We Get the Monopolies We Deserve

How consumers can help stop anti-competitive corporate behavior (without government intervention)

First line of defense

Most consumers believe that it is the government’s job to protect us from abusive monopolies and harmful anti-competitive corporate behavior. And they’re right — to an extent. Practical free-market advocates agree that capitalism should usually be allowed to function unencumbered with the government acting as a deus ex machina only when absolutely necessary.

Money, redefined

In general, monopolies¹ happen in two ways:

  1. Market forces: A corporate entity uses its dominant market position to stifle competition. Although monopolies are not illegal in and of themselves, it is illegal to leverage a dominant market position in predatory or exclusionary ways.

Money is to a free-market economy what votes are to a democracy. Therefore, spend your money as judiciously as you cast your votes.

The rule of two

From a business perspective, the only thing better than building a highly profitable product or service is building out infrastructure that empowers others to easily stand up highly profitable products or services (and, of course, benefiting financially from their success). These types of businesses are usually referred to as “platforms.”

  • Airbnb. Rather than spending billions over the course of decades building out hotels all over the world, Airbnb created a marketplace for others to instantly monetize existing available properties.
  • Rivian’s “skateboard”. Although it’s too early to say, Rivian’s brilliance might not be in the electric trucks and SUVs they are building, but in their “skateboard” platform: a module which contains almost everything other car manufacturers need to build and sell their own electric vehicles.
  • iOS or Android
  • Uber or Lyft
  • Xbox or Playstation³

The difference between two platforms and three may seem trivial, but it represents a 50% increase in competition, and can make all the difference in disrupting monolithic and complacent market leaders.

When it comes to platforms, the Rule of Two is difficult for consumers and even enterprises to combat, but not always impossible. For instance, if I were a heavy user of cloud computing services, I would be looking for ways to spread my usage across AWS, Azure, and Google Cloud Platform to help ensure that three major players remain in the game (as it stands, Amazon and Microsoft are dominating the space). And now that we’re down to only three significant providers of telecommunication services (T-Mobile and Sprint recently merged), I decided to switch from AT&T to Google Fi — an MVNO, or mobile virtual network operator, that combines the T-Mobile, Sprint, and U.S. Cellular networks into one. Even though I get my internet service through Verizon and could probably save by purchasing a bundle, I’m playing the long game by betting that I will ultimately pay less by helping to ensure robust carrier competition.

No pain, no gain

Unfortunately, being a competition-conscious consumer isn’t always easy. It could mean:

  • Missing out on certain social experiences because of your platform of choice, or because a company’s ethics and principles may not be in line with your own.
  • Taking the time to read privacy policies and end user license agreements, and sometimes walking away from compelling products or services because you aren’t comfortable with their terms.
  • Paying slightly more for a product in exchange for privacy guarantees.
  • Tolerating the inconvenience and often expense of being an early adopter in order to support disruptive new technologies or business models.
  • Changing the way you shop in order to support a wider variety of both online and brick-and-mortar retailers.
  • Communicating to others what you have learned in your research to help them make better-informed purchasing decisions.

Use it or lose it

There are aspects of economic theory that seem to assume consumers are mindless, mechanical automata who will always gravitate toward the least expensive or otherwise most enticing products and services. Maybe as a whole, that’s true. But as individuals, we can make our own informed decisions. And when enough individuals accumulate, they become a meaningful and influential demographic. Consumers have never been better equipped to both make informed purchasing decisions, and to coordinate their immense combined economic power.

A free market system is only as free as its ability to support competition.

Every dollar we spend is a vote that helps determine how competitive the economy will remain. As you cast your votes, remember that market choice is not an inalienable right. It is more like a muscle in that it only remains healthy and viable for as long as we make the conscious decision to exercise it.

Author of SCORPION and Director of Design Prototyping at Adobe.

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