The US Federal Trade
Commission and the Department of Justice have launched an antitrust probe into
Amazon, Facebook, Apple and Google (Amazon and Facebook watched by the FTC,
Apple and Google watched by the DOJ). It is undeniable that these companies have
some degree of oligopolistic power. They are not the traditional oligopoly that
they do not control some rare natural resources like some crude oil oligopoly.
How do they gain and expand their oligopolistic power? They are building their
own platforms and ecosystems to make their clients become more and more
dependent on their products, platforms and ecosystems.
Some people might
have such experience. Once they bought their first iPhone, then they started to
buy other Apple's products including music from iTunes, after a while, they
found themselves living in Apple's ecosystem. And when they enter this
ecosystem, it is extremely difficult for them to get out of this ecosystem, because the
convenience brought by the ecosystem is so significant and attractive.
Moreover, even if they are able to get out one ecosystem, they are likely to
find themselves quick adapt to another ecosystem by another tech oligopoly.
Ecosystem is so power in terms of gaining market power, because ecosystem is
able to bring a closed system, which can be treated as a separate market from
the big general market and is entirely controlled by the firm who builds this
ecosystem. In an ecosystem, the tech company can control the content, the
technology, the charges and many other elements; more importantly, this system
is relatively isolated from the outside. These big tech companies can lock
their clients into their ecosystems; and because of the existence of these
clients, other content developers including software developers, hardware
developers, whoever want to win these clients, have to comply with the large
tech companies who control the ecosystems.
Since these large
tech companies have built up their ecosystems, as long as they have the control
over their ecosystems, their oligopolistic power is almost unbreakable.
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