Did you know that the word "monopoly" comes from the Greek word monos, which means single or alone? It was first used to describe a market that was dominated by just one seller.
But what is a monopoly and why are they so harmful to the competition?
When a company has a monopoly in an industry, it means there is only one seller of this product. That single seller can charge whatever price it wants for the product. In such a scenario, the profits that a company makes out-of-pocket may seem good, but if you see the other scenarios, they aren't worth anything.
In most industries today, there are multiple sellers with varying prices. Moreover, these companies compete against each other to provide the best services and products at the best prices. If you own as many businesses as these big companies do, then you also have a monopoly in every other business owned by your company. As such, these 5 companies have big monopolies:
Now, this may come as a surprise to some, but Google does not actually own its core business. The company's core search business is actually owned by the company known as Alphabet Inc., which is the parent company of Google. This makes Alphabet the owner of all the businesses under the Google umbrella. Alphabet is a holding company and its core business, Google, is a monopoly in the search business. No one can reliably compete with the amount of information Google has about its customers and how to best serve them. The Internet giant has established itself as a leader in several highly competitive industries. It has a near-monopoly in online advertising, a strong presence in online mapping, and commands nearly 90% of the mobile phone operating system market. If you try to enter the market, you risk getting crushed under the weight of Google's dominance, as there is no space to grow. If you want to compete in the search business, you need a business model that allows you to keep up with Google but also grow enough to avoid getting crushed in the long run. But if you want to invest in stocks, this might be a good choice as Google will remain the top search company for a very long time.
Facebook, which is known for its social media platform, is actually a monopoly in online social networking. The company has a massive user base and generates billions of dollars from advertising each year from this base. It also has very high barriers to entry in this space. With over 2 billion users, even a small competitor would have a very hard time gaining traction in this market. This is because Facebook has perfected the art of creating a sense of community and intimacy between its users. In other words, it has found the formula for creating strong brand loyalty. This combination of factors makes it an extremely strong competitor against any would-be competitor in the social media market. Facebook has been a monopoly in social networking since its inception. It became even more entrenched in the market as its user base grew, and as it introduced new features and functionality. In fact, the number of Facebook users has passed 2.9 billion. Facebook has managed to achieve this position through aggressive expansion and clever business practices. Initially, the social network targeted young people, who were its main customers up until the age of 34. However, as the service grew, it began targeting a much larger audience of older people who use social media to connect with friends and family. With the strategies for maintaining the engagement of the users, Facebook will remain one of the fastest-growing companies, which might also affect the stock price to rise even more.
Amazon Web Services
Amazon Web Services is another example of a monopoly in an industry. This company provides cloud computing services to businesses and individuals, and it does so through a network of data centers. These data centers are located all over the world, which means that a customer can access their computing resources from almost any location. It offers more than 1 million services across 37 regions worldwide. This includes server-side and storage services, cloud infrastructure, developer tools, and other support services. AWS also has a powerful ecosystem of partners and Amazon services for developers. Like Google, Amazon also has substantial control over the market through its brand recognition and customer trust. This has led to a situation in which very few could compete with them. This has helped the company achieve a monopoly in the cloud computing market. With this being said, it sounds like the company's worth will grow even more over time, right?
Apple Inc.
Apple Inc. has long been a leader in consumer technology, with a wide range of products that appeal to a wide range of customers. However, the company is on the verge of a significant transformation as it shifts from being a consumer electronics company to an Internet company. The company has introduced a wide range of services and products to expand its reach beyond its traditional customer base. Apple has established itself as the most valuable brand in the world, with strong brand equity that makes it difficult for other companies to copy its products. Additionally, the company has a massive customer base that gives it a huge advantage over new entrants. Apple generates the vast majority of its revenue from selling iPhones and other consumer electronics devices. However, the company is rapidly expanding into an array of services for a variety of customers. This includes payments, music streaming, television, news, and other services. As Apple continues to grow and expand its services, the company will likely continue to see significant revenue growth. However, the company is also facing strong competition from challengers such as Samsung and others. This means that Apple's revenue growth will likely be slowed in the future. However, the company remains a key player in the consumer electronics, Internet, and smartphone markets.
Microsoft Corporation
Microsoft Corporation has been operating in the information technology (IT) industry for a long time and has a strong grip on the market. The company has a monopoly in traditional IT services such as computer operating systems, database management systems, and business intelligence software. However, it has also diversified into other areas such as the Internet of Things and artificial intelligence (AI). This diversification has helped the company stay relevant in an ever-changing market. As Microsoft continues to expand into new industries, it will encounter significant competition, which might be a challenge for the company to remain the top brand in all industries involved, but it remains to be seen how the company will handle the challenges moving forward.
Conclusion
Finding a company that has a monopoly in an industry can be a bit tricky. However, a careful analysis of the competition and the market can help you make the right decision. If you are interested in building a portfolio of the top performers and companies that have huge monopolies, by reading this article now you know where to put focus and analyze more for the best investing strategy. For gaining more information about the market movements and company's updates, you can subscribe to our newsletter to receive market opportunities and keep up with the latest news!
