An externality is a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of th

An externality is a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved. Removing redundancy to increase profit margins affects other parties (ie users) without affecting the cost of the goods or services involved. If and only if the MBA's decision to increase risk to the user is reflected in the costs does it cease to be an externality. And we are specifically talking about an industry over-relying on a single provider of a service. If there were a variety of competing services, the entire point would be moot.