Customer-Approved Dominance: What Makes a Likable Monopoly?

The common perception of businesses that achieve a dominant position is often one of deteriorating service and begrudging customer use. However, exploring the question of whether there are dominant businesses that customers actually like reveals several interesting facets about market dynamics, customer value, and business practices. The key takeaway is that even companies with significant market power can foster appreciation by focusing on user needs and delivering consistent value.

The "Just Works" Advantage

One prominent example frequently cited is Steam, the digital distribution platform for PC games. For many users, particularly those who grew up with PC gaming, Steam offers unparalleled convenience. It functions as a reliable app store, seamlessly porting game collections across different computers, and is praised for its frequent discounts and bundles. The platform's ability to "just work" without constant issues or overt attempts to extract profit is a significant differentiator. While competitors often offer janky experiences, Steam provides a smooth, dependable service that for the majority of its users is simply excellent.

Niche Dominance and Customer Value

Costco also emerged as an example, though its classification as a "monopoly" sparked debate. While it competes broadly with grocery stores, its unique model of membership-based bulk retail places it in a distinct market segment where direct competitors are fewer (e.g., Sam's Club). Customers appreciate Costco for its solid inventory and perceived commitment to value, where the company's "moat" isn't used to extract excessively from its clientele. The insight here is that dominance within a specific market niche, coupled with a focus on delivering tangible customer benefits, can foster loyalty.

The Fine Line of Profit Extraction

The discussion highlighted that a key factor in whether a dominant business is liked or resented lies in its approach to profit. For instance, while one segment of Steam users appreciates the value, another points to practices like lootboxes and certain cash-cow titles that exploit younger audiences, which may soon face legal challenges under acts like the EU’s Digital Fairness Act. Similarly, Southwest Airlines was mentioned as a company once loved for its customer-friendly approach until external investor pressure led to perceived "enshittification." This suggests that even a well-regarded dominant player can lose favor if the balance between user value and profit extraction shifts too far towards the latter.

Market Segmentation and Perception

The concept of "liking" a dominant business is also nuanced by market segmentation and perception. Steam, for example, is beloved by a demographic that values PC gaming, while others still associate PC gaming with dated controls and prefer the lean-back experience of consoles. This shows that a company's perceived dominance and customer approval can vary significantly across different user groups and their expectations. The definition of a "monopoly" itself also plays a role, with some arguing for a narrow definition within a specific niche versus a broad industry-wide view.

Ultimately, the consensus points to dominant businesses earning customer appreciation when they consistently deliver significant user value, offer a seamless and reliable experience, and avoid aggressively prioritizing profit extraction over customer well-being. The challenge, however, lies in maintaining this balance against internal and external pressures.