The problem with capitalist arguments about crony capitalism is that they see the world as a static system as opposed to a dynamic one. The underlying assumption about the markets balancing themselves is that all companies are equal players. However, what people can’t seem to wrap their heads around is the fact that over time competition means that successful companies grow bigger by taking over the market share of the companies they outcompete. As the company size grows it takes more up front capital to try and compete with it. Meanwhile, the bigger company has the benefits of having brand recognition and being able to leverage the economies of scale. They can also just buy up smaller companies they see as a threat. For example, there’s no realistic scenario where a scrappy startup can start competing with Amazon to take on their online sales empire. Marx wrote about this problem in Das Kapital:
The battle of competition is fought by cheapening of commodities. The cheapness of commodities depends, coeteris pribus, on the productiveness of labour, and this again on the scale of production. Therefore, the larger capitals beat the smaller. It will further be remembered that, with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which Modern Industry has only sporadically or incompletely got hold of. Here competition rages in direct proportion to the number, and the inverse proportion to the magnitudes, of the antagonistic capitals. It always ends in the ruin of many small capitalists, whose capitals partly pass into the hand of their conquerors, partly vanish.
The only time incumbents can be displaces are during paradigm shifts. If a new marker niche opens up, and the established companies cannot adapt to it, then a new company has a chance to dominate that niche.
Amazon in ecommece is exception to the rule. In almost any other industry, be it traditional like metals and chemicals, plastic, etc. or services sector like hotels and trips, banking or IT, all those fields are riddled with competition. Now, that makes one wonder why a few monopolies like Amazon, Google, etc. are able to sustain? Is it due to a lack of interest or ability by other players or some other factor (like entry and information barriers)?
The competition is rather superficial in practice. Currently, 1% of the world population owns more than half the wealth. If you look at all these businesses and competition, most of it can be traced to a tiny number of owners. Capitalism created a phenomenal amount of wealth concentration because it’s fundamentally designed to concentrate wealth.
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Internet is amazing as it makes any information (e.g. software, music, document, prices etc.) you put in it automatically abundant. Capitalism is not applicable to things that are abundant as they have 0 price. This is why we put up those “information barriers” (copyright, patents, DRM) as artificial scarcity measures to set price to information, so that investments in crating this information can be paid back and money made.
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