Internet Users – Who are the main users of the internet?


The real “customers” of Internet platforms are advertisers, not users. This is a deposited manuscript and has not been posted. Recently, Alibaba has been anti-monopoly, and the state has also talked to major Internet platforms, asking not to monopolize the market, so let’s send it out.

1. A news aggregator platform published a special article, borrowing community group buying, and criticizing the monopoly behavior of Internet giants by name. Some people say that the characteristic of monopolistic enterprises is to charge high prices and obtain excessive monopoly profits.

In economics, the pricing method of monopoly companies is that marginal revenue equals marginal cost. The monopoly price is higher than the equilibrium price, and the monopoly enterprise obtains excess profits. However, the marginal cost of products on the Internet platform is close to zero. Free, so the marginal income is zero, so where is the excess profit of the so-called monopoly?

To understand the monopoly of Internet companies, we need to think differently. The monopoly of Internet companies is completely different from the monopoly in economic theory.

What kind of monopoly is on the Internet platform?


We use the analogy of commercial real estate. You go to a hotel for one night and you have to pay. You have to pay when you go to the cinema to watch a movie. However, when you go to a shopping mall, you don’t need to pay for a ticket to the shopping mall. It also costs money to build a shopping center, but the profit of the shopping center comes from the rent of the merchants, not the tickets of the consumers.

For shopping malls, people who come to shop are not consumers. For the shops in the shopping center, they are the consumers. The business model of the shopping center is to attract the shopping center and the flow of people who enter for free, in the form of rent, or in the form of profit-sharing, sold to the shops inside. We are not consumers in shopping malls, we are goods sold in shopping malls.

I don’t know if anyone has ever moved the idea of ​​collecting tickets in the early stages of the development of Western shopping malls. But I believe smart people can see that the admission of tickets in shopping malls will cause the flow of people to fall off a cliff. The flow of people is the core goods sold in shopping malls. The loss of rent caused by the drop in foot traffic is far greater than ticket revenue. Therefore, no shopping center will charge tickets. For the core business of the Internet platform, the model is exactly the same. We are not consumers of Internet platforms. We are traffic, the core goods sold on Internet platforms.


If you are not paying for the product, YOU ARE THE PRODUCT. The shopping center sells people to the merchants in it. The Internet platform also sells people to the merchants on the platform. The real customers of the mall are the shops inside. The income of the shopping center is the rent and share provided by the store. The customers of the Internet platform are manufacturers who place various advertisements on their platforms. E-commerce, games, these can make money from users, and then put them on the Internet platform in the form of advertising fees. This is the essence of the Internet platform. Netizens are goods sold on Internet platforms, not their customers and consumers.

2. Traditional monopolies monopolize the products and the goods they sell. And they get monopoly profits from consumers. For traditional companies, the natural ownership of the products I produce is mine. I can sell to whomever I want to sell. I am willing to pile mold in the warehouse, which is also my freedom. The product has no autonomy and will not run away on its own with long legs.

For Internet platforms, the flow of people is the goods they sell. People are autonomous and can run away. How do they monopolize products?

Let’s compare it with commercial real estate. The core factor for the success or failure of commercial real estate is location. Especially commercial real estate, the most particular location. Locking a prime location is equivalent to locking an effective consumer group in the core business district of the plot. Occupying a prime location first, it is very difficult for a latecomer to open another nearby to grab a site. One shopping mall in a business district may be very profitable, two with scattered people may not make money, and with three, all of them will lose money.

Commercial real estate is a local business, and the Internet transcends the limitations of geographic space. The business districts of commercial real estate are the so-called race tracks of the Internet. Commercial real estate competes for the flow of people in the business district, while the Internet competes for traffic on the surface, while the core is user cognition, habits, and duration. A lot of investment to form a brand-forming habit and form loyalty. After that, users can become goods sold on the Internet platform.

3. The real customers of Internet platforms are advertisers, and their source of monopoly profits is also advertisers. Advertisers are real consumers of Internet platforms. The real consumers of commercial real estate are tenants. Most of the rents collected by commercial real estate are fixed rents. There are also some special merchants (such as movie theaters) that use the form of sharing. There are various ways for advertisers to contribute revenue to the platform. In the early days of the Internet, website advertisements were also a way of renting advertising spaces. How much is an advertising space per day? This method is called CPT. However, the recording, segmentation, and guidance of user behavior on the Internet platform is far stronger than that of commercial real estate. Internet platforms have various ways to collect advertising fees, such as CPI, CPC, CPA, CPS, and so on.

