There are tons of examples of this. Basically any company with a real competitive advantage is very expensive to unseat once established. Try to unseat Amazon, Google, Facebook, or Apple with the capital that launched those companies.
It might seem inconceivable today that these giants could fall, but they absolutely can.
Even if these giants don't fall, they can't just act as they wish, just because they have a dominant market position.
They're kept in check by the fact that their products are easily replaced if they raise prices well beyond cost of replacement. As a result, they don't raise prices and the potential competition never emerges - which in terms of the social outcome is just about as good as active competition.
There's an exception to this which the article mentions: Companies that sell themselves as "too big to fail" or "socially important" to gullible or corrupt politicians. The market can't fix this, only politics can.
They weren't that "powerful" because the web wasn't used as much. It took a while for us to adopt the digital lifestyle. Ultimately, they're just platforms though. Of course they have a lot of inertia, but user habits can change. Younger users in particular aren't engaging with Facebook that much anymore:
https://www.theguardian.com/technology/2018/jun/01/facebook-...
> They felt less like companies and more just like websites, if you know what I mean.
Google certainly has moved beyond being a website by creating many products. However, I feel that a lot of these products are rather crappy and wouldn't be competitive if they weren't given away. How dominant of a player can you really be, if you must give your product away for free?
Most companies aren't in the business of giving away free stuff, so in that sense it is hard to compete. That's not necessarily a bad thing for the consumer though, they get all the free stuff after all.
For instance, Facebook is losing engagement to Snapchat, Snapchat is losing engagement to TikTok, and so on. As a result, there is constant pressure to evolve.
IBM may still be around, but it's a totally different company now. Nobody uses "IBM PCs" anymore. Remember, back in the day those were very expensive, relatively speaking. IBM was as big as it ever was, relatively speaking. Yet, cheap clones by smaller companies drove down profits to make IBM give up on the market.
Also, IBM may still be a big company, but you'd be hard pressed to find a segment where they are absolutely dominating, unlike back in the day. I never said small guys will bankrupt and annihilate the giants, I'm saying competitive pressure from below is there at all times, no matter how big you are.
And sure, competitive pressure is there, but it can be at such a low level as to be nominally meaningless. Whether or not IBM dominates any segment, they are still around, despite being in many products and use cases, not at all the best option. That says to me the idea that competition will results in the best products at the lowest price points (the great-great etc comment that started this) is simply not the case except in a sort of platonic idealization of capitalistic competition that only imperfectly, when at all, plays out in reality.
I'm not even saying we should ditch that model of capitalist competition, though I clearly think it should be subject to regulation & oversight that a pure free-market libertarian wouldn't like. I don't know that there's a better alternative than a hybrid competition-with-oversight model. I just think we should keep our eyes open. We shouldn't blindly act from a position of philosophical assumptions that such competition will solve all problems. Or when it might solve them, that it will do so in an acceptable time frame, e.g., more than a century of industrial pollution without a competitive solution until the (less than perfect, better than nothing) implementation of the EPA.
Heck the entire concept of path dependency in economics exists to help explain why inferior choices may persist despite the possibility of better alternatives in a way that defies the "competition will provide" mantra. [0]
[0] https://en.wikipedia.org/wiki/Path_dependence#Illustration
I think you have trouble with the distinction between "the best" and "good". In market terms, "the best" is that which the market chooses. If the market decides that cheap junk shall succeed, so it will. Quality and cost are at odds, obviously. In some cases the market will even choose expensive junk, that's generally the success of effective marketing.
To understand why this mechanism is nevertheless desirable, we need to look at the alternative: A planned economy and design by committee. Those mechanisms tend to result in products that are neither good nor cheap. The real argument for capitalism isn't that market economies are great (though they are), but that none of the alternatives have ever worked out any better.
Perhaps a technological revolution can usher in a better system at some point, but whoever advocates for that had better done an elaborate computer simulation first.
> I'm not even saying we should ditch that model of capitalist competition, though I clearly think it should be subject to regulation & oversight that a pure free-market libertarian wouldn't like.
The first thing to note is that regulation rarely fulfills its purpose without unintended consequences that require further regulation later on. Furthermore, regulation usually benefits the big guys, who can afford to deal with it.
That's not to say you shouldn't have any regulation. Market externalities can not be dealt within from within a market framework alone. It is to say that regulation should be a last resort.
Anyway, your comments on the potential for a better system and market externalities show we're probably not too far away from each other on the general issue. Somehow we just ended up on opposite sides of this particular thread. There's not much of a better alternative on the table. I agree regulation shouldn't be the first course of action to any issue that might reasonably be solved by the market within a reasonable amount of time. What is "reasonable" being dependent on any particular issue's circumstances. (as examples, the market might be left to resolve issues of consumer inconvenience, but ones of public safety should get much closer scrutiny). The pendulum between the excesses of capitalism and those of regulation will swing back and forth, hopefully better approximating the ideal balance with each pass. And maybe at some point we'll be able to do better than this messy method.
I haven't made myself clear enough then: "The best" can still be awful, it's just better than whatever the next best alternative is, from a market perspective.
The market, at the end of the day, is people. If people reward short-lasting and cheap products over long-lasting and more expensive products, those are the "best products" in terms of adaptation to market demand.
They're never the best products in terms of resource usage or the environment or some other externality. That is unless that's what the market rewards, which it does to some degree, see "green advertising".
> The free market isn't especially efficient if massive resources are used to produce short-lived items when they might instead be used to produce more durable ones.
Nevertheless, market economies tend to be more efficient than non-market economies at allocating resources to where they are needed. This is because of local information advantage.
As I said, perhaps some future technology can be even more efficient at allocating resources than a market made out of people.
> But I'm arguing against the premise that started this thread. It was that a free market would result in the highest quality goods at the lowest price.
You didn't read that right. The OP started out by saying what companies should do: Produce the best products at the lowest prices. It's a prescription, not a prediction.
Of course what companies actually would like to do is sell the worst products at the highest prices. It's just that the market won't let them get away with it, unless they have really good sales and marketing, which is a big cost in and of itself.
In effect, the tendency with mass market products is to lower prices towards marginal cost and improve (or reduce) quality to acceptable levels, but not beyond. In the niches, for those people who really care and are ready to pay the price, there's still room for excellent products, maybe with a "lifetime warranty"