This piece and the embedded links give some clues as to what's going on.
From FT Alphaville:
Do digital industries break capitalism?
A little snippet from Citi’s equity telecom analysts earlier this week via a note entitled “Will telecoms ultimately disrupt their own industry model?”. It pertains to the upcoming release of the IDATE Digiworld Yearbook on June 14:
The two leading, but also opposing, economic forces, which drive digital industries are: (a) benefits of size and network effects; and (b) disruptive innovation. This, according to the authors, leads to two paradoxically convergent potential outcomes: (1) dominance by the leading platforms, which enables their owners to generate significant value and cash flows or (2) economy based on sharing and collaboration.The authors see both outcomes as potentially fundamental threats to capitalism.
he book also discusses potential industry responses in a form of four possible scenarios for the digital economy in 2025: (i) customer-centric Mall Scenario, (ii) techno-centric Open Scenario, (iii) trust-centric Trust Scenario; and (iv) price-centric Automated Scenario. The above-mentioned dilemma in our view highlights the scale of strategic uncertainties currently faced by the telecoms, as well as the essential role policymakers will continue to play in shaping the industry over a long-term.The view ties in with Jaron Lanier’s thesis about how businesses based on digital network effects tend to encourage monopolism and a winner-takes-all framework. This inevitably erodes the freedoms and wealth of the middle and cultural classes by undermining the very protections (what might also be called culturally-favoured inefficiencies) that had hitherto guarded their capacity to earn a consumer surplus. In the long run, a new type of feudalism is brought about, wherein the average person’s quality of life becomes entirely dictated by the whims and desires of digital tycoons.
But unlike the old feudalism, where it was in the interests of the lords to pass prosperity back to the dependent serfs to keep them on side, content, compliant and not rebelling, no such interests exist for the digital elite. The new lords can retreat to their mansions without ever having to interact with their dependents, and without ever hearing out their concerns, troubles or wants. There is no court system. There is no empathy. Digitised complaints instead are dealt with algorithmic courtiers programmed to get rid of the problem makers as cheaply as possible....MORE