The CPI charged by the display is like a commercial real estate charged by the number of people passing by the door of your store.

CPC that charges per click are like commercial real estate charges based on the number of people who enter your store.

CPA charged by the installation is like commercial real estate charging by people who buy things after entering your store.

CPS charged by income is like sharing commercial real estate according to the sales of your store.

As more and more useful information is collected by Internet platforms, more advanced charging methods are available. Men and women charge different money, women who carry LV bags and seven wolves carry different money. At the same time, different users are directed to different shops. This is the so-called segmentation of user portraits into groups, and then sell advertisements separately.

Then use the bidding ranking auction method to make advertisers who are willing to pay high prices, and through differential pricing, squeeze advertisers’ consumer surplus.

4. As the saying goes, the customer is God, who is the customer of the platform? Is an advertiser. Therefore, Internet platforms naturally need to use various methods to collect as much information as possible to serve advertisers, so that advertisers can place advertisements more accurately, and platforms can sell advertisements better. For the so-called platform users, they are trafficked traffic, not customers.

Of course, in a competitive environment, it can’t be too bad for users. A shopping mall is so poorly operated that even if tickets are not charged for free, the flow of people will be lost to competitors. However, there is only one shopping mall in a city with nowhere to go. Naturally, there is no need to be too good for users. At the same time, this monopolistic shopping mall will certainly charge higher rents for its real customers and shops. The Internet environment is the same. But if there is only one platform in a certain field, users naturally have no choice. In this case, even if it is free, it is still a monopoly. Monopoly allows Internet platforms to infringe more on user privacy, place more and more offensive advertisements, and make advertisers have to pay higher prices.

5. Monopoly will lose efficiency, squeeze upstream and downstream profit margins, widen the gap between the rich and the poor, and increase social injustice. Monopoly needs to be regulated and suppressed. But at the same time, the ultimate goal of all profit-oriented enterprises is a monopoly. Anti-monopoly is about supervision, not about digging out local tyrants to divide the land, not about class struggle. Many industries, such as public utilities such as hydropower networks, including the Internet, are inherently natural monopolies.

It is not that companies have a large market share and high profits will necessitate anti-monopoly. It is only when companies use their dominant position to damage competition, crowd out rivals, and harm the interests of the general public, that monopoly needs to be suppressed. There are many antitrust methods. For example, encourage competition and prevent collusion. But in some fields, natural monopoly is born, such as public utilities. For the sake of anti-monopoly, each household should be connected to two sets of power grids and two sets of tap water. Nationalization is actually a kind of anti-monopoly. Since monopolistic enterprises can use their monopoly advantages to extract profits, let them not pursue profits. If the incentives of the corporate management have nothing to do with corporate profits, naturally there is not much urge to squeeze profits through price increases.

Therefore, for public utilities such as hydropower, which have natural monopoly properties, countries around the world are either operated by state-owned enterprises or set prices by the government. Private enterprises have no independent pricing power. In the field of natural monopoly, state-owned enterprises are often a better choice than private enterprises. At least, a core KPI is not a profitable CEO, and the incentive to squeeze monopoly profits will be much smaller.

But the other side of nationalization is the lack of efficiency and lack of motivation. The trick of state-owned enterprises is certainly not applicable to Internet anti-monopoly. Anti-monopoly on the Internet industry is being pursued in the United States and in Europe. Frankly speaking, no country has a good solution. It is difficult not only to ensure the innovation and efficiency of enterprises but also to reverse the monopoly.

After the reform of our country, the way of governance can be described by the four words “balance and maintain the middle”. Therefore, some people who eat melon hope that if a certain father is completely knocked down, there is a high probability that it will not happen. It is swollen, a warning, a small punishment, and a big admonishment. Anti-Internet monopoly in countries around the world will not be too radical. Lift it high and fall gently. A word of warning, do business in compliance with the law, don’t go too far, it’s over.

Leave a Comment