One factor that made me switch careers from scientist to software engineer is the attractive vibrancy the software sector radiates. Being a sovereign scientist felt like such a privileged position that it seemed impossible for anyone to ever deserve it, yet you’d see senior software engineers given autonomy for designing and operating systems so impactful they’d make your eyes water (often while being paid gloriously to do so). There is clearly a product-market-fit for creativity in the software sector’s labor market, at least in the current era, and I am wondering why.

Since switching lanes, I confirmed this product-market-fit with my own experience and started asking myself where this vibrancy of the software sector originates from. During my Science days, I learned that even in places that should enable autonomy the most (academia), you’ll fully depend on the good-will of third parties like peers, granting authorities, journals etc. Yet in the software sector where influence of third parties is encouraged (they’re called stakeholders) you can see engineers enjoying great autonomy over their creations. Why is trust so cheap in the software sector?

The trust afforded to engineers in software appears unique among professional disciplines. This trust manifests not just in technical decision-making autonomy but in the resources allocated to pursuing solutions without guaranteed outcomes. Unlike physical goods where materials and manufacturing have inescapable costs, software’s reproducibility at near-zero marginal cost enables a trust paradigm impossible in other sectors. While the artifacts of software engineering can be inspected and verified, trust is “cheap” primarily because of the intellectual and monetary hyper-liquidity that monopoly-seeking behavior creates. When a company is awash in venture capital and chasing market dominance rather than immediate profitability, the traditional constraints that limit trust in other sectors simply evaporate.

Monopoly is a Business Model

One can blame the vibrancy of the software sector on Google. In particular Google Search. Free search was never an intrinsically viable business model; if you learn about the computational effort of indexing the internet, you will understand. What made Google Search a trillion dollar business was the monopoly. The monopoly was an essential foundation of Google AdWords and Google AdSense (which were the actual cash cows). Facebook did something similar, Discord is doing something similar right now. Everyone learned (latest since Thiel’s infamous statement “competition is for losers”) that you need to strive for at least market dominance in order to make the big bucks and VC firms are aiming exactly at this.

This ambition explains the stupendous amounts of cash put into “unicorns” before any profitability is even in sight. It is all about growing that market share until you dominate the market or have a monopoly so you can leverage that monopoly for cashing out. Achieving anything less than market dominance or monopoly is not worth it because then you’re barred from the exponential increase in power that comes with market domination or monopoly.

So you have VC-funded software startups that get as much cash as they want and have full autonomy over what they’re creating as long as their market share grows every quarter. Think about it. What could the consequences of that be? Read the title of the essay again. Companies seeking market dominance means cheap access to new and useful technology.

The race towards achieving a monopoly is a high-stakes gamble fueled by external investment. Venture capital firms pour vast sums into these companies, hoping for exponential returns when the company either goes public or is acquired. However, this influx of cash is not infinite. Eventually, these companies must demonstrate a path to profitability to justify the continued investment. The model is inherently unsustainable in the long run if the promised dominance and subsequent monetization do not materialize within a reasonable timeframe. The constant need for “exogenous fuel” in the form of funding creates a finite runway for these ventures, making the initial period of lavish spending and free offerings a temporary, albeit impactful, phenomenon.

This explains, in part, why my move to software engineering felt like entering a different world. The abundance of resources and the freedom to create felt almost unreal compared to the constant struggle for funding and recognition in academia. The vibrancy I observed and now experience is intrinsically linked to this pursuit of monopoly, a temporary state where the drive for market share leads to an unprecedented outpouring of innovation and freely available technology.

