Size Matters

No matter how big or small your business is, all of us want to achieve our revenue goals, maximize our profitability, and be associated with a brand that is well-respected in the marketplace. Often businesses look at forming partnerships to help achieve these goals finding beneficial combinations that enhance their position in the market.

However, in a partnership or business relationship, there is often an imbalance of power, with one of the partners having the ability to wield power and control over the other based on the advantage of their size.? Here are just a few examples of what happens to the small guy when the big guy decides to use that imbalance of power to their advantage:

Yelp and Google:

Yelp, a popular online review platform, entered into a partnership with Google where Yelp's reviews were integrated into Google's search results. However, Yelp later accused Google of favoring its own content over Yelp's, leading to antitrust allegations and lower viewer traffic. Google’s dominance in the market created an environment where they used Yelp’s content to enhance their own search results.

Walmart vs. Small Suppliers:

Walmart, being one of the world's largest retailers, has faced criticism for its practices in dealing with suppliers. Smaller vendors often find themselves under significant pressure to meet Walmart's demands for low prices and strict compliance standards leading to razor thin profit margins and cash flow challenges as they struggled to negotiate with the retail giant or lacked resources to resist Walmart's demands.

?Apple vs. Mobile App Developers:

Apple has used its dominant position in the mobile app market to charge a 30% commission fee on all in-app purchases, which has been criticized for being exorbitant and potentially stifling competition. Smaller developers argue that this fee structure can significantly impact their profitability and ability to compete on a level playing field, but the imbalance of power based on Apple’s size and market reach give these developers little choice but to comply.

These examples illustrate how imbalances of power can lead to challenges and difficulties for smaller businesses when dealing with larger corporations that can lead to disastrous results when the big guy uses their size to take unfair advantage of their smaller partner.