Aggregators: Demand, Power, and Commoditized Supply

📚 This post is part of the Concepts series.

Think of it as the warm-up before the sparring. Before we dive into company battles, market deep-dives, or competitive teardown posts, we need to get the fundamentals straight.

These posts aren’t trend-chasing. They’re the mental models and strategic concepts that show up again and again—just wearing different clothes.

If business strategy is war, this series is your weapons training. No fluff, no corporate buzzword soup. Just sharp concepts, explained like one operator talking to another.

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At the old village fair, a storyteller with the best spot under the banyan tree would draw the biggest crowd. Once enough people gathered, food sellers and traders drifted over, hoping to make a sale. The storyteller didn’t cook, build, or trade. He just owned the audience. And that was enough.

An aggregator works the same way. It pulls in users, then uses that access to squeeze value out of suppliers. Not by making the product, but by controlling who sees it.

User relationship is everything

Aggregators deal directly with users—through logins, payments, or habitual use. That direct line gives them power no distributor ever had.

They also scale like software. Serving ten million users costs about the same as serving one. There’s no warehouse. No shipping. No per-unit anything. Just code and cloud bills.

Aggregators don’t begin by courting suppliers. They solve discovery for users. Better recommendations, easier search, less friction. Users come first. Suppliers follow, and once they do, they don’t get much say in the arrangement.

Platforms vs. Aggregators: Not the same game

People confuse aggregators with platforms. They’re not twins, just cousins.

Platforms build ecosystems. Think operating systems, marketplaces, developer APIs. Everyone plugs in and grows together. Aggregators insert themselves between users and suppliers, then take over. They aren’t always essential, but they are preferred

A platform wants its suppliers to shine. Apple needs good apps. A platform’s job is to make the whole system better. Aggregators, in contrast, prefer uniformity. Facebook doesn’t care if a post comes from The Economist or BuzzFeed. It’s all “content.” One source is as good—or irrelevant—as another.

Platforms facilitate relationships. Aggregators control them.

On platforms, value gets shared. Suppliers win if the platform wins. Aggregators flip that script. They keep most of the value for themselves and let suppliers compete for crumbs.

Why regulators care (or should)

With platforms, regulators worry about gatekeeping and foreclosure. With aggregators, the real concern is acquisition. Facebook buying Instagram wasn’t about synergy; it was about cutting off the next threat. The danger isn’t what aggregators do today—it’s what they’ll be able to do once they own the entire category.

Owning the funnel

Aggregators win by owning the funnel. The user starts with them. Search begins on Google. Travel inspiration starts on Instagram.

Once that habit forms, the aggregator can steer users wherever it likes. To whoever pays more. Or to itself.

Suppliers can’t walk away. Not without disappearing. Aggregators don’t just set the rules. They are the rules.

Network Effects

Unlike platforms, which often externalize network effects (more apps attract more users, who attract more apps), aggregators internalize them.

Facebook becomes more valuable as more friends join. Google Search improves with every query. That feedback loop tightens the flywheel and raises the walls.

Some aggregators sit in the middle. Amazