This text discusses the concept of “economic termites,” which are instances of monopolization that are not noticeable enough for most people but make investors a significant amount of money. These termites exist in various industries such as domain registration (Verisign), computer-aided design software (Autodesk), industrial gases (Linde), locks and smart locks (Assa Abloy), entertainment data (Gracenote), and professional networking (LinkedIn). These monopolistic practices often lead to cost inflation and bottlenecks in the supply chain, causing prices to increase and making it difficult for new competitors to enter the market. The author argues that addressing these hidden tollbooths and promoting competition is crucial for restoring fair commerce and democracy.
| Signal | Change | 10y horizon | Driving force |
|---|---|---|---|
| Economic termites are everywhere | Widespread presence of hidden monopolies | Increased awareness and regulation of economic termites | Lack of antitrust enforcement and oversight |
| Verisign: The Most Profitable Company in the Stock Market | Monopolistic control of domain registration | Increased competition and pricing transparency in domain registration | Government agreement and lack of competition |
| AutoDesk: Taking “Hostages” in Architecture | Market dominance and high prices | Increased competition and innovation in CAD software | High switching costs and lack of competition |
| Linde: Industrial Gasses | Concentration of industry and price increases | Limited competition and higher operating margins in industrial gas industry | Acquisition of smaller firms and lack of competition |
| Swedish Predators: Assa Abloy | Market power in lock distribution | Increased pricing and limited innovation in lock industry | Lack of competition and mergers and acquisitions |
| Entertainment Data: Gracenote | Dominance in metadata for media listings | Limited competition and higher costs in media industry | Control over data usage and market power |
| LinkedIn: Beyond Super Positive Corporate Blog Posts | Monopolistic control of professional networking | Higher costs for recruitment and limited competition in professional networking | Exclusive contracts and market dominance |
| Amazon Web Services is the biggest termite of them all | Monopolistic control of internet infrastructure | Increased regulation and competition in cloud computing | Dominance in the market and lack of oversight |
| Lack of antitrust enforcement and oversight | Increased scrutiny and accountability | Stronger antitrust enforcement and regulation | Concentration of power and monopolistic practices |
| High switching costs and lack of competition | Difficulties in switching service providers | Increased competition and innovation in industries | Barrier to entry and market dominance |
| Acquisition of smaller firms and lack of competition | Consolidation of industry and price increases | Limited competition and higher operating margins | Mergers and acquisitions to increase market power |
| Control over data usage and market power | Restrictions on data access and innovation | Limited options and higher costs for consumers | Market dominance and protection of their business interests |
| Dominance in the market and lack of oversight | Concentration of power and price increases | Stronger regulation and competition in the market | Monopolistic practices and lack of enforcement |