Monday, September 26, 2005

Mergers, customers, and Web 2.0

In a recent post, I mused about the timeline on which mergers and consolidation take place within technology. I neglected an obvious point in that post, which is that a lot of these mergers are in the best interest of the vendors, but not in the best interest of their customers. It was pretty clear that Larry Ellison viewed the takeover of PeopleSoft as an opportunity to raise prices and reduce customer choice. It is pretty clear that Adobe and Macromedia merging will eliminate troublesome competition from both the web authoring tools and web content distribution space. None of this is very good for customers and users.

One of the precepts of Web 2.0 is that new technologies and standards like RSS, XML, and web services are going to allow flexible, customer-driven interoperability and integration -- "mashups" driven by customer desire for functionality rather than mergers driven by vendor desire for profitability. There are several assumptions built into this governing philosophy of Web 2.0:

a) That such mashups will actually work and add value - that the costs of integration really have fallen to the extent that you can effectively and usefully integrate at the desktop, not the boardroom.

b) That some sort of business model will emerge that would allow a convoy of solution elements like the ones posited by Peter to actually charge customers a reasonable fee, and split that revenue among themselves.

c) That vendors (that'd be us Web 2.0 companies) will not act in our own greedy short-sighted self-interest, but (perhaps because we are chastened by the threat of open-content examples like Wikipedia and, kind of, Craigslist) instead really allow our customers vast choice and freedom.

In order for Web 2.0 to work the way it's been hyped, all three of these have to come true. The existence of many mashups and the existence of Google AdSense are indications that a) and b) can happen, though they are very early, partial steps. C) remains entirely hypothetical for now, though it can be argued that Craiglist is an example.

I am really curious for others' thoughts on this.

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