Why do websites not have more competitors?

[Beet]

Why do websites such as Google, Facebook, Twitter, Instagram, Snapchat, and Netflix not have more competitors?

If you think about it, in most industries, you have different companies engaged in direct competition. So GM offers basically the same product as Toyota-- if you're in the market for a new car, you will likely buy either a GM car or a Toyota car, but not both. You will buy an iPhone or an Android. You will hail a Lyft or an Uber. You will fill up the gas at Exxon or Shell. But not so with the above listed companies! Facebook, for instance, has no direct competitors. Sure, there are other social networks, but they all offer something essentially different. There's no other "social network with a timeline for posting status updates and livestreams". There's no other "search engine." There's no other "140-character text-based followstream."

There are a number of particularly curious points here:

1. Normally, a lack of competition is due to barriers to entry. For instance, you can't just start up a Wal-Mart in town X if Wal-Mart is using it's huge scale to depress prices below what a smaller retailer could afford. You can't just start up an electric company in city Y if the electricity infrastructure is already owned by Tinseltown Electric, Inc. and the city government is giving it a monopoly use on that infrastructure. However, there are seemingly no barriers to websites. Microsoft, a huge company with massive capital behind it, tried to start a competitor to Google, (Bing search), and still failed, despite the fact that there's literally nothing preventing consumers from going to www.bing.com.

There are seemingly zero barriers to entry. Anyone can start a website, supposedly. But are there?

2. Normally, a lack of competition would trigger antitrust lawsuits. I can't remember the last time the government filed a major antitrust lawsuit to break up a major company. AT&T? Microsoft in the late 1990s? Yet Google has had an effective monopoly on the U.S. search market for 15 years now, it's one of the world's largest companies, and there has never been a whiff of anti-trust threats against it.

3. Another mystery about these companies -- is that they don't charge anything. Google has become one of the world's largest companies, Facebook has made its owners among the wealthiest in the world-- undoubtedly due to users like me, who use these products. Yet I have never spent a cent directly on either Google or Facebook. Normally, very successful companies get that way by getting err-- customers, to err-- spend money buying things. You'd think that would be the most basic aspect of business. Yet for these businesses, that's not occurring, even though it's clear users are very important to them.

I propose that the users of sites like Google and Facebook are actually laborers for them. It's our data that is valuable to them, and in using their product we are simultaneously working for them in an uncompensated manner. They've designed the product to ensure that the consumer wants to do this. I argue this is an entirely new model of capitalism for the information age and is not sufficiently recognized as such by our regulatory structures.

[136or142]

I'm interested in what actual economists have to say on this, but in the case of  Netflix, they do have a couple competitors though they are quite a bit smaller: Amazon and Hulu.  There are or were also illegal free sites where television programs could be downloaded.

I'd imagine the reason in the case of Netflix is that it's not simply a 'website' but that it produces its own content which keeps some of its customers loyal.  Most importantly though, to legally broadcast the television shows it doesn't produce itself this 'website' needs licensing from the owners of those programs.  So, I'd imagine that's the main reason Netflix doesn't have very many competitors.

Some of the other sites you mention likely don't have many competitors due to, I believe the term is 'network externalities.'  It makes sense for everybody to congregate to one site like Facebook rather than having ten different sites like that where your high school friends might be.

[○∙◄☻¥tπ[╪AV┼cVê└]

Google: large barrier to entry to build up powerful servers for search when everyone just Googles
Facebook: barrier to entry since everyone's friends are on Facebook and not your new network. Sure, Facebook replaced Myspace, but Myspace never had the reach Facebook does.
Twitter: Against user base, but shouldn't be as entrenched as Facebook
Instagram, Snapchat: Probably similar
Netflix: They need powerful servers and internet connection for good speed, and access to lots of content.

Some businesses (roadside vegetable stand) are just easier to get into than others (defense contractor).

[This account no longer in use.]

Google has Bing and Yahoo.
Facebook had Myspace, but defeated it.
Netflix has Hulu, as well as a number of other more specialized websites.

The other three do seem to have a monopoly currently.

[136or142]

Some businesses (roadside vegetable stand) are just easier to get into than others (defense contractor).

I wish you had told me this before I incorporated my business:  Fly-By-Night Defense Contractors Limited.

[I spent the winter writing songs about getting better]

Google Plus still exists as a Facebook competitor. A small one sure but it's there.

And as been pointed out Hulu and Amazon Prime for Netflix.

[Beet]

Yes, Netflix does have real competitors, albeit not as successful.

The failure of Google+ shows just how daunting the invisible barriers to entry are. If any company could successfully challenge Facebook, you would think it would be Google. If they can't do it...

However even the competitive industries do not pass the Herfindahl-Hirschmann index. .25 is considered the threshold for high concentration.

