Comments by "Persona" (@ArawnOfAnnwn) on "ANTITRUST cases: The key points to the FINES Against GOOGLE - VisualPolitik EN" video.
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@alstonjacobs4934 That's a good quick take. However, it only addresses one aspect of network effects. Firstly, why would your customers leave your service en masse if your service is able to serve them better precisely BECAUSE of how ubiquitous it is i.e. how extensive its network/reach is? Smaller competitors will offer worse alternatives, not because of anything deficient in their platform itself, but simply because their platform is smaller and so doesn't connect you with as many friends or sellers or whatever else as the big players. People would only leave en masse if and when some major scandal tainted the big player in question, meaning the viability of competitors is itself determined by the dominant provider.
Secondly, bigger players are also able to better harness information asymmetries. They have more data, in other words. And in several fields more data = better performance. Again new players can't compete with that, unless for some reason (such as state intervention) that data is made public for all to access. Targeted advertising, for instance, gets better not simply by writing better algorithms, but also simply from having more, and more diverse, data to feed it. So too do search results. And so on.
Thirdly, diversified platforms are able to make their product somewhat 'sticky', by tying it to a bunch of other services. This is, in fact, one of the primary practices that anti-trust cases have targeted so far, to force them to stop doing shit like that. Another related way it's sometimes done is by vertical integration, followed by exclusion (something this video touches on). Basically, if you control a large part (or most, occasionally even all) of the distribution chain, you can maintain a monopoly simply by refusing to allow competitors to sell on it (and establishing an alternative distribution chain is often prohibitively expensive).
Fourthly, and related to the last bit above, it becomes prohibitively difficult for new entrants to achieve 'critical mass' in a market in order to compete, which may be needed for both their service to work well, and for their business model and hence revenue generation to actually function.
Btw, network effects aren't limited to only digital platforms. They play into industries based on physical goods too. And it's silly to imply that we live in a 'digital age' and so physical products are passe.
And so on. And this is not even mentioning other tactics like dumping and acquisitions that big players use to protect their leads from any potential competition. And keep in mind that I said network effects were just ONE way in which monopolies arise even without govt. shenanigans (other examples would be natural monopolies, IP-centric monopolistic practices, cartelization, etc.). Many of these things have actually happened in history, and were beaten back BY govt. intervention to put a stop to it.
Point being that markets aren't perfectly self-regulating. That isn't a 'socialist' take, it's the mainstream economics take. That's why competition regulation is such a common part of even the most famously capitalist countries in the world.
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