Yesterday Instagram announced that it has 200 million users for stories, which exceeds Snapchat’s 160 million users from their S-1 filing. Never mind that nobody outside these companies knows what those user definitions really mean or how to compare them. This has nonetheless rekindled a debate about copying that periodically arises in the tech industry. For a previous instance, take the outrage over Rocket Internet’s copying of US businesses for Europe and also Asia. If you want to go much further back you have the long running feud between Apple and Microsoft over copying from each other in the PC era.
The copying debate suffers from a great confusion because most people ignore the importance of market power. Copying happens all the time in all industries. Hardly anything is ever truly new and most products draw on inspiration from the work of others (including researchers, remember the role of Xerox Park for instance). Copying is essential to innovation because the copies also come with mutations, much the way human evolution works.
Here is a funny exchange about copying that just played out on Twitter between Hardee’s and Wendy’s
What matters in copying is not the act of copying itself but how much market power the copycat has. Let’s say Sniptalk, another startup, had copied all the features of Snapchat. Would anyone care? No because it is unlikely to have any impact on the trajectory of Snapchat.
During the early days of Twitter, I kept a list of Twitter clones. There were about a dozen of them. Some of them were literal copies. None of them are around anymore. And, I should be quick to point out, there is even some question whether Twitter itself copied from other microblogging services.
So the real issue here is Facebook’s market power. And we face similar market power issues in search (Google) and commerce (Amazon). Excessive market power is bad for innovation. If we get more instances of these new incumbents successfully killing of competitors through copying then the investment in innovation through startups will die off. We saw this clearly during the dominance of Microsoft in the PC era. Once investment dies off the incumbent itself tends to stop innovating.
As for what to do about market power, I have written previously that antitrust is the wrong tool. Instead what we need to take are many steps towards increasing informational freedom, including fundamentally shifting who controls computation on mobile devices to the enduser.
PS Despite all of Facebook’s efforts with Instagram, I think that Snapchat usage is still meaningfully different and it is too soon to tell how this will play out
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Albert Wenger