Giving Away Valuable Technology for Free is The Price that Companies Pay for Market Dominance

Think about the impactful, free apps everyone knows:

  • Facebook: Connects billions of people globally without direct payment, pursuing user growth before monetization through ads.
  • Google Search: Provides instant access to a vast ocean of information for free, sacrificing short-term revenue to achieve search dominance.
  • Airbnb: Enables finding accommodation anywhere with minimal upfront cost, prioritizing network effect over immediate profitability.
  • ChatGPT: Offers sophisticated AI capabilities at a very low price point, foregoing revenue to establish market position in the emerging AI assistant space.
  • Uber: Revolutionized transportation by making it easily accessible and cheaper than traditional taxis, using venture capital to subsidize rides and gain market share.
  • YouTube: Hosts an unimaginable amount of video content freely available to anyone, accepting massive infrastructure costs to dominate video distribution.
  • Twitter/X: Provides a real-time global communication platform at no cost, pursuing user engagement over immediate revenue.
  • WhatsApp: Offers free messaging and calling across the globe, initially forgoing any monetization to achieve critical mass in messaging.
  • TikTok: Delivers endless entertainment through short-form videos without charge, rapidly scaling its user base before focusing on monetization.
  • Netflix: While subscription-based, offers free trials and vast content at relatively low cost, initially accepting negative margins to establish streaming dominance.
  • Spotify: Provides access to a massive music library for free with ads, sacrificing per-stream revenue to disrupt traditional music distribution.
  • Docker: Revolutionized software deployment while remaining largely free for individual developers and small teams, prioritizing adoption over revenue.

This pattern is clear: these companies, in their pursuit of market dominance, have offered incredibly valuable technology and services at little to no direct monetary cost to the user. This “free for monopoly” strategy isn’t about altruism; it’s a calculated investment in capturing a massive user base, which can later be monetized through advertising, premium features, or by leveraging the network effects that come with a dominant position.

This strategy has historical precedents beyond software. The British Empire’s construction of railways across India wasn’t motivated by altruism but by the desire to extract resources and maintain control. Standard Oil’s aggressive pricing was designed to eliminate competition before raising prices. What’s unique about software is the unprecedented scale and speed at which this strategy can be deployed, coupled with marginal costs that approach zero. The economics of digital goods enables companies to give away valuable technology at a scale impossible in other sectors, making the “free for monopoly” strategy disproportionately effective.

The race towards monopoly is inherently unsustainable, designed to be finite and needs exogenous fuel (funding).

Companies whose goal is not to achieve monopoly (usually because the market is too competitive or impenetrable) default to different strategies. It is to make money with the first user and proportionally more with each following user (and not the fact of having captured all the possible users). This intrinsically sustainable strategy is not dependent on growth and market dominance which is the reason why you might not know some of these products:

  • Oracle Database: Charges substantial licensing fees from the first customer, focusing on enterprise reliability over market share.
  • SAP R/3: Sells complex enterprise resource planning software with high per-user value, prioritizing depth over breadth.
  • Salesforce: Offers CRM software with tiered pricing that scales with usage, never sacrificing margins for growth.
  • Xero: Provides accounting software with immediate subscription revenue, focusing on serving existing customers well rather than unlimited expansion.
  • Jira: Sells project management tools with predictable per-seat pricing, never giving away enterprise features to gain market share.
  • Microsoft Office Suite: Maintained premium pricing even when competing with free alternatives, focusing on sustainable revenue over maximum adoption.
  • Workday: Charges substantial fees for HR management software, focusing on serving large enterprises profitably rather than maximizing user numbers.
  • Amazon Web Services: Despite operating in a competitive market, maintains healthy margins on all services rather than using predatory pricing.
  • NordVPN: Charges all users a subscription fee with no meaningful free tier, prioritizing sustainable revenue over rapid growth.
  • Babbel: Requires payment for language learning services from the start, never subsidizing free users with venture funding.
  • Ableton: Sells professional audio software at premium prices, focusing on serving paying customers rather than maximizing adoption.
  • Hey/Basecamp: Deliberately charges sustainable prices for email and project management, explicitly rejecting the venture-funded growth model.

These products incur massive revenue and even the smallest of these are more profitable than Uber.

