The Monopoly Strategy Behind the Google and Microsoft Mobile Patent Wars
The victory condition isn’t highest profits, it’s market dominance
Capital-as-power, a framework from Jonathan Nitzan and Shimshon Bichler, holds that companies don’t seek to be as profitable as possible — but rather to accumulate as much power as possible. A company doesn’t seek to be as big as possible, but rather, as dominant.
There are two strategies for accumulating power: one is “breadth” — to grow the market as much as possible, thus accumulating profits faster than the average competitor, eventually taking a commanding lead over the rest of the field.
The other strategy is “depth,” dominating your sector by capping its growth and then taking as much business away from your rivals as possible — if the industry is crucial (like, say, software), then dominating it gives you a lot of power, even if you’re strangling it.
In a paper in the Review of Capital as Power, York University’s Chris Mouré analyzes a bizarre moment in the history of mobile phones through this lens: the moment when Google and Microsoft went on a buying spree for also-ran telecoms companies.
