Technology

I’m not an economist but that makes sense to me.

What about a modified scenario:

A small island has three cupcake makers operating out of their homes: Meta, Alphabet, and Bytedance. Each has captured a section of the island’s market with cupcakes and at this point, there’s no real opportunity for growth. Meta can’t convince Bytedance’s customers to switch because they prefer other flavors. Meta would need to purchase one of the other cupcake companies in order to expand.

None of the cupcake makers are interested in selling their companies. They consider themselves elite and their successes feed into the CEO and shareholder perceptions of value and success.

Now, we consider that one of the cupcake companies is funded by a rich uncle from a different country. The island’s elders decide that the uncle’s influence is too great and orders Bytedance to sell its cupcake company or leave the island.

We’ve established earlier that people who like Bytedance cupcakes don’t necessarily want to eat Meta or Alphabet cupcakes, so if they leave the market, those customers may be gone for good. They may have a change of heart and decide that cupcakes of any flavor are fine, but they may also be angry that the government forced their favorite place out of business. In any case, Meta and Alphabet cannot rely capturing this segment of the market to grow.

Faced with the dilemma of possibly gaining customers organically or definitely gaining customers by purchasing their preferred product brand, I’d argue that the remaining companies may jump on the opportunity to purchase Bytedance before they are forced out. None of the cupcake companies were up for sale in a traditional sense before, so this was never a realistic path to achieve growth.