A little more than ten years ago, I found myself sitting in the green room of NBC’s “Today” show alongside the founder/CEO of one of our agency’s largest clients, Sun Microsystems. I was asked to accompany Scott McNealy on the morning following his testimony before Congress about Microsoft’s monopolistic ways.
I hadn’t previously met Mr. McNealy, but I certainly knew who he was mostly through Sun’s decimation of another client ten years earlier – workstation maker Apollo Computer. I decided to engage him in conversation about what he intended to share on the air that day. He cut me off by saying “Imagine if your company owned the alphabet, and had the power to add or subtract letters as it sees fit. This is Microsoft.” (I thought it bestÂ to hold my tongue after that.)
Over the last several months, McNealy’s audacious challenge to a company he rightly viewed as unjustly anti-competitive and monopolistic resonated more and more with me. Today, we are seeing that scenario play out with a handful of dominantÂ players whose power over their Internet (and cloud) platforms (versus Microsoft and the PC) has thus far gone uncheckedÂ andÂ unregulated.
Here’s a smattering of news articles that portend the age we’re entering:
“Amazon, a Friendly Giant as Long as Itâ€™s Fed” (The New York Times)
“Facebook Admits Organic Reach Is Falling Short, Urges Marketers to Buy Ads” (Ad Age), or
“Furor Erupts Over Facebook’s Experiment on Users: Almost 700,000 Unwitting Subjects Had Their Feeds Altered to Gauge Effect on Emotion” (Wall Street Journal)
“Google Faces New Search Complaint: Rival Yelp Says Results Favor Google+ Local Listings” (Wall Street Journal)
“Apple and its iOS â€˜monopolyâ€™: Or, should Apple be broken into two companies?” (MacWorld)
“Just Like Facebook, Twitterâ€™s New Impression Stats Suggest Few Followers See Whatâ€™s Tweeted” (Marketing Land)
Yesterday Union Square Ventures’ Fred Wilson weighed in on the phenomenon/issue with a post titled “Platform Monopolies.”Â He led with:
“Thereâ€™s an article in the NY Times Sunday Business Section today that lays out a very important question we have all been dancing around but will increasingly be dealing with. The article is nominally about Amazonâ€™s fight with Hachette but it is really about internet platforms and monopolies.”
Mr. Wilson, one of the most astute and successful venture capitalists today (Think Twitter, Tumblr and Zynga), alludes to the power these monopolies have:
“For this is the truth that we are now facing. For all of its democratizing power, the Internet, in its current form, has simply replaced the old boss with a new boss. And these new bosses have market power that, in time, will be vastly larger than that of the old boss.”
Rather than inviting regulatory scrutiny of these new power platforms, he sees their ascendance as a primer for tech investors seeking repositories for their investment dollars:
“So, as an investor, when you see a dominant market power emerge, you should start asking yourself â€œwhat will undo that market power?â€ And you should start investing in that. Weâ€™ve begun doing that, but are not anywhere near done with this effort.”
Based in part on Scott McNealy’s testimony, the U.S. Justice Department ultimately stepped in to rein in the Microsoft juggernaut. From CNN (April 3, 2000): Â “Verdict stings Microsoft: Judge rules software giant’s business practices violated antitrust laws”
Will Amazon, Facebook, Google, Twitter and Apple share the same fate? Â Other than Facebook’s recent mood manipulation “experiment,” which prompted one Senator to urge the FTC to investigate, it’s highly unlikely the others will anytime soon have their day in any legislative or regulatory court outside the ephemeral court of public opinion.