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When Technology Becomes Dominant

I checked Facebook this morning, bought a book on Amazon last week, and used Google throughout the day. My guess is that your experiences are similar. How have these technologies come to play such an integral role in our lives?

Digital technology allows market dominance because it makes capacity constraints irrelevant -- "a single producer with a website can, in principle, fill the needs of millions or even billions of customers." So argues the authors of the book "The Second Machine Age."

Brick-and-mortar businesses incur significant costs in expanding and maintaining a large footprint. Facebook can serve a good portion of the planet with ease. The next participant adds nothing much to Facebook's expenses. Technology allows Facebook to operate with under 20,000 employees; General Motors has 200,000. (I looked it up on Google.)

In fact, the widespread popularity of Amazon, Facebook, and Google have led to their further success. This is known as the "networking effect." A recent article in Barron's explains that "the more people use Facebook, the more others feel they must use it, in a self-perpetuating fashion. Ditto for advertising on Google or selling goods on Amazon." The proof this is true: How many of you still have an active MySpace account?

The article in Barron's describes how such market dominance has led European regulators to institute anti-trust actions. Query whether American regulators will follow suit. In the meantime, we appear to be willing captives for good or ill.

Words of Wisdom

Being famous on Instagram is basically the same thing as being rich in Monopoly. -- Online quote