WALTER OLSON, CATO INSTITUTE
Look on my works, ye Mighty, and despair!
Mar 2000: Palm Pilot IPOs at $53 billion
Sep 2006: “Everyone’s always asking me when Apple will come out with a cellphone. My answer is, ‘Probably never.’” – David Pogue (NYT)…
Jun 2007: iPhone released
Nov 2007: “Nokia: One Billion Customers—Can Anyone Catch the Cell Phone King?” (Forbes)
Geoffrey Manne and Alec Stapp at Truth on the Market have written a brief history of impregnable tech monopolies that were pregnable after all, in fields from personal computers to video distribution to social media. Sen. Elizabeth Warren and others are now arguing that the government should break up and closely regulate tech giants Google, Amazon, Facebook, and Apple “claiming they have too much power and represent a danger to our democracy.” Manne and Stapp offer examples of sector after sector in which what was seen as structural, inescapable tech monopoly turned out to be not so unassailable. Here’s music distribution:
Dec 2003: “The subscription model of buying music is bankrupt. I think you could make available the Second Coming in a subscription model, and it might not be successful.” – Steve Jobs (Rolling Stone)
Apr 2006: Spotify founded
Jul 2009: “Apple’s iPhone and iPod Monopolies Must Go” (PC World)
Jun 2015: Apple Music announced
IBM, Microsoft and Nokia were not beaten by companies doing what they did, but better. They were beaten by companies that moved the playing field and made their core competitive assets irrelevant. The same will apply to Facebook (and Google, Amazon and Apple).
And why “we will not be stuck with the current crop of tech giants forever”:
With each cycle in tech, companies find ways to build a moat and make a monopoly. Then people look at the moat and think it’s invulnerable. They’re generally right. IBM still dominates mainframes and Microsoft still dominates PC operating systems and productivity software. But… It’s not that someone works out how to cross the moat. It’s that the castle becomes irrelevant. IBM didn’t lose mainframes and Microsoft didn’t lose PC operating systems. Instead, those stopped being ways to dominate tech. PCs made IBM just another big tech company. Mobile and the web made Microsoft just another big tech company. This will happen to Google or Amazon as well. Unless you think tech progress is over and there’ll be no more cycles … It is deeply counter-intuitive to say ‘something we cannot predict is certain to happen’. But this is nonetheless what’s happened to overturn pretty much every tech monopoly so far.
Walter Olson is a senior fellow at the Cato Institute’s Center for Constitutional Studies. His books include The Rule of Lawyers, on mass litigation, The Excuse Factory, on lawsuits in the workplace, and most recently Schools for Misrule, on the state of the law schools. His first book, The Litigation Explosion, was one of the most widely discussed general-audience books on law of its time. It led the Washington Post to dub him “intellectual guru of tort reform.” He blogs at Overlawyered.com.