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The original post I replied to was implying economy of scale because he based his claim on competitive advantages coming with a larger addressable market. Howev

The original post I replied to was implying economy of scale because he based his claim on competitive advantages coming with a larger addressable market. However if the market is actually divided (firewalled really), with no sharing of brand recogniton, content creation, marketing, infrastructure, customer service etc, where does the economy of scale come from? Even source codes are now developed separately. There is some sharing of business model and basic technology, but is that truly formidable? There is certainly no network effect (between TikTok and Douyin) which would have been the most significant barrier.

BobbyJo 6y ago
Well, the economies of scale come from capital concentration. Since the money all flows through the parent, they have capital to use to improve their likely hood of success. Not just financial capital, but human capital too.
- fspeech 6y ago
  Google and Facebook have more access to capital, financial or human, than any of their competitors. If anything they are at a strong competitive advantage in this respect.
  - BobbyJo 6y ago
    This thread was about the unfairness of asymmetrical market access, not who is worth the most right now. Side note, in all likelihood, ByteDance would be worth a lot more if they were an American company, even if nothing about their business and revenue changed, because there would be less perceived systemic risk. That being said, the capital difference between them and Google in terms of PPP isn't huge because of lower costs in China.
    - fspeech 6y ago
      I merely refuted your claim of where the competitive advantage came from. It is clearly from the network effect of the first movers. China blocked Google and Facebook so they could not exploit their first mover advantage in China. If US wants to do the same to TikTok for the same reason I am totally fine with it. It is just kind of lame to attribute it to unrelated issues. Of course there is a reason for obfuscation here, at least from the government's point of view. If it becomes the norm in the world to block companies from exploiting their first mover advantage due to network effect across national boundaries, US companies would suffer more.

BobbyJo 6y ago

Well, the economies of scale come from capital concentration. Since the money all flows through the parent, they have capital to use to improve their likely hood of success. Not just financial capital, but human capital too.

fspeech 6y ago
Google and Facebook have more access to capital, financial or human, than any of their competitors. If anything they are at a strong competitive advantage in this respect.
- BobbyJo 6y ago
  This thread was about the unfairness of asymmetrical market access, not who is worth the most right now. Side note, in all likelihood, ByteDance would be worth a lot more if they were an American company, even if nothing about their business and revenue changed, because there would be less perceived systemic risk. That being said, the capital difference between them and Google in terms of PPP isn't huge because of lower costs in China.
  - fspeech 6y ago
    I merely refuted your claim of where the competitive advantage came from. It is clearly from the network effect of the first movers. China blocked Google and Facebook so they could not exploit their first mover advantage in China. If US wants to do the same to TikTok for the same reason I am totally fine with it. It is just kind of lame to attribute it to unrelated issues. Of course there is a reason for obfuscation here, at least from the government's point of view. If it becomes the norm in the world to block companies from exploiting their first mover advantage due to network effect across national boundaries, US companies would suffer more.