This is the fundamental paradox presented by aggregation-based monopolies: by virtue of gaining users through the provision of a superior user experience, aggregators gain power over suppliers, which come onto the aggregator’s platforms on the aggregator’s terms, resulting in an even better experience for users, resulting in virtuous cycle. There is no better example than Google’s actions with AMP and Chrome ad-blocking: Google is quite explicitly dictating exactly how it is its suppliers will access its customers, and it is hard to argue that the experience is not significantly better because of it.
At the same time, what Google is doing seems nakedly uncompetitive — thus the paradox. The point of antitrust law — both the consumer-centric U.S. interpretation and the European competitor-centric one — is ultimately to protect consumer welfare. What happens when protecting consumer welfare requires acting uncompetitively?
Ben Thompson on the Aggregator Paradox.
See also: Amazon, Steam, et cetera.
For what it’s worth, I disagree with Thompson’s assertion that aggregators are, in fact, “protecting consumer welfare”. Google and Facebook aren’t “protecting consumer welfare” by normalizing deeply intrusive surveillance and the on-sell of personal data, for example, and Amazon isn’t doing it by, say, implicitly using its monopoly to prevent technological advances in ebook formats.1 I do agree that there’s a convenience factor with these platforms that, in many cases, can appear to users to represent a “better user experience”—DuckDuckGo’s search does kinda suck, ebooks really are a pain-in-the-ass to manage outside of Kindle (or iBooks, for that matter)—but I’d argue there are negative externalities with long-term effects that go beyond just “it’s easier” that Thompson is disregarding.
So, yanno. Tl;dr, it’s complicated.
- Honestly probably the least of its sins, but… well. Good enough for an example. [↩]