No new territories.

Photographer: Andrey Rudakov/Bloomberg

The Digital World's Shrinking Frontiers

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Haven’t downloaded any new apps lately? Join the club.

“Even the very biggest app publishers are seeing their growth slow down or stop altogether,” Recode’s Peter Kafka wrote last week. “Most people have all the apps they want and/or need. They're not looking for new ones.”

This could just be the result of a temporary bottleneck. Lots of people, myself included, currently own smartphones with only 16 gigabytes of storage. That’s often not enough space even to upgrade all the apps we’ve already downloaded -- I’ve been having to delete apps on a regular basis for the past six months. Someday I’ll get a better phone and this will change, right?

Still, it seems like it’s more than just a storage-capacity issue. A handful of dominant mobile apps are crowding out the rest in terms of mindshare. And, at least in the developed world, there aren’t many untapped customers left to go after.

This situation may represent the new normal for the mobile internet and the internet in general. There could well be lots of revenue growth left -- in the annual Internet Trends slideshow she released earlier this month, Mary Meeker of the venture capital firm Kleiner, Perkins, Caufield and Byers pointed to rising advertising spending on mobile and the great potential of voice interfaces. Apple and Google, meanwhile, are hoping that app subscriptions will increase mobile spending. What there doesn’t seem to be, though, is a lot of truly virgin digital territory.

In the early days of the commercial internet, digital homesteaders could stake big claims. Now a small group of companies -- Amazon, Apple, Facebook, Google and Microsoft, mainly  -- already controls most of the territory. Facebook is only 12 years old, and five-year-old Snapchat now seems like it may be breaking into the mainstream. It's not impossible for newcomers to find a niche. But as I’ve written before, the advantages to size seem to be growing. Microsoft’s acquisition of LinkedIn, announced today, is just one more indication of that.

Those advantages surely aren’t permanent. They could last a while, though. And while there may still be lots of opportunities for digital companies to disrupt existing markets in the physical world, that’s not exactly settling new lands. The digital frontier seems to have closed, for the moment at least.

Thinking about this led me to take a look at historian Frederick Jackson Turner’s famous essay on “The Significance of the Frontier in American History.” It was first delivered as a speech in 1893, not long after the Superintendent of the U.S. Census, reporting on the findings of the 1890 Census, declared that:

Up to and including 1880 the country had a frontier of settlement, but at present the unsettled area has been so broken into by isolated bodies of settlement that there can hardly be said to be a frontier line.

Turner argued that the “perennial rebirth” of frontier settlement had played a big role in shaping the American character and the country’s political development.

Each frontier did indeed furnish a new field of opportunity, a gate of escape from the bondage of the past; and freshness, and confidence, and scorn of older society, impatience of its restraints and its ideas, and indifference to its lessons.

Hey, that sounds like internet entrepreneurs! Does the closing of the digital frontier mean they’re suddenly going to become patient, rule-following respecters of tradition?

Turner didn’t offer much of a prediction in 1893, other than to say that, “He would be a rash prophet who should assert that the expansive character of American life has now entirely ceased.” The U.S. found lots of ways to change and expand after the 1890s.

In fact, in terms of living standards and life expectancy, the really big changes and improvements were still to come. It was in the 20th century, after the frontier had closed, that entrepreneurial bets, infrastructure investments, efficiency gains and government programs began to pay off in a big way for average Americans. Here’s hoping that the same will be true of the post-digital-frontier era.

  1. Netflix sometimes gets mentioned with this group, but its much smaller. Also, its a different set of companies in China and some other parts of the developing world.

  2. Heres what LinkedIn Chief Executive Officer Jeff Weiner told employees today:

    Imagine a world where we’re no longer looking up at Tech Titans such as Apple, Google, Microsoft, Amazon, and Facebook, and wondering what it would be like to operate at their extraordinary scale -- because we’re one of them.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Susan Warren at susanwarren@bloomberg.net