Some of the most valuable tech used by developers comes from monopoly-seeking companies

When you hire the best engineers in the world, give them a lot of money and time, they will inevitably invent and give away amazing technologies for developers. This often happens as a side-effect of building internal tools and infrastructure necessary for their own massive scale (Google developed Angular, Go, Kubernetes, and Android to power its own services; Facebook created React and GraphQL for its platform; Microsoft developed TypeScript). In other cases, developers are the direct market these companies are targeting (Docker, Elasticsearch, VS Code, and MongoDB offer powerful tools that streamline development workflows, often with free or very affordable tiers to attract a wide developer base).

Furthermore, we see this pattern with VC-funded developer tooling like Bun and Next.js. These tools often gain rapid adoption by being offered for free and focusing on excellent developer experience. Their business model isn’t typically based on direct sales of the product itself, but rather on building a large network of users and developers around the technology. This network effect creates a quasi-monopoly in their respective niches, which can then be leveraged for monetization through services, support, or more deleterious practices like degrading the architecture for revenue and market share. The product itself acts as a loss leader, with the hope that the surrounding ecosystem will eventually generate sustainable revenue.

Companies sometimes engage in the strategic move of commoditizing their complement to weaken competitors. Meta releasing Llama, a powerful large language model, for free was a clear attempt to destroy the profit margins of companies like OpenAI and Google. This is classic price dumping strategy – Meta doesn’t need to make money directly from AI models (unlike OpenAI), so by releasing a capable model for free, they force competitors into a race to the bottom on pricing while Meta can still profit from its core advertising business. Google’s open-source Chromium project operates on the same principle, maintaining control over web standards and the browser landscape by giving away the browser for free while monetizing search traffic. These commoditization strategies are rarely framed as competitive attacks, instead presented as benevolent contributions to the technology ecosystem while their true strategic purpose – undermining competitors’ ability to charge premium prices – operates beneath the surface.

The monopoly business model drives sustainable innovation through intellectual hyper-liquidity

What I’ve written so far may sound pessimistic but is supposed to be realistic. I am searching for an explanation as to why switching to software engineering was one of the best decisions of my life.

The path towards market domination is a period of what I call intellectual hyper-liquidity because you bring together the world’s best engineers, pay them well and leave them alone as long as market share grows. This creates an environment where experimentation and innovation flourish. The sheer scale and ambition of these monopoly-seeking companies necessitate the development of novel solutions to unprecedented challenges.

By intellectual hyper-liquidity, I mean a state where cognitive capital—brilliant minds, innovative ideas, technical expertise—is both abundant and highly mobile. It’s characterized by the freedom to experiment with minimal bureaucracy, the resources to pursue solutions that might fail, and the mandate to solve problems at unprecedented scales. This liquidity operates at multiple levels: within organizations where engineers can move between projects, across the industry as talent flows to where it’s valued most, and in the conceptual space where ideas can rapidly evolve, combine, and transform without the friction that typically binds more traditional sectors.

This state differs fundamentally from academia, where intellectual capital is often constrained by grants, publication requirements, and institutional hierarchies. It also differs from traditional enterprises where innovation is typically focused on incremental improvements to existing products. In the monopoly-seeking tech sector, the convergence of abundant capital, ambitious technical challenges, and the strategic imperative of rapid growth creates a uniquely fertile environment for both technical innovation and individual autonomy.

This might have led to the past wave of releases of free technologies like Kubernetes, React, and GraphQL that are undeniably impressive but can sometimes feel like complex and highly-engineered solutions for smaller, less demanding systems. These technologies aren’t over-engineered in an absolute sense—they embody design decisions that address real needs at scale. Kubernetes, for instance, wasn’t designed for the typical small business deployment but for orchestrating thousands of containers across global data centers. Its complexity reflects the genuine complexity of the problems it solves.

What appears as over-engineering to a smaller organization is often a reflection of different priorities and constraints. The teams building these technologies operate in environments where future scalability, extensibility, and handling edge cases are paramount concerns, not excessive abstractions. The resource constraints that would typically force simplification don’t apply in the same way when you’re backed by monopoly-seeking capital and tasked with solving problems at global scale.

