With President-elect Donald Trump’s inauguration just a few days away, his initially negative comments regarding the pending AT&T/Time Warner merger, along with his general mistrust of Silicon Valley, are reverberating forcefully throughout the tech community. His comments may have unintended consequences on future deals that strive to continue the innovation that has defined the digital age.
Perhaps at the root of President-elect Trump's skepticism is his experience with the traditional concept of goods; oil, steel, and the rails and ships that connect producers to markets. Markets are playing fields where finding and maintaining control of supply and distribution is the ultimate goal and the foundation of market dominance. In turn, the threat of market dominance spawned rules, regulations, and even entire government agencies dedicated to promoting competition. But in a world increasingly powered by software, the fear of monopolies is anachronistic, and monopoly is just a board game.
Because the internet has re-written what we know about how industries and products emerge and evolve, and how consumers view them. Companies like Facebook, Amazon and Google have grown from nothing to become the industry icons of the Internet age by innovating rapidly and delivering services that consumers value.
At the same time, long established industrial icons are themselves rearranging and adapting to this pressure, all the while driving down prices and increasing supply. Companies like Comcast and AT&T are expanding their franchise from telephones and cable TV, to content, cloud services and wireless internet. In the new marketplace the old guard and disruptive upstarts occupy the same field and are fiercely competing to develop the next killer app or innovative service that their common customers demand.
The reality is that the platforms built by Facebook and Google are both competitors and collaborators; as are the networks and studios of AT&T and Comcast. Exclusivity, once essential to monopoly control, now stands in direct opposition to scalable success. No company can reach its audience, let alone a new market, without ecosystem partners who, more often than not, are also direct competitors in one vertical or another. Consumers are empowered by choice. Consumer demands drive the digital market, and with fast and nearly ubiquitous distribution, product and service, developers derive huge benefits of scale and consumers see lower prices and greater innovation.
Competition, as well as collaboration, will drive innovation and offer companies of every size and the emerging digital workforce the opportunity to make not only new products, but new markets. The result is increased choice, greater scale, and improved products at lower costs. The best thing we can do to promote this trend is get out of its way.
The end result for the consumer is falling prices, greater choice in services and content, and the elimination of distance and isolation; hardly reasons for regulators to intervene. And from the viewpoint of the thousands of newly empowered software developers, there’s considerable danger in trying to dismantle an organically evolving environment, which provides them tremendous benefits of cost, scale and reach.
Yet, somehow, it seems we’ve arrived at a place where big is bad, larger is worse, and mergers are inherently evil. Why should this be the case given that all we see are benefits?
One answer could be that with the range of choices at every level, and the speed with which consumers require change, “regulation” itself is becoming less relevant. Like any business, agencies tend to expand their reach, increase their power and grow their influence if left to their own devices. Without self-imposed humility or politically imposed restraint, old rules never die and old agencies never close their doors. When you regulate telephones, everything looks like a telephone. When you regulate monopolies, you see them around every corner.
The digital economy was created by innovation and consumer expectation, and it has delivered. It is a healthy market creating tremendous value and benefit economically and socially for both consumers and the developers that serve them. Regulators should trust that the work they have done in the past is reflected in the success of the present. And they should resist the urge to use yesterday’s tools to fix tomorrow’s problems – before they even appear.
Jake Ward is the President and CEO of the Application Developers Alliance.