In the late 1940s De Beers began using their iconic slogan, “A Diamond is Forever.” For almost the entire 20th century the De Beers monopoly controlled 80 to 90% of the supply of diamonds. Even though diamonds are not rare and among the most common gemstones, De Beers’ successful marketing campaign and limiting of supply kept diamond prices artificially high. In the 21st century, new diamond discoveries in Russia, Australia, Angola, and Canada disrupted the De Beers monopoly. Even worse for diamond prices, starting in 2018, FTC rule changes allowed lab grown diamonds to be marketed as real diamonds, chemically equivalent to the stones found in nature. While prices of just about everything have increased over the last 20-years, diamond prices are lower. Advancing technology, new regulation, changing sentiment, and a lack of adaptation doomed the De Beers’ seemingly “forever” monopoly.
De Beers shows us that the current period of rapidly shifting technology and politics creates vulnerabilities for even the strongest monopolies. One word that best summarizes the outlook going forward is “disruption.”
There are forthcoming events that could even challenge the near monopoly status that some of the big market winners of 2024 enjoy. In the coming years, AMD, Amazon, Alphabet, and Microsoft are poised to challenge Nvidia’s estimated 70 to 90 percent market share in the artificial inteligence chip design market. In another example, scientists theorize that quantum computers, like the ones being quickly developed by Alphabet, could undermine the bitcoin transaction process and internet encryption protocols. Alphabet itself is facing antitrust challenges in federal court. Even on a personal level, many office workers are justifiably concerned about the potential for machine learning to disrupt their employment.
Because it is very difficult to foresee disruption and its impact, diversification of both personal human capital and investment capital will be more important than ever going forward.