The resources available to these companies allow them to tackle incredibly complex problems and develop sophisticated tools that might be beyond the reach of smaller, more resource-constrained organizations.

It’s important to distinguish between the race to monopoly and the monopoly business model itself. The race, as discussed earlier, is often fueled by unsustainable levels of investment. However, once a company achieves a dominant market position or a true monopoly, the business model can become remarkably sustainable. The lack of significant competition allows these companies to generate substantial profits, which can then be reinvested in further innovation, attracting top talent, and solidifying their market leadership. Therefore, while the initial phase of giving away valuable technology for free is often unsustainable in isolation, it is a strategic investment aimed at achieving a position where innovation can be sustained by the immense resources that come with market dominance.

However, the technologies emerging from this period of intellectual hyper-liquidity are often inherently complex because they are designed to solve problems at a scale and with intricacies that most organizations will never encounter. The very nature of operating global platforms with billions of users necessitates building sophisticated and multifaceted systems.

This inherent complexity is a direct reflection of the immense challenges these monopoly-seeking companies are tackling. It’s precisely this gap between the needs of these tech giants and the reality of most developers that has fueled a significant counter-movement within the software development community. This movement, largely originating outside the realm of big tech, emphasizes simplicity, developer experience, and pragmatic solutions. Frameworks like Ruby on Rails, championed by figures like David Heinemeier Hansson, along with technologies like SQLite and HTMX, represent a deliberate choice towards more straightforward and accessible approaches, tailored for teams and projects with different constraints and priorities.

This counter-movement isn’t merely cyclical or reactionary; it represents a fundamentally different approach to value creation in software. While monopoly-seeking companies build complex systems designed to scale infinitely and capture entire markets, the simplicity advocates pursue solutions that solve specific problems well with minimal complexity. These aren’t temporary fashions but parallel traditions in software engineering, each with its own philosophy and economics. The tension between them is productive, pushing both approaches to evolve and improve.

Most economic sectors don’t give away valuable technology for free

We should almost be grateful to TikTok for providing a seemingly endless stream of entertaining and informative short-form videos for free. This easy and free access to information and technology is indeed a significant benefit of the current landscape. However, it’s crucial to clarify that platforms like TikTok and its counterparts aren’t truly free. While users might not pay with money, they certainly pay with their data and their attention. These companies collect vast amounts of user data, which is then used for targeted advertising and to further refine their algorithms, ultimately shaping the content users see and the products they might be interested in.

This model of “free” access in exchange for data and attention is largely unique to the technology sector, driven by the pursuit of market dominance and the potential for massive advertising revenue or the ability to leverage user data in other ways. In most other economic sectors, valuable technology and services come with a direct monetary cost. You pay for your car, your washing machine, your medical care, and the raw materials that go into these products. The fact that the software sector so readily gives away powerful tools and platforms for free (or the exchange of data) is an unnatural state, a byproduct of the intense competition for market share and the unique economics of digital goods, where marginal costs can be near zero once the initial development is complete.

This unnatural state cannot persist indefinitely. As monopolies solidify, the incentives that drove giving away valuable technology begin to shift. We already see signs of this maturation: increased subscription models, freemium tiers replacing fully free offerings, and the gradual enclosure of once-open platforms. The question isn’t whether this transition will happen but how it will unfold across different segments of the industry. Will we see a gradual evolution toward sustainable business models that preserve some of the openness and innovation, or a more dramatic correction that fundamentally reshapes the software landscape?

Despite this inevitable evolution, the period of intellectual hyper-liquidity has created lasting artifacts—open-source technologies, development practices, and collaborative models—that will continue to shape the industry regardless of how its economics evolve. These technologies represent a permanent contribution to our collective technological capabilities, even as the conditions that created them may prove transitory.

The good part of this unnatural state is the unprecedented access to powerful technology and information it provides to individuals and developers alike, fostering innovation and creativity on a global scale. As we navigate this unique moment in technological history, understanding its economic underpinnings helps us appreciate both its extraordinary benefits and its inherent transience.