This is a linkpost for https://www.gwern.net/Complement
Curated.
I liked this post for proposing a new model for examining the economy – I found both this specific model useful as a possible explanation for what's going with some companies, as well as broadening the space of possible explanations I might consider in the future.
As an layman who reads little academic micro- and macroeconomics, I can't but think that I am already familiar with the "Commoditize Your Complement." I lack the expertise to frame this properly, but I suspect it relates to concepts like "platform envelopment", "envelopment of complements", "platform stacks" when discussing competition in platform economies.
Joel Spolsky in 2002 identified a major pattern in technology business & economics: the pattern of "commoditizing your complement", an alternative to vertical integration, where companies seek to secure a chokepoint or quasi-monopoly in products composed of many necessary & sufficient layers by dominating one layer while fostering so much competition in another layer above or below its layer that no competing monopolist can emerge, prices are driven down to marginal costs elsewhere in the stack, total price drops & increases demand, and the majority of the consumer surplus of the final product can be diverted to the quasi-monopolist.
A classic example is the commodification of PC hardware by the Microsoft OS monopoly, to the detriment of IBM & benefit of MS.
This pattern explains many otherwise odd or apparently self-sabotaging ventures by large tech companies into apparently irrelevant fields, such as the high rate of releasing open-source contributions by many Internet companies or the intrusion of advertising companies into smartphone manufacturing & web browser development & statistical software & fiber-optic networks & municipal WiFi & radio spectrum auctions (Google): they are pre-emptive attempts to commodify another company elsewhere in the stack, or defenses against it being done to them.