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How Software Is Stifling Competition and Slowing Innovation



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More than a decade ago, Marc Andreessen, the internet entrepreneur and venture capitalist, famously declared, “Software is eating the world.”The winners, Mr. Andreessen wrote in The Wall Street Journal, would be mainly “entrepreneurial technology companies that are invading and overturning established industry structures.”His essay was a distillation of a long-held article of faith in Silicon Valley.Clearly, some traditional businesses such as advertising and retailing have been upended by software-fueled companies like Google, Facebook and Amazon, the new giants on the corporate landscape.But there is also a very different software story, according to James Bessen, executive director of the Technology & Policy Research Initiative at the Boston University School of Law.In a new book, Mr. Bessen challenges what he terms the “disruption myth.” He makes the case that big companies in one industry after another have built complex software systems for managing their sales, marketing, operations and product offerings that are essentially moats against competitors.This mastery of software by major corporations, he argues, helps explain rising economic concentration, increasing inequality and slowing innovation.“Th …

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