When we started Open Market in 1994, the Internet was pretty much the Wild West. Everyone was figuring out what it “meant”, and it was a time when a 2-person company could have the on-line presence of IBM (and often did).
Now, fast-forward 15 years. We have an Internet ecosystem dominated by the “Gang of Four”: Google, Apple, Amazon, and Facebook. Combined, these “gorilla” companies have a $750 billion market cap, employ over 100,000 people, and extract most Internet revenues and profits. And increasingly, this group is controlling the devices we use to get on-line.
It’s not the Wild West anymore, and the new “GAAF” ecosystem has added new constraints around building Internet companies:
- There’s a tax. It’s overt (e.g. 30%) or indirect (e.g. ad dollars, hosting fees, API fees, etc)
- There’s the threat of copying. The gorillas use the ecosystem to source new features and products. See what Apple copied into iOS 5.
- There’s an upper-bound on success. If you get too big, the gorillas change the rules (e.g. Facebook with Zynga).