No, Competition isn’t Always Good

People always say it is good if company X does better, because it brings more competition. And competition is good, right?

One of the most annoying truthism I hear people pander is this idea that competition is always good. Specifically, this comes up often when a dominant company which has held back the market for years slips and the little guy gets some time in the sunlight. This could be AMD beating Intel for a change. It could be ARM beating x86.

It could be Tesla beating General Motors. Or it could be SpaceX beating United Launch Alliance. Every time this kind of stuff happens, people will go, “It is great AMD is doing so well, but let us hope Intel recovers because competition is good!”

Eh, no, let us not hope that. If you actually cared about competition then you should not be cheering for the recovery of companies that have created near monopolies and used every dirty trick in the book to stay there. The failings of a former monopolist is not something to mourn. It is something to celebrate. It opens up the door for countless other companies. You know, “real” competition.

Say a company that holds 90% of the market trips so the company that had 10% of the market is able to go up to 15% of the market. That is not the time we should be praying for the one that holds 85% of the market to return to financial health and get back its 90% of the market. No, this is when we should hope for further failure, so the monopolist opens the way for other competitors.

The argument is always the short sighted “But it is good for the consumers with competition.” Yes, indeed it is, which is why one should not wish for the recovery of a former monopolists. Companies like Intel, Microsoft, IBM, General Motors, etc., have generally not given the market competing companies that can offer consumers a variety of products. Rather, these dominant players have usually destroyed most of their competition, leaving us with fewer choices.

Dominant companies often became dominant by offering better products and services. However, that is by no means the norm. Secondly, while a company may have been a good corporate citizen in the past, it hasn’t necessarily been so in the latter years of its reign. Why should we wish for the recovery of a dominant player which has provided customers with substandard products and kept competition out of the market?

There is in fact an analogy to this in the science. Research has shown that when a big name within a discipline dies or is out of the field, there tends to be a flurry of innovation and progress that follows shortly after. Often, people who dominate a field also hold it back. Others are not given a chance or dare not step forward. Thus, long-time dominant players getting knocked down a few notches isn’t an unhealthy thing. It is likely a good thing.

Then there is the question of visions and goals. When people hope the competition recovers from, say, SpaceX, then what exactly are they hoping for? SpaceX has a strong vision about making really cheap rocket launches and going to Mars. The entrenched competition has no vision other than making more money. Why should we cheer on their success? Any success they have will come at the expense of income for SpaceX, which means we are put further behind on the realization of a vision that is actually exciting and takes humanity further.

The same could be said of Tesla. Sure, I welcome other visionary electric car companies, and hope for their success. But why exactly should we hope that Ford, GM etc should recover and do well in EV competition with Tesla? Any success Ford and GM has in the EV space will naturally reduce the income for Tesla. That takes money away from a company which has used that money more than any other EV company to drive innovation and push for a transition to an all-electric transport sector.

Who knows whether GM and Ford success in the EV space will be followed up with new things that drives EV success further? What if they stop innovating on EVs as soon as Tesla is knocked out of the race? Because the old car companies have generally not shown a strong commitment to EVs and a green shift, there is little reason to cheer on these guys if you care about the environment and seeing good EVs produced.

Ask yourself: What is more likely? That extra money earned by Tesla will be used to improve EVs or extra money earned by GM? That is why I would rather see GM electric cars fail. Yet people will say, “Oh, but how can you be against competition!?”

Because every dollar and hour spent by GM to make an EV seems to give us fewer returns than every dollar and hour spent by Tesla. Hence, I would rather see Tesla have success in the market than GM. If you truly cared about competition, one should not wish for GM EV success but rather wish for Rivian, Lucid Motors, and others to have success. Let us wish for the success of new upcoming innovative EV companies. Let us not cheer on the industry giants who has held back EVs for decades.

Let us not forget that Tesla got started because GM, Ford and others failed to do what they should have done decades ago.

Geek dad, living in Oslo, Norway with passion for UX, Julia programming, science, teaching, reading and writing.

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