Executive Voices 2 mins read

The spider economy and technology innovation

The “spider economy,” where large technology companies copy or gobble up startups, could be killing innovation.

Bernd Gross Bernd Gross

Large technology companies are growing larger by copying or gobbling up innovative predators. I call this the “spider economy,” and it could be killing innovation.

On the one hand, tech giants buying clever start-ups to fill perceived gaps in their offering can leave room in the market for other newcomers. On the other hand, copycat behavior is squashing true innovation.

Global tech giants have all used the copycat tactic. It offers them the ability to provide a one-stop shop solution for customers. But the copies are often a pale imitation of other innovators’ ideas. They give customers the quick fix they want, but at the cost of being locked into a proprietary ecosystem. Also, this is not true innovation.

Innovation – the real thing – involves new ideas, new and disruptive designs. Which is why some of the tech giants, i.e. the spiders, swoop in and buy the innovators. As I said, this is not a bad thing – it can give rise to other disruptors entering the market.

But the copycats do not support innovation; they water it down and even sometimes kill it. Some tech giants bundle their own applications into their ecosystems for “free,” effectively dealing a blow to more innovative competitors.

So, what’s the problem?

The spider economy creates a closed ecosystem that not only locks customers in, but also diminishes the ability of start-ups and smaller competitors to participate in their space. It eats the “flies” for breakfast. Although I believe in a free market, I am also passionate about consumer choice. If the spiders eat all the flies, what is left for the consumer?

That is why I suggest you think carefully before being locked into a closed ecosystem. Compare the initial benefits with any long-term deficits. Are you prepared to forgo using any superior technology that comes along? Are you happy to be hemmed in by specific standards? Is it OK to keep your data locked in silos and never take advantage of it?

Digital freedom is about choice. The spider economy could well take that away from you.

Read my original article on LinkedIn by clicking here.