For instance, Netflix-style OTT subscription service:
http://marketrealist.com/2016/05/amazon-gearing-compete-netflix/

(.48)^2+(.2)^2+(.1)^2+(.1)^2+(.1)^2 = .30

U.S. search market share:
https://www.comscore.com/Insights/Rankings/comScore-Releases-February-2016-US-Desktop-Search-Engine-Rankings

(.64)^2+(.213)^2+(.124)^2+(.017)^2+(.009)^2 = .47

[Taco Truck 🚚]

However, there are seemingly no barriers to websites. Microsoft, a huge company with massive capital behind it, tried to start a competitor to Google, (Bing search), and still failed, despite the fact that there's literally nothing preventing consumers from going to www.bing.com.

I don't know that they have "failed".  Bing still exists and has many users.  Also if you understand marketing  you would realize there are a lot of things preventing consumers from going to bing.com.  And of course you are assuming the search results are of equal quality between the two sites.  For many things bing is just as good as Google.  But I have found for certain types of specific searches I had better luck with google.  People don't have time to use multiple search engines.

2. Normally, a lack of competition would trigger antitrust lawsuits. I can't remember the last time the government filed a major antitrust lawsuit to break up a major company. AT&T? Microsoft in the late 1990s? Yet Google has had an effective monopoly on the U.S. search market for 15 years now, it's one of the world's largest companies, and there has never been a whiff of anti-trust threats against it.

Lol.  Google's search services are free.  Might as well file an antitrust suit against the Catholic church.

3. Another mystery about these companies -- is that they don't charge anything. Google has become one of the world's largest companies, Facebook has made its owners among the wealthiest in the world-- undoubtedly due to users like me, who use these products. Yet I have never spent a cent directly on either Google or Facebook. Normally, very successful companies get that way by getting err-- customers, to err-- spend money buying things. You'd think that would be the most basic aspect of business. Yet for these businesses, that's not occurring, even though it's clear users are very important to them.

I propose that the users of sites like Google and Facebook are actually laborers for them. It's our data that is valuable to them, and in using their product we are simultaneously working for them in an uncompensated manner. They've designed the product to ensure that the consumer wants to do this. I argue this is an entirely new model of capitalism for the information age and is not sufficiently recognized as such by our regulatory structures.

I don't use facebook.  There is no law saying you have to use facebook.  I am a big supporter of government regulation particularly where businesses are concerned but I don't see any need to regulate facebook's interactions with its users any more than they already have.  If you don't like facebook's business practices unplug.

[Taco Truck 🚚]

Yes, Netflix does have real competitors, albeit not as successful.

I know people that have Amazon Prime, Hulu, and Netflix.  I'm not as familiar with prime but Hulu and Netflix are very complimentary.  Hulu is very good with current TV shows and Netflix is better for movies and TV shows that are a season or two behind.  The original content on Netflix is excellent as well.  Hulu is actually owned by Fox, ABC-Disney, and NBC.  It really is a completely different animal to Netflix.  And Amazon prime is just a perk of the Amazon prime shopping package.  The frustration with all the services is none of them have everything.  There are massive disturbing gaps in their products.  It sucks trying to figure out what is showing on what service particularly when the line up is constantly changing.

Overall I think your analysis is deeply flawed.  You call all these things "websites".  Besides using the web for part of their business these companies are very different and are immune to that kind of simple analysis.  To me if one were to have enough capital and negotiating skills you could easily create a Netflix competitor.  If you had the content library and the technological know how making an alternative would be relatively simply.  Honestly if you started a company that had all NFL games streaming and you bolted on a few other things people would buy the service.  There are such massive holes in the online streaming experience that competition and evolution is inevitable.  15 years from now I would not be surprised if Hulu and Netflix are either defunct as stand alone companies or completely unrecognizable.  Making any calls at this stage of evolution is a bad idea.

[RI]

Network externalities are important for sites like Facebook and Twitter where the content is user-generated and interaction with real world people is paramount. Why go to another social network when all the possibility of interaction, the value-producing element for the user, is already hoarded by these groups? It's self-reinforcing: as long as everyone else is here, it's best for me to be as well, and the benefit to myself increases as more people join (though this effect is clearly marginally diminishing or worse).

But more than that, these major websites almost act as utilities or infrastructure which create natural monopolies. Google is like a road from one website to another; it's generally not optimal to have two roads next to each other competing for consumers. In the real world, this is because usable land space is limited. I think perhaps in the virtual world it could easily be that there's a psychic cost to remembering "directions" to web destinations, and the most "efficient" route tends to prevail. This is then reinforced by personal habit formation effects and aided by network externalities as Google becomes more efficient in its search results the more people who use it.