Why size matters

Battle of the internet giants | The Economist

With so much revision on competition and oligopolies, it is interesting to note that both of these economic concepts are actually present in an industry we are all too familiar with: the Internet.

Today the four largest players are Google, Apple, Amazon and Facebook. Their influence cannot be understated. Collectively, they dominate our internet queries, music, online purchases and social networks. This is precisely why competition authorities are so concerned with the power of these firms, since they have the power to manipulate the way we live. Indeed, much of our lives have been merged with the Internet, from communication through to even ultrasounds for our children (see image below), and this Google-owned blogging platform is even underlining the word 'Bing' for me, whereas 'Google' is a perfectly acceptable word in its dictionary.

Internet giants tend to lock in their customers through their operating systems, with certain Apple apps being limited from usage on Android phones. The firms are eager to grab as large a share of the market as possible, since customer inertia ensures that most customers stick with their usual service providers.

Marketing strategies may seem too detached from our lives, but it is easy to relate to this desire for firms to expand their customer base; once a customer begins to use Google, it is highly unlikely that they will be wooed into using Bing.