Economics: Monopolies Are A Fairy Tale

 
 (Drivebycuriosity) - Politicians and the media see monopolies behind every corner. The US has 2 huge administrations that try to hunt them down - the Federal Trade Commission (FTC) & the Antitrust Division of the US Department of Justice (DOJ) - and in the European Union the powerful "European Commission" is going against them as well. But do monopolies really exist?

Monopolies tend to vanish, noticed Milton Friedman. Standard Oil was seen as a monopolist and broken up in 1911. But the company`s market dominance was already eroding before its breakup; its share of U.S. refining capacity fell from around 90% in the 1880s to 60-65% by 1911, thanks to new competitors like Texaco and Gulf Oil, expanding regional players, and increased oil production in new areas like the Southwest and California. Its alleged monopoly power was waning as the industry grew and new companies emerged (google).

And who remembers MySpace? The company was once the leading social network and regarded as a monopolist ( theguardian). But then came Zuckerberg out of nowhere and destroyed MySpace`s "monopoly" by creating Facebook.

 

And what happened with Sony? At the turn of the millennium the Japanese company seemed to rule the world of consumer electronics. They were world market leaders in consumer electronics, driven by burgeoning sales of their Walkman portable players, Trinitron televisions & Handycam camcorders and other products. But early in this century came Steve Jobs and destroyed their markets with Apple products like iPads and iPhones. The stock chart above illustrates the tragical fall of the company ( finance.yahoo.com). 

 

Apple`s iPhone also destroyed the market for plain cellular phones. Nokia, then the world market leader, lost about 90% of her market capitalization  ( finance.yahoo ).

 

                        Existential Risks 

The fate of MySpace, Sony, Nokia & other alleged monopolies confirms an old wisdom. When a company has success it will inspire others, often copycats, who want a share from the pie. When Jeff Bezos started Amazon in the year 1994 his online bookshop was a monopolist, but just for a very short time. Amazon`s success story inspired worldwide others, the copycats, to offer similar services. Today there are thousands of companies selling online, including giants like Walmart, Target, Best Buy & Costco, who all developed large online departments; and there also exist a lot online platforms like Overstock, Shopify, Wayfair, Etsy & Ebay, who all are successfully copying Amazon.

The existential risks for leading companies are getting even bigger, thanks to AI. October 2020 the Antitrust department of the DOJ sued Google, claiming that the company monopolizes the market for internet search. Late in 2025 Judge Mehta dismissed the monopoly claim. Metha described the search market as “highly competitive” with “numerous new market entrants” in recent years, including the Chinese firm DeepSeek and Elon Musk’s Grok, and wrote that Google is not exactly in pole position to dominate it (techpolicy ). The judge also listed Anthropic, Meta, Microsoft, OpenAI, Perplexity, xAI, and DuckDuckGo as other participants in the market, and noted that they “have access to a lot of capital” to compete. 

The swift rise of AI creates also existential risks for Apple, Micosoft, Metha and other Big Tech. Machine learning allows newcomers to develop and market new and attractive services & products and to challenge the market leaders. 

Monopolies are a fairy tale!