Market definitions and tech monopolies
- The fun part of this is that both of these definitions are true, and so you have dig rather deeper and work out what problem you’re trying to solve to work out what definition to use, because very often, picking the definition decides the outcome of the case, before it’s even started.
- So, if you’re trying to sell to American teenagers, the fact that Apple has 15% of global smartphone unit sales is as meaningless as the fact that Amazon has 1% share of global retail. What matter is the install base of your customers, and in that market definition, Apple has 80%
- The big shifts in dominance in tech in the last few decades have not generally come from a new product that does the same thing as the old one, but from a company doing something that changes the field of play
- Microsoft didn’t overturn IBM’s dominance of mainframes - instead, PCs made mainframes irrelevant. Google didn’t make a new Windows, and Facebook didn’t take on Google at web search - instead, they carved out something new.
- Shopify isn’t the same thing as Amazon (or indeed eBay). It’s not beating Amazon at doing Amazon, any more than Microsoft beat IBM at doing IBM - it’s doing something adjacent, and different, but deeply competitive. Tiktok is also doing this to Youtube now - Tiktok is not YouTube but it’s a much bigger question than DailyMotion. The threat comes from things that don’t fit inside a straightforward market definition.
- The DoJ’s current case against Google is a great illustration of how hard this is. Google is paying Apple to be the search default on iOS. The DoJ says this is Google abusing its search dominance (and consequent cashflows) to shut out competition, but you could equally well argue that this is a case of Apple using its smartphone dominance to squeeze $5-10bn a year out of Google. DuckDuckGo might be squashed either way, but who do you sue? Is this a search market case or a smartphone OS market case? And what happens next year? If Apple makes a search engine and uses the market dominance of iOS to create competition in search, what market definition is that?