Broader signals from the isolated case
The argument was simple. At one polar end there is the technology, which requires continuous reinvention and upgrade. It is said that technology companies are in the business of innovation. At the other extreme there is the network, which is robust because it has effect, because there are switching costs for its users, who preserve the value of its base with their interconnected presence. At one end there is a high degree of option value, at the other there is a greater element of stability.
The argument is no longer simple. When the world’s largest social network makes it a point to acquire the up-comers, at ever increasing prices, at first for merely 1% of its market capitalization but soon enough 10%, this is a signal from the other side that times have changed. It is a signal that the effect is not what it once was and that the network needs to be defended and preserved and reinvented, much like a technology.
When one large social network buys a smaller one (partly as defensive tactic), the transaction is a symbol. When the price is high, the message isn’t subtle. When the payment is in stock, there is a statement in that as well, because buyers with multiple and ample resources will use the least expensive to transact. And when the successful up-comer quickly sells to the deeper pocket with the greater resources, there is in that too a sort of comment, possibly about necessity.
It has been argued in this space that in an information economy marked by deflationary trends and rapid innovation, there are convergences underway that are diminishing distinctions between previously disparate sector categories. It has also been argued that option value is the order of the day in this environment of technical volatility.
All these themes are represented in the referenced transaction, which additionally hints at a new convergence, previously less pronounced: the blend of network and technology, whereby the former assumes the volatile insecurities of the latter.
… a collection of essays about a new information economy and its new fundamentals.
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