Phil Sim

Web, media, PR and… footy

The crumbling world of co-opetition

Don't you love the word co-opetition. It posits that companies can both compete and co-operate at the same time. And sure they can. That is while the relationship profits both parties. That is while the “co-operation” benefits outweighs the “competition” factor.

But make no bones about the fact that as soon as the competition side of the scales starts to tip that way, the whole concept of co-opetition falls apart. And that's exactly what's about to happen right now.

Google, Microsoft, Yahoo. Each of these three companies believe the need to rule the Internet. Google owns search. It owns online advertising. They're arguably the two most powerful forces on the Internet, so its not surprising that Google thinks its well positioned to rule the world. Microsoft, is used to dominating the desktop, so its natural that it wants to own the Internet as well. And hell, why should either Google or Microsoft govern the Internet when Yahoo! was there first, dammit.

The problem is the Internet is such a big space that it can never be ruled by one party. The Internet encompasses media, commerce, software and a whole bunch of new innovations the world is only just beginning to grasp. It's so big that partnering has never been so important.

Yet, in a web universe that supposedly places so much importance on valuing the user, there appears to be an abject neglect for valuing the partner.

Maybe, it's got something to do with the fact that Google got away with it for so long. It's dominance in search and the powerful position of its AdSense business meant that other businesses felt they were forced to tolerate working with a company that every day kept extending its tentacles into its partners businesses.

Google's primary customers are content providers yet Google more and more is a content provider as well. They also own a big chunk of one of the world's biggest media companies AOL Time Warner. Trust me, the day any big media company can work with anyone else but Google, they will.

But who will they turn to? Yahoo! No, they're in the content business, too. Yahoo! have always been a media company and they keep going that way. In Australia, the company has rebranded as Yahoo7, partnering with one of this company's major television networks. This week they launched Yahoo Tech, which will put them in competition with the likes of CNET, IDG and many others.

Microsoft. Same deal. So who is a content provider to work with? Meanwhile, the cosy little relationships between these vendors are falling apart. Amazon's Alexa search engine has dumped Google for Microsoft. Google and Microsoft are increasingly at war. eBay is keen to get over its reliance on Google AdSense. The age of co-opetition on the Internet is quickly coming to an end.

That's could open up opportunities. Not for Google, Microsoft or Yahoo. But for companies who focus on their business and only their business.

Now, maybe it's true. Maybe, the big boys do have too much scale and its become impossible for 'independents' to compete. But, I just have a feeling that when you combine this crumbling world of co-opetition with some genuine innovation which I'm sure is lurking out there that “best-of-breed”, focused plays have to have a shot.

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32 Responses

  1. Kris says:

    The current beauty of what is happening on the Internet that some refer to as Web 2.0 is that it seems more realistic for a new company to come into the market with something amazing and quickly gain a meaningful position.

    Unfortunately the extreme power of Google, Yahoo! and Microsoft means that these companies (Flickr, Delicious, Skype, etc.) get folded into the giants rather than being allowed to grow up and become potential competitors.

    I think Flickr and Delicious could have achieved much more success and a higher valuation in the end if they had decided to build. (Skype probably not given the size of the eBay deal.)

    Maybe it’s a paradox. The field and opportunity seems broader than ever for new companies but at the same time somehow closed or sewn up by the dominating players of today with tens of billions of dollars to deploy as needed.

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  21. Terry says:

    You may be correct that “Co-Opetition” as a strategy or tactic on the internet is fading (and may or may not enjoy a resurgence) but the components of co-opetition such as many providers of a particular commodity creating a “market” for that comodity, in which the best providers will flurish, will always exist. I think being able to look at a particular industry in the light of Co-Opetition produces multidimensional thinking and opportunity enhancement.

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