Okay, maybe the headline is a slight stretch, but the news today that Jean Tirole of France has won the “Nobel” Prize for economics makes it a lot less of a stretch.
Tirole’s work, in part, includes work on “Two-Sided” markets which describes businesses ranging from Google to Visa and Mastercard, as well as dating sites and yes, even B2B marketplaces. The Economist ran a good article on his work for lay people here. His work, and the work of David Evans and Richard Schmalensee, demonstrate the power and complexity of getting pricing right in such markets. Think of all of the arguments that now take place in B2B marketplaces over buyer versus supplier fees (Ariba, Tradeshift, Coupa, Basware, Ob10, etc.) as a small part of this debate.
Tirole puts a lot of emphasis on the “winner-take-all” aspects of these markets and the complexity of antitrust regulations associated with these type of potential monopolies. I think most investors and entrepreneurs in “two-sided” markets secretly hope that some day their platform will have enough market power to attract the attention of the regulators! And eventually a few make it: EDI VANs, Google, Sabre, Visa/MasterCard, AT&T, and a few others have all had run-ins with the antitrust regulators. The rest will have to wait with a combination of envy and trepidation.