is indeed phenomenal as no Stadium anywhere in the world has the capacity to accommodate that number of people at a time.
We have also been using WhatsApp a whole lot these days, sending tons of messages, engaging in groups, making lots of voice calls and catching up with video calls. So why is Facebook keen on introducing this feature and moving Zoom’s cheese? Mark Zuckerberg has always been obsessed with the idea of dominance. From the onset, he’s always pushed to dominate the social media space. Yes, he and his colleagues built a great platform from their college dorm which knocked out the then highly successful Myspace off the social media space after a few years. At some points in the past 12 years, we’ve all contemplated staying away from Facebook or deleting our Facebook accounts altogether, but there is this thing about helping us stay in the loop with family, friends and colleagues that almost always draws us back.
Over the years, Facebook has come under fire for privacy issues and how it uses our data to its own benefit, sometimes to our individual or collective detriment. Most recently, after the US presidential election of 2016, there was talk of foreign interference in the electioneering process, some of which was tied to how third party agencies like Cambridge Analytica was harvesting and using information from Facebook users to help push political propaganda. Those revelations led to a lot of public outcry which resulted in a congressional hearing, where Zuckerberg was grilled by the senate for 2 days, with people moving a campaign to #DeleteFacebook. All that seems not to have shaken Facebook as it has always emerged from all such scandals unscathed, growing even bigger. This seeming immortality is largely because we simply do not have a better alternative.
Today with over 2.5 billion monthly active users, Facebook is worth over half a trillion dollars, making it the clear leader by several miles in the social media space worldwide. This market dominance isn’t simply because there hasn’t been a better idea since Facebook launched. There has indeed been a lot of great ideas and features that has led to the rise of other platforms on the social media space. From WhatsApp to Instagram and then Snapchat, we have seen the rise of really cool social applications that have caught the attention of the different demographic segments of society. Since we have seen the rise of cool alternatives, why has Facebook maintained this dominance, you may ask. Over the years of its existence, Facebook has mastered the art of copying the best features of its competitors and potential competitors, sometimes buying up, not just the idea, but the entire teams also. As Chris Hughes, a co-founder of Facebook said, “He can choose to shut down a competitor by acquiring, blocking or copying it.” As we also saw in the 2010 movie, The Social Network, Mark has a special gift for taking good ideas and turning them into something really phenomenal and game changing.
Facebook acquired Instagram in 2012. I really didn’t understand why Instagram accepted, seeing they were positioned to be the next big thing that would have probably relegated Facebook over a few years. That possibility has been further reinforced as we have seen that the acquisition gave Facebook another breath of life. After they integrated both platforms, we could now post pictures on IG and seamlessly link them to Facebook. Facebook also acquired WhatsApp in 2014, expanding its amount of real estate on smartphones. After Facebook’s attempt to buy over Snapchat failed, it decided to copy Snapchats disappearing photos and videos feature, and implemented it first on Instagram and eventually across all its platforms. That move somewhat stifled the growth and success of Snapchat. Even after Snapchat went public to raise more money, it still hasn’t been able to take on the giant, Facebook.
These ruthless and monopolistic tendencies isn’t peculiar to Zuckerberg and Facebook alone, it is widespread practice among the BIG tech companies. From Facebook, to Amazon, Apple, Alphabet (Google), and Microsoft, these giant companies are notorious for devouring the talent, technology and entire businesses of aspiring competitors. These anticompetitive tendencies have been in the computing and technology circles for decades now. In the 60s and 70s, International Business Machines (IBM), was taken advantage of its market dominance at the time, to stifle competitors. This eventually got them into an antitrust case that spanned almost 2 decades, taking up productive time and reducing their influence, giving rise to companies like Microsoft and Apple.
In 1998, Microsoft got entangled in an antitrust case for taking advantage of its dominance of the PC operating systems (OS) market with its Windows OS to force customers to use its browser, the Internet Explorer as their default browsers, pushing aside competitors like the Netscape Navigator browser. Even though the suit did not succeed in dismantling Microsoft into smaller companies, like the IBM case, it made Microsoft more cautious and ensured it exercised restraint in its future dealings. Like Adam Smith said “Monopolies prevent the competition that spurs innovation and leads to economic growth.” That case spurred innovation in the browser space, giving consumers choice and a shot at better browsing experience. Imagine what we would have done without the likes of Mozilla Firefox and Google Chrome coming along with better speed and user experience. It also paved the way for the rise of companies like Google, Amazon and Facebook.
It’s not like these tech behemoths have been allowed to continue in their ruthless practices unchecked, we have seen politicians like Senators Elizabeth Warren, Ted Cruz and Amy Klobuchar calling for more oversight and possibly breaking up these companies into smaller entities to ensure free and unfettered competition. These companies have all gotten themselves into one legal dilemma or the other with the Federal Trade Commission (FTC) or the European Union Commission Competition Department, resulting in fines worth billions of dollars. But that’s a paltry sum compared to what these companies make from their sharp practices. One of such cases was against Google. The EU regulator slammed google with about $5 billion antitrust fine for abusing the dominance of its Android mobile OS and unfairly forcing smartphone makers to preinstall google apps in a bundle on their android devices. Google in its defense said it has only given consumers options as they are allowed to easily install alternatives if they don’t want to use the Google preinstalled options.
So What Are Zoom’s Options?
Some have argued that Zoom should look to raise more money and wade off the competition from Facebook. The truth is, raising money alone does not cut it, as we saw with Snapchat. The Snapchat experience has made investors shy away from investing in companies they perceive to be competitors of the ruthless Facebook, as they have seen time and again that Facebook almost always wins. Competitors simply can’t raise the money to take on Facebook. Asides money, you also need the talent. It’s good to have smart engineers that can build great technology products (like Google Plus), but it’s more important to have a team that can build products that the consumers want and can’t get enough of. Google tried to get into the social media space with Google+, but it was too little, too late.
Others have suggested that Zoom can decide to focus on enterprise customers (large corporations and small businesses alike). While that sounds good, we must also remember that there are big players like Microsoft with Skype for Business/ Microsoft Teams and Cisco with Webex battling in that segment already. So what exactly can they do?
If you can’t beat them, JOIN THEM. For startups in the tech space who are constantly faced with the reality of getting their cheese moved by the BIG companies who are constantly looking to adopt new features from other services to improve on their own apps, it is almost impossible to win. The best bet has always been to sell to rival BIG companies (the enemy of your enemy is your friend) or form a partnership that stands a fair chance of success. Zoom should seriously consider toing this route. I’d propose they sell to Alphabet (Google). Yes, Google, despite being BIG, has largely failed in all its previous attempts to break into the mainstream social media circles as much as it has desired. Asides Google+, we have seen Hangouts and Duo. All those haven’t done as well as the Facebook platforms. I strongly believe that there’s a great chance of success for both Alphabet and Zoom if they can come together, leveraging on the talent and resources of both companies to take on Facebook dollar for dollar.
While it remains uncertain whether or not we will see a landmark antitrust case against Facebook or any of the tech behemoths, that will open up competition in the tech space, it is important that tech start-ups while making efforts to build great products and features for consumers that are better than what we currently have, stay open to the idea of collaborations and buyouts as a means of fostering stronger competition in the tech space, that will eventually result in better and perhaps safer user experience.
