The hidden cost of free technology

Back in late 2019 I met someone from Zoom who was visiting London. The company, then as now, offered free video-conferencing calls for up to 40 minutes, but charged a fee of around £10 a month to users who wanted longer calls.

Towards the end of the conversation, I flippantly asked what I thought was a hypothetical question: ‘How much would you charge to give full Zoom access to the whole UK population?’ I didn’t think much more about it, but to my surprise they came back to me a few days later: ‘If you know anyone in the government who’d be interested in this, we’d like to talk.’

In the end, I never got round to doing anything, and then the pandemic hit, which solved their adoption problem overnight. Nevertheless it remains an interesting thought experiment. Firstly, why might this have been a good idea? And why did I never bother taking it further?

One reason I was interested was because Zoom was not Google, Amazon, Facebook, Apple or Microsoft. When regulators turn their fire on these network-effect oligopolies, the criticism usually focuses on their pricing power. Maybe so. But often these companies perform their profitable work quite well.

Instead, a less visible cost of their market dominance may come from services where they don’t make money: things like FaceTime, Skype, Teams, or the various email clients given away with the ‘main product’. These defensive offerings can trap innovation in a slough of mediocrity where they are capable enough (and free enough) to prevent new entrants entering the market, yet where nothing significantly improves.