Technology has always been prone to winner takes all. In 1969, the U.S. anti-trust agency began proceedings against IBM, then the world’s leading computer company. The case dragged on for 13 very long years, and although it was later rejected by the courts, the whole affair illustrated the nature of the market: the company, at the time, was dominating the hardware, software and technology services market. In 2001, Microsoft was accused of monopoly practices after it cornered the personal computer market, making it very difficult to buy one that wasn’t already installed with Windows.
At present, access to the world’s fastest-growing market, the smartphone, is completely dominated by Android, which has an 80% share of the global market. The only competition worth mentioning, and only in some markets such as the U.S. and U.K., is Apple’s iOS, which, despite recent increases, is below 20% worldwide. Everybody else is just hanging in there: even Microsoft’s Satya Nadella admits as much. The smartphone segment is particularly vulnerable to monopolies: whoever controls the operating system also controls the app store and is able to pretty much set the rules about what products or services can run on it.
In such a polarized market, for a company like Facebook to consider alternative strategies to deal with the hypothetical case that Google might decide to exclude it from its ecosystem by refusing it access to Play Store sounds reasonable. Mark Zuckerberg has proved himself an astute analyst: the collapse of Myspace in 2008 has shown him that it’s a jungle out there, and that for the moment, seen from his privileged position atop the biggest social network in the world, the best survival method is to try to buy anything with the potential to disrupt the market, anything that becomes popular on the social networks, any app that is gaining the least traction. When you are the owner of four out of the 10 most popular apps in the Play Store (Facebook, Messenger, WhatsApp and Instagram), considering an extremely unlikely - but potentially feasible - scenario such as a radical exclusion from that store might make some sense.
When all’s said and done, Google has history here. It banned ad blocker apps from the Play Store to protect its business model, as well as threatening to excommunicate Acer if it used Alibaba’s operating systems.
A hot war between Google and Facebook could be sparked by a toughening of positions on internet neutrality: Facebook is trying to attract users in the developing world through Internet.org, offering them limited internet access via its apps. Google could refuse to allow the operators to use its Play Store. But for the moment, neither company is interested in going thermonuclear: Google doesn’t want to be seen as a global threat, while nobody knows how things are going to go for Facebook, whose position in India is under question.
Facebook has already taken a couple of swipes at Android through Facebook Home, a launcher that gave its apps high visibility, which may explain its lack of popularity. Preparing a strategy ahead of a possible expulsion from Play Store doesn’t mean Facebook thinks this is a likely scenario right now, but simply that some kind of collision is possible further down the road.
Meanwhile, perhaps we should be giving some thought to what it means to live in a world in which a single company controls more than 80% of smartphones. In Russia, the authorities are to take action against Google for abusing its market position there.
Android is absolutely strategic for Google. But the dominance it has achieved in the world means that more and more companies, like Facebook, have to ask themselves what they would do if they found their products under attack from the people at Mountain View. As happened with Microsoft, which argued that it makes no sense to punish a company because it makes something the majority of people like, Google is now saying that its domination is simply the result of research that has produced a superior product, and that far from being a threat, is an incentive to further develop its mobile ecosystem overall.
Every company wants a monopoly position, which doesn’t mean such a monopoly cannot be controlled by the authorities so as to keep some competition in the market. How to do so is arguably one of the most difficult challenges capitalism faces, and one that it hasn’t been overly successful in meeting.
