Tech economics pattern: “Commoditize Your Complement”

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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.