Comment by qeternity | Hacker News Reader

Comment by qeternity | Hacker News Reader

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> Instead antitrust law needs to be expanded to consider network effect platforms like social network as monopolies on ways of interacting with their users, and restrict them from several behaviors like this one.

This is not a monopoly, and monopolies themselves are not illegal. You mention antitrust laws but I am not sure what anticompetitive behavior is taking place here? The C&D itself is quite laughable, but speaking more generally, why should the network effect be regulated? Plenty of other communications networks are open, so any network effect of "walled gardens" ought to be attributed to the superiority of the product.

There are so many methods of communication available today, calling any one of them a monopoly is a bit absurd. You may not like what WhatsApp are doing, but that's not reason for more regulation...that's reason to switch products. But just because you don't like the alternatives isn't a valid argument for increased regulation.

> Plenty of other communications networks are open, so any network effect of "walled gardens" ought to be attributed to the superiority of the product.

So, when people evidently complain that they feel the social pressure to use the walled garden even though they rather wouldn't ... then that ought to be attributed to the superiority of the product?

Could you explain your reasoning behind that?

What explanation is necessary? You've laid it out already. It's like saying you feel pressure to drive a gasoline powered car instead of a coal powered one because gasoline is much more convenient. The network effect arises out of superiority over competition. The social pressure is a result of everyone using the same platform, which itself is a testament to the product.

In what way does ubiquity equate to superiority? Popularity does not confer superiority.

Haha of course it does, though perhaps not to you. If there were a superior alternative, people would use it. You're just defining this problem so narrowly has only the app itself or something. It's the network, the integrations, the history, etc.

McDonald's has the best food, right?

Define best. Best tasting, no. Heathliest, no. Some combination of taste, nutrients, affordability and convenience? Yes.

The most abundant organism on this planet is not humans [0], but I daresay humans are superior to single-celled organisms (or a virus as is the case in the linked article).

[0]: https://www.smithsonianmag.com/smart-news/guess-what-the-mos...

So, you are essentially saying that network effects don't exist, then, right?

The idea of network effects is that they create a cost simply for individually choosing an uncommon option, after all other costs and benefits have been accounted for. Which would obviously imply that they create an incentive to choose a common option even if it were an inferior choice without the network effect, as long as the benefits of the uncommon option don't exceed the cost caused by the network effect. Which would thus imply that a situation could arise where everyone individually chooses an inferior product. So, if you say that that can't happen, then network effects don't exist, right?

It may seem pedantic to you, but network effect creates a benefit, not a cost. That may create an opportunity cost for those not in the network, but it's not a direct cost. This distinction is actually very important.

Also, how did I imply network effect doesn't exist? Where did I say anything that you're implying I said? You're trying to strip out the network effect from this theoretical product and I'm saying you can't. Something can be superior simply bc of its network. Take the most obvious example, the internet. Where is your outrage? TCP/IP sucks. BGP sucks. But we embrace these things nonetheless because of the (literal) network.

This extends from computers to anthropology to biology. You're trying to make an apples to apples comparison assuming no network effect and I'm saying that's pointless.

> It may seem pedantic to you, but network effect creates a benefit, not a cost. That may create an opportunity cost for those not in the network, but it's not a direct cost. This distinction is actually very important.

So, it's a cost, but not a cost? What's your point?

Also, the network effect doesn't create a benefit. The benefit of using a network (and thus the cost of not using the network) is simply what we call the network effect.

Other than that I have no clue what point you are actually trying to make, and it all smells like a whole lot of equivocation and missing the point.

Do you agree that it is possible to have a situation where one product dominates the market because individuals making rational decisions prefer that dominating product because of its dominance, even though a different product would be beneficial for every consumer of the currently dominating product if they magically agreed on switching over, even when considering the switching costs (other than the costs of reaching agreement, which is assumed to be zero for this hypothetical case)?

Are you in the second year of a degree in economics? What you write is textbook.

What's your planned thesis?

Cars don't have much network effects, the best car is bought regardless of the dominant brand of the year (I agree with your point on the car). However, social network have a network effect which makes it very hard to switch, if all your friends use app A, it's difficult to make them use app B.

> superiority of the product

It's not though. Once you become big and have reached critical mass you can pull off quite a lot of mediocre/bad stuff. Fact is the majority of people simply do not care as long as the product still works (they might not even be aware there's bad stuff going on behind the scenes) - too much effort to find a suitable alternative, convince everyone else to go to the same platform and so on

How do you think it got big in the first place? "Too much effort to find an alternative" is just a synonym for "superior".

They start out by building a superior product; then that product gets big; then they realize they need to monetize; then the product stops being superior, but it still has everyone's contacts, so most users stay; then the product keeps getting worse until it's unbearable and everyone switches to the most popular superior alternative...

WhatsApp is currently in the "no longer superior" phase.

> then the product stops being superior, but it still has everyone's contacts, so most users stay

You're just twisting words here. The fact that switching costs are too high means it's superior. You're defining superiority to be some very strict UX that you've decided.

> then the product keeps getting worse until it's unbearable and everyone switches to the most popular superior alternative

Exactly. Once it stops being superior than people switch.

> You're just twisting words here. The fact that switching costs are too high means it's superior.

I don't see how high switching costs implies superior, nor how that's part of a definition for superior. For superior app I'd consider that to mean if it's better. It's also weird your usage of superior has shifted. You've stated it became bigger because it was superior; meaning superior is not about how much used it is. But you also define superior as having pretty much everyone use it. This seems to conflict, no?

What? I never said they were mutually exclusive? Far from a conflict, what you're describing is exactly the network effect: it both became large because it was superior, and it's size/growth contributed to it's superiority. This is the flywheel that is the network effect.

If only that flywheel didn't throw off all common sense and "don't be evil" tendencies... greed dominates eventually and everyone pays the price until a critical tipping point event comes and everyone finally realizes they have to go now.

Those tipping points are just too subtle until after a lot of damage has been done.

Except that the superiority, at this point, has nothing to do with the product itself. It is primarily—possibly solely—due to who else uses it.

That is not something that WhatsApp chose, or designed, except in that they hoped that everyone would be using it.

This is not a free market, where the product in question is something that one simply purchases and continues to purchase, and can switch to any other product freely. The products in this space are, to some extent, non-interchangeable (Facebook, Twitter, and WhatsApp may all offer online communication with other users, but if the users you want to contact are only on one of them, that is the only one that is useful to you), and there is a significant barrier to exit.

So a product that no one would have willingly chosen to start using may still end up being used long after it is, objectively, inferior to every other offering in that product category—so long as the people using it still need to communicate with each other, and cannot easily coordinate a mass exodus to a different product.

You're talking about superiority of experience (product + network), other people are talking about superiority of product, and saying that the network effect should be counted separately

I think you're making a good point that doesn't deserve the downvotes. There is no need to see vendor lock-in and efforts by companies to create it as anything more sinister than the free market at work. The network effect is a double edged sword. The world switched from Myspace, and it happened pretty fast. Switching has only become easier and easier since then.

This comment gave me new perspective on my romantic relationship. Thank you. :)

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