When Apple and Google control the two major computing systems, things that work best with those systems tend to be the ones that succeed. So first, companies kill the headphone jack — and soon, perhaps, they will also start to kill competition
This isn’t merely theoretical. Google famously flopped in the smartwatch market, in large part because, unlike Apple, it had no in-house department to design chips, and instead had to rely on partner Qualcomm, who haven’t been able to compete with Apple for years. That’s the corporate case for vertical integration: when you control all the parts, you can make better stuff.
Now, looking to make up for its past mistakes, Google has bought FitBit, the maker of wearable fitness trackers and smartwatches. Just as antitrust chatter starts to ramp up amid worries of tech’s increasing consolidation of power, one of the world’s largest companies swallows an ostensible competitor not only to absorb talent to make its own smartwatches, but also to hoover up its data.
The smartwatch example is illuminating. More than any other tech, smartwatches currently rely on the smartphone they are paired with for much of their functionality. An Apple Watch only works if you have an iPhone — and speaking as an Apple Watch owner, it’s a powerful form of lock-in. In one sense, it’s about tech companies pairing products with each other because they’ll work more effectively together. But it also shows how the vertically integrated system encourages both users and companies to form little silos of tech which end up discouraging interoperability, and with it, competition.
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