Do the Giant Companies Kill the Competition?

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With rising competition at a pace that is huge, the startups seem to die with each passing day, there are many reasons due to which small businesses vanish but a huge part of this reason are the giants.
The giant firms thrive and expand with each passing day, but how and why do they kill the not-so-giant-startups?

Tech Aristocracy

The most successful tech companies have achieved massive scale in just a couple of decades. Google processes 4 billion searches a day. The number of people who go on Facebook every month is much larger than the population of China. These companies have translated large scale into market dominance and soaring revenues. The infrastructure of the information economy is increasingly controlled by a handful of companies: Amazon has almost one-third of the market for cloud computing, and its cloud-services division has grown by more than half over the past year. The world’s three most valuable companies at present are all tech companies, and Amazon and Facebook come in at number six and seven.

Powerful Connections

Network effects have always been powerful engines of growth: not only is success self-reinforcing but it follows the law of increasing returns. Some network companies even pay people to become customers in order to achieve scale. And those effects become even more powerful if networks connect with each other to produce multi-sided versions. Most of the new tech firms are “platforms” that connect different groups of people and allow them to engage in mutually beneficial exchanges. Older tech companies too are putting increasing emphasis on the platform side of their business. Everyone wants to sit at the heart of a web of connected users and devices that are constantly opening up further opportunities for growth.

These two factors are the most important ones that affect the small businesses along with the competition from their peers.