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Is Some Internet Competition Devolving?
Submitted by Scott Cleland on Thu, 2009-03-12 13:57
"eBay Retreats in Web Retailing," the WSJ top story today, suggests some Internet competition may be devolving.
What does it mean that eBay has decided to retreat from competing in web retailing against Amazon and other online retailers of new goods, in order to focus on:
First, it is a stark reminder of the Internet's unbeatable network effects where the strong tend to get stronger and the weak tend to get weaker.
Second, it suggests even less business model competition on the Internet going forward. There are basically three main business models on the Internet: advertising, transactions, and auction brokering and each are increasingly dominated by one player.
Third, eBay's decision to compete less directly with market leader Amazon, has some similarities with Yahoo's ill-fated decision to compete less with Google by entering into an ad-partnership with Google. That Yahoo decision was ultimately blocked by the DOJ.
Exit question: What does it mean for the future of Internet competition, overall and long term, if profitable Internet companies best-positioned to compete in key Internet markets choose to give up on fully competing?