Why do companies fight? Before diving in to answer this question, it is important to understand the two major types of markets and the companies in them. Perfect Competition is a type of market structure where many firms sell similar products and profits are virtually non-existent due to fierce competition. With that said, it is important to realize that perfect competition is an abstract term used to compare against real-life markets. Although perfect competition is based on several assumptions, that in reality, rarely exist.
At the same time, Monopoly is the highest position in a single industry or industry, to the point of excluding all other active competitors. Monopolies are often discouraged in countries with free markets. They are seen as leading to price decline and declining quality due to the lack of alternative consumer options. And they can infuse wealth, power, and influence into the hands of one or a few individuals.
On the other hand, monopolies of some essential services such as utilities may be encouraged and even enforced by governments. To an economist, every monopoly looks the same, whether it deviously eliminates rivals, secures a license from the state, or innovates its way to the top. In this article, I’m not going to talk about illegal bullies or government favorites: by “monopoly,” I mean the kind of company that’s so good at what it does that no other firm can offer a close substitute. Google is a good example of a company that has paved the way: it has not competed in search since the early 2000s when it distanced itself from Microsoft and Yahoo!
In a static world, a monopolist is just a rent collector. If you corner the market for something, you can jack up the price; others will have no choice but to buy from you. But the world we live in is powerful: it is possible to invent new and better things. Creative monopolists give customers more options by adding completely new categories of abundance to the world. Creative monopolies do not just benefit the whole community; they are powerful engines to make it better.
Even if many companies can always stay as creative monopolies, why do they fight? Within the company, people are very concerned about their competitors excelling at work. Then the firms themselves become obsessed with their competitors in the marketplace. During all human drama, people lose sight of the essentials and instead focus on their rivals. Let’s take one of Shakespeare’s plays as an example. Imagine a production called Gates and Schmidt, based on Romeo and Juliet. Montague is Microsoft. Capulet is Google. Two large families, dominated by alpha intellectuals, will certainly clash over similarities.
As with all good tragedies, conflict seems inevitable. In fact, it was completely avoidable. These families came from different backgrounds. The House of Montague builds operating systems and office applications. House of Capulet has written a search engine. What was there to fight about? A lot, obviously. As a startup, each family was content to leave the other alone and succeed independently. But as they grow older, they begin to focus on each other. The Montagues were very concerned about the Capulets who were obsessed with the Montagues. The result? Windows vs. Chrome OS, Bing vs. Google Search, Explorer vs. Chrome, Office vs. Documents, and Surface vs. Nexus. Just as the war called the Montagues and Capulets their children, so did Microsoft and Google their rule: Apple came out and conquered them all. In January 2013, Apple's market capitalization was $ 500 billion, while Google and Microsoft combined were worth $ 467 billion. Just three years earlier, Microsoft and Google were more important than Apple. War is a costly business.