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Laws of Tech: Commoditize Your Complement (2022)
A classic pattern in technology economics, identified by Joel Spolsky, is layers of the stack attempting to become monopolies while turning other layers into perfectly-competitive markets which are commoditized, in order to harvest most of the consumer surplus; discussion and examples.
Vertical integration can be an effective way of resolving the intractable market dispute with top-down dictatorships, but can require lax anti-monopoly regulations, high capital investment, massive corporation overextension & empire-building, and risks being outcompeted at every level by nimbler competitors; this makes it difficult for any up-and-coming company to implement, and often ineffective. In practice, the division winds up being due to power plays and market dynamics, and who can most effectively erect a moat while sabotaging competitors, exploiting tactics like lawsuits & software patent trolling, proprietary APIs, cross-business subsidies, kickbacks, DRM, deliberate incompatibility or “embrace and extend”, FUD, operating at a loss indefinitely, etc. (As one of the main cloud providers, Amazon is merely one the most visible & criticized practitioners of this kind of enclosure, but, rhetoric about ‘strip-mining’ aside, of course this sort of thing is why much FLOSS software is funded in the first place by entities large and small & those complaining often benefit enormously from commoditize-your-complement fights elsewhere—what OSes do they all run on, for example?)
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