Ben Thompson’s Stratechery, Part 2
I was impressed by, and enjoyed, the first two-thirds of Ben Thompson’s response to my critique of his work related to tech platforms and the Google antitrust case. (The last third is more regrettable, but I’ll address that, too.) I’ve enjoyed most of the exchange, and it has helped me clarify my thoughts. In particular, I’ve come to feel that Google’s spending $30 billion on traffic acquisition feels too much like the kind of thing Net Neutrality was trying to prevent back in the 2000s. But more on that later.
Overall I’d say Thompson’s response hasn’t done much to counter my core critique. He is too quick to jump from model to reality, too quick to assume that one important source of advantage represents something close to the full picture. As I said, his work is insightful for understanding tech business models, but when it comes to antitrust, it is on much shakier ground. And the hardest part for him to defend is the assertion that various costs, including switching costs, are zero or near zero. For doing so assumes away the costs that could be critical in determining strategic advantage, winners and losers, and at some point, liability in a lawsuit.
Let’s focus on the Google case, which, ironically, we agree on — it is nonetheless a good proxy to examine our differences. In case you’ve been living under a rock, the Justice Department sued Google, alleging that it is maintaining its monopoly using means that violate the Sherman Act. Thompson says that as “[Wu] does not believe that Google is unique as far as scalability is concerned, he appears to assume that the company must be doing something nefarious to command such market share.”
I’d turn this around and say that I don’t actually assume that the company must be doing something nefarious, but — but more importantly — I don’t not assume it, either. And that may make for the key difference between us.
Google is unquestionably one of the most impressive companies of the last 30 years, the cream of Silicon Valley’s late-1990s crop. Indeed, for much of my early career, I was accused of being too big a booster of Google.
But despite its origins as an impressive company with an undeniably great product, life is long, products are…