Open Versus Closed Standards
In communication and information technologies, open standards and interfaces are often developed through the participation of multiple companies and are usually perceived to provide mutual benefit. But, in cases in which the relevant communication protocols or interfaces are closed standards the network effect can give the company controlling those standards monopoly power. The Microsoft corporation is widely seen by computer professionals as maintaining its monopoly through these means. One observed method Microsoft uses to put the network effect to its advantage is called Embrace, extend and extinguish.
Mirabilis is an Israeli start-up which pioneered instant messaging (IM) and was bought by America Online. By giving away their ICQ product for free and preventing interoperability between their client software and other products, they were able to temporarily dominate the market for instant messaging. Because of the network effect, new IM users gained much more value by choosing to use the Mirabilis system (and join its large network of users) than they would using a competing system. As was typical for that era, the company never made any attempt to generate profits from their dominant position before selling the company.
Read more about this topic: Network Effect
Famous quotes containing the words open, closed and/or standards:
“Listen to me, as if I were Sybaris barking with all his heads, at the gates of Hell, I will tell you where to take it. But don’t ... don’t open the box!”
—A.I. (Albert Isaac)
“No other creative field is as closed to those who are not white and male as is the visual arts. After I decided to be an artist, the first thing that I had to believe was that I, a black woman, could penetrate the art scene, and that, further, I could do so without sacrificing one iota of my blackness or my femaleness or my humanity.”
—Faith Ringgold (b. 1934)
“A generation which has passed through the shop has absorbed standards and ambitions which are not of those of spaciousness, and cannot get away from them. Everything with them is done as though for sale, and they naturally have in view the greatest possible benefit, profit and that end of the stuff that will make the best show.”
—Alexander Herzen (1812–1870)