In a world driven by tech giants that locked-in digital distribution pipelines to reach billions of people across the globe, the gatekeeper hypothesis states that small businesses will need to pass through those nodes to reach key customers.
Thus, those gatekeepers become the enablers (or perhaps deterrent) for small businesses across the globe.
In a first wave of the Internet, large dominating players (with their walled gardens), were disrupted by once smaller digital players, turned into tech giants.
In this wave, these tech giants (now consolidating their walled gardens) have become the gatekeepers of distribution. Just like Google in the early years, surfed AOL to grow. Today, your small business can reach potential customers by going through those gatekeepers (Google, Amazon, Facebook, Netflix, Apple, and a few others).
As those digital companies turned tech giants, what’s next? Those tech giants are now transitioning into AI companies. That makes them still able to quickly iterate, or perhaps devour those small players trying to grow at their expenses.
However, once this wave is over, and if regulation will act to slow those tech giants, new AI companies, able to leverage on speed, and faster feedback loop might gain traction so quickly that tech giants will not be able to contrast them, nonetheless their distribution power.
Those AI-driven business models will be able to tap on new or existing channels, yet grow so quickly to become massive overnight. A good example is TikTok, for now unstoppable, also by giants like Facebook.
In the digital era, digital platforms made more options available to consumers. Where previously, companies had locked in distribution, thus working primarily on optimizing the supply chain. The first digital platforms formed as a result of an Internet that found its commercial applications in enabling a smoother flow of information, which freed the consumer in terms of choices and options they could make.
Those platforms grew they also locked-in part of the distribution, they still build incredible products, as they’ve been used to grow in an environment of demand-side optimization, where the whole company success would be built around creating mass-adopted products. Those companies became modern gatekeepers.
In the previous era, many markets were fragmented, as the many gatekeepers acted at the end of the chain, by providing few if little value, thus throttling the market. Modern gatekeepers instead, have killed the hundreds of millions of existing intermediaries (depending on the market) and have unlocked those markets, thus making them explode and hyper grow.
Therefore, in the modern era, a single gatekeeper won it all. Yet, while in the past the gatekeeper captured value by getting a cut on the transaction (or perhaps by making most of the margins on the transaction), the modern gatekeeper can make money by getting a small cut or fee (platforms) or subsidize the whole value chain by a key player (aggregators). This was the first phase.
In a second phase, Horizontal gatekeepers (those able to serve several markets) consolidated, thus becoming the main gate between businesses and customers (Google, Amazon, Facebook, Apple).
In a third phase, vertical gatekeepers also formed. Those were, in part, born from horizontal gatekeepers, as these were not able to cover at the best vertical areas (think of travel search engines like Booking, TripAdvisor, Airbnb were born on top of Google‘s inability to cover at the best vertical areas). Those vertical gatekeepers also depend on horizontal gatekeepers. And yet they provide a vertical, often more specialized help to customers compared to the horizontal gatekeeper. However, the horizontal gatekeeper is now also making a move in vertical areas (Google, Amazon).
In a fourth phase, horizontal gatekeepers are claiming some space back, to recapture market value that before was left to vertical gatekeepers. As horizontal gatekeepers like Amazon and Google, for instance, grew into giants, they also started to cover more and more vertical areas, thus competing directly with vertical gatekeepers.
Is this the fifth phase of super gatekeepers? As those horizontal gatekeepers take more space, they can cover both horizontal and vertical areas, with more specific products to cover them.
If this phase consolidates, then we’ll see the rise of super gatekeepers, able to recapture and claim back pieces of the markets they created, that once were handed to vertical gatekeepers (unless they get broken up).
(The author is the Founder at FourWeekMBA)