Friday, June 14, 2024
CEOWORLD magazine - Latest - CEO Advisory - 5 things we can unlearn from marketplace monopolies and their cultures

CEO Advisory

5 things we can unlearn from marketplace monopolies and their cultures

Shirish Nadkarni

Monopolies, by their very nature, have a tendency to breed complacency and foster harmful behaviors within their organizations. Once a marketplace achieves a monopoly status, the risks of unethical practices and unfair treatment become more prevalent, even if the leaders claim to uphold the right values. We should recognize these problems and unlearn them to create a healthier business environment. 

In this article, we will explore several practices that monopolies often engage in and highlight the importance of breaking these habits.

  • Competing with suppliers:
    One common practice among monopoly marketplaces is to enter the same market as their suppliers, effectively becoming their competitors. This not only undermines the trust between the marketplace and its suppliers but also creates an unfair advantage for the monopoly.

    Amazon, for example, has a private label business that it promotes aggressively. Employees at Amazon have also been known to access data about certain suppliers to make decisions on whether to enter the market with competitive products. By unlearning this behavior, monopolies can foster healthier relationships with their suppliers, promoting collaboration and mutual success.

  • Imposing exorbitant fees:
    Monopolies often charge excessively high fees to their suppliers, making it nearly impossible for them to make a profit while selling on the marketplace. Apple and Google, for example, charge a 30 percent fee for their app stores. Recently, under pressure, they reduced the fee to 15 percent for businesses that have less than $1 million in revenues.

    However, the vast majority of Apple and Google’s app store revenues come from players with more than $1 million in revenue. This not only stifles competition but also creates an uneven playing field that favors the monopoly itself, as is the case between Apple Music and Spotify. Unlearning this practice is crucial for creating a fair marketplace where all participants have an equal opportunity to succeed.

  • Biased search results:
    Another common issue in monopolistic marketplaces is the manipulation of search results to favor the monopolists’      own products or those of sellers who pay for additional services. For example, for a long time, the Apple Store search favored its own apps over competitive ones. This practice compromises the integrity of the marketplace and undermines the trust of consumers who rely on unbiased search algorithms. Unlearning this behavior is essential to maintain fairness and ensure that search results are based solely on relevant and reliable criteria.
  • Ignoring ethical considerations:
    Monopolies may disregard ethical considerations in favor of maximizing profits and maintaining their stronghold on the market. This can include engaging in unfair labor practices, exploiting customer data, or neglecting environmental responsibilities. Unlearning this disregard for ethics and adopting responsible business practices is crucial for creating a sustainable and socially conscious marketplace. The press has an important role to play in this regard. Exposes conducted by the Wall Street Journal and the New York Times have been particularly helpful. Apple and Google’s movement with regards to App Store fees has been due to the negative press it has received for its high fees.
  • Resistance to regulation:
    Monopolies often resist regulatory measures that aim to level the playing field and protect consumer rights. This resistance stems from the fear of losing control and facing stricter guidelines. Unlearning this resistance and embracing transparent and fair regulations can contribute to a healthier and more equitable marketplace for all stakeholders involved. Congress can play an important role in this regard. They can hold hearings with marketplace suppliers to unearth the types of monopolistic behaviors being alleged and enact laws to prevent these kinds of behaviors.

In conclusion, monopolies hold a significant responsibility in shaping the business landscape and impacting the lives of consumers and suppliers. By avoiding harmful practices and fostering a culture of fairness, collaboration, and innovation, monopolies can redefine their role in the marketplace. It is imperative that we recognize the negative consequences associated with monopolistic behavior and strive for a more inclusive and ethical business environment where competition is fostered, and the needs of all participants are prioritized.

Written by Shirish Nadkarni.

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CEOWORLD magazine - Latest - CEO Advisory - 5 things we can unlearn from marketplace monopolies and their cultures

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Shirish Nadkarni
Shirish Nadkarni is a serial entrepreneur with proven success in creating multiple consumer businesses that have scaled to tens of millions of users worldwide. Shirish was the co-founder of Livemocha, the world’s largest language learning site with 15+ million registered members from over 200 countries, which was acquired by RosettaStone in 2013. Prior to Livemocha, Shirish was the founder of TeamOn Systems, a mobile wireless email pioneer that was acquired by BlackBerry in 2002.
Shirish Nadkarni is also the author of Winner Takes All: Case Studies in How Online Marketplaces Are Creating Modern Monopolies and From Startup to Exit: An Insider's Guide to Launching and Scaling Your Tech Business.

Shirish Nadkarni is an opinion columnist for the CEOWORLD magazine. Connect with him through LinkedIn. For more information, visit the author’s website CLICK HERE.