The Politics of Commoditization in Global ICT Industries: A Political Economy Explanation of the Rise of Apple, Google, and Industry Disruptors

19 Pages Posted: 21 Feb 2015

See all articles by Kenji E. Kushida

Kenji E. Kushida

Stanford University Shorenstein Asia-Pacific Research Center

Date Written: February 13, 2015

Abstract

The global Information and Communications Technologies industry has experienced a rapid, radical reorganization of industry leaders and business models — most recently in mobile. New players Apple and Google abruptly redefined the industry, bringing a wave of commoditization to carriers and equipment manufacturers. Technologies, corporate strategies, and industry structures are usually the first places to look when explaining these industry disruptions, but this paper argues that it was actually a set of political bargains during initial phases of telecommunications liberalization, which differed across countries, that set the trajectories of development in motion. This paper shows how different sets of winners and losers of domestic and regional commoditization battles emerged in various ICT industries around the world. Carriers won in Japan, equipment manufacturers in Europe, and eventually, computer services industry actors rather than communications firms emerged as winners in the US. These differences in industry winner outcomes was shaped by the relative political strength of incumbent communications monopolies and their will to remain industry leaders, given the political system and political dynamics they faced during initial liberalization. The US computer services industry, which developed independently of its telecommunications sector due to antitrust and government policy, eventually commoditized all others, both domestically and abroad. This paper contends that a political economy approach, tracing how politics and regulatory processes shaped industry structures, allows for a better understanding of the underlying path dependent processes that shape rapidly changing global technological and industry outcomes, with implications beyond ICT.

Keywords: ICT, Commoditization, Industry structure, Economic policy, Liberalization

JEL Classification: L14, L22, O25

Suggested Citation

Kushida, Kenji E., The Politics of Commoditization in Global ICT Industries: A Political Economy Explanation of the Rise of Apple, Google, and Industry Disruptors (February 13, 2015). Journal of Industry, Competition and Trade, 2015, Available at SSRN: https://ssrn.com/abstract=2565555

Kenji E. Kushida (Contact Author)

Stanford University Shorenstein Asia-Pacific Research Center ( email )

Stanford, CA 94305
United States

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