Does cloud computing mean an easy monopoly?
The idea of cloud computing, in essence, means a company with the proper market stature and resources could dominate the industry or “clouds” if you will. While this could easily be true, the debate still continues whether it will be allowed to happen.
Information Week outlined an interesting debate between O’Reilly Media founder Tim O’Reilly and technology writer Nicholas Carr about the potential for a single company to achieve monopoly control of the world of cloud computing. One believes in the theory of network effects, and the other relies more on Power Laws.
The debate has been rolling on since the beginning almost, but came into the spotlight after a blog post by Hugh Macleod titles The Cloud’s Best Kept Secret:
The way I’m seeing the future commonly talked about, is all this data and programs spread all over the networks of all these companies, relatively proportional to their current market caps. Some folk have their stuff with Sun, some with Amazon, etc. But nobody seems to be talking about Power Laws. Nobody’s saying that one day a single company may possibly emerge to dominate the cloud, the way Google came to dominate search, the way Microsoft came to dominate software.
It seems Macleod thinks any new web-related technology is bound to be dominated by a single company that is in the right place at the right time- much like Google and Microsoft were. I’m not saying that’s all that contributed to their successes, but it definitely helped in the cause. O’Reilly strongly disagreed with this blog post, stating; “understanding the dynamics of increasing returns on the web is the essence of what I called Web 2.0. Ultimately, on the network, applications win if they get better the more people use them. As I pointed out back in 2005, Google, Amazon, eBay, Craigslist, Wikipedia, and all other other Web 2.0 superstar applications have this in common.” Another strong point indeed- the users themselves will create a dominance if the product or service is good enough.
Nick Carr fired back at O’Reilly completely negating the fact that Google’s dominance had anything to do with so-called “network effects:”
Let’s stop here and take a look at the big kahuna on the Net, Google, which O’Reilly lists as the first example of a business that has grown to dominance thanks to the network effect. Is the network effect really the main engine fueling Google’s dominance of the search market? I would argue that it certainly is not. And in fact, if you look back at that 2005 O’Reilly article, What Is Web 2.0?, you’ll find that O’Reilly makes a very different point about Google’s success. Here’s what he [O'Reilly] says, in a section of the article titled “Harnessing Collective Intelligence”: Google’s breakthrough in search, which quickly made it the undisputed search market leader, was PageRank, a method of using the link structure of the web rather than just the characteristics of documents to provide better search results.
While I can’t really agree with either party so early in the game, I think it will be a long road ahead before things get to a point where the issue of a monopoly comes into play. Cloud computing is still very much in its infancy, but at the rate it’s going, I see Google taking it to the next level, and possibly a dominate level.
Related Posts:
November 8th, 2008
Google dominates because they do it better. Would you prefer advancement just stagnate? If someone was doing it better they would Google’s (or whoever is the monopoly) backside. But they aren’t, and the market progresses.