Two companies decide what software can run on 99 of every 100 phones on earth.
Share of each market held by the leading firms, latest available. Six unrelated markets, and largely the same four names in all of them.
Google appears in four of the six rows, Apple in three, Amazon and Microsoft in two each. These are not adjacent businesses: search, phone operating systems and cloud computing have almost nothing technically in common.
- Software has almost no marginal cost, so the biggest player can always undercut a challenger and still make money. Scale is not just an advantage, it is a permanent one.
- Then network effects lock it in. Developers build for the platform with the users, users go to the platform with the apps, and advertisers go where the users are, so each year of dominance makes the next year easier.
- And control of one layer buys the next. Being the default search engine on the world's phones cost Google around $20bn a year in payments to Apple, which is cheap for keeping a 90% share, and is precisely what the US antitrust ruling against Google concerned.
These companies are toll gates. To reach people on a phone, an app maker has to go through Apple or Google and follow their rules. Apple takes up to 30% of what apps earn in its store. In 2021 Apple let iPhone users refuse to be tracked by apps. Most refused, so ads on Facebook and Instagram (both owned by Meta) got worse at finding customers, and advertisers spent less. Meta put the cost at about $10 billion. Most of these services are free, so the worry is not high prices. It is that a few firms write the rules for everyone else.