The platforms have become so dominant because they benefit from “network effects”.
Size begets size: the more sellers Amazon, say, can attract, the more buyers will shop there, which attracts more sellers, and so on.
By some estimates, Amazon captures over 40% of online shopping in America.
With more than 2bn monthly users, Facebook holds sway over the media industry. Firms cannot do without Google, which in some countries processes more than 90% of web searches.
Facebook and Google control two-thirds of America’s online ad revenues.
America’s trustbusters have given tech giants the benefit of the doubt. They look for consumer harm, which is hard to establish when prices are falling and services are “free”.
The firms themselves stress that a giant-killing startup is just a click away and that they could be toppled by a new technology, such as the blockchain.
Before Google and Facebook, Alta Vista and MySpace were the bee’s knees. Who remembers them?
However, the barriers to entry are rising.
Facebook not only owns the world’s largest pool of personal data, but also its biggest “social graph”—the list of its members and how they are connected.
Amazon has more pricing information than any other firm.
Voice assistants, such as Amazon’s Alexa and Google’s Assistant, will give them even more control over how people experience the internet.
China’s tech firms have the heft to compete, but are not about to get unfettered access to Western consumers.
If this trend runs its course, consumers will suffer as the tech industry becomes less vibrant. Less money will go into startups, most good ideas will be bought up by the titans and, one way or another, the profits will be captured by the giants.
The early signs are already visible.