Imagine that you have been bitten by a startup keeda and you have started fantasizing about a million dollars in revenue for whatever that you are gonna build and how on one fine day you will sell it for a billion dollars!
Sounds great, right? Now here’s the catch. Your product has this core feature which is dependant on a third party service. Somewhat like how Ola, Uber run on Google Maps. But the third party which provides the services (some API or data or platform) is also a budding startup with a bit of competition, where you are a client. Now, both players are kinda generating value for each other. The question is who will pay whom for using the other? Remember the classic chicken-egg problem?
Problem is very clear. Usually, where both the players are on a falling side, this creates a win-win situation. Most startups partner with each other in this case and then they are good to go!
What if both the players are on the strong side of the game and hold most of the market share in their respective segments? Who should roll up their sleeves and demand the payout from the next party? Or should they also follow the startup mindset and partner with other? Unfortunately things are quite different at this scale.
Google holds more than 88% market share for search engines. And any platform leveraging their search aces. It generates more than 90% of its revenue from their search service (ever noticed how searching good sports shoes ends you up in getting relevant ads at the top of search results, gmail and ad-spaces on websites you visit thereafter?) Also, around 50% of Google’s revenue is generated from US markets, mostly from mobile-based searches.
On the other side of the table you have Apple which holds more than 50% of mobile market in US with their proprietary iOS. And thus almost all the phone-surfing is done via Safari, their default browser, holding the most popular mobile internet browser position. Apple, at its core, is a hardware selling company which happened to glorify its offerings by one of the best possible OS, personalised channels & services, huge class of phone applications to choose from and also the fast and best user experience. Now when it comes to surfing the internet you know who offers the best experience on the planet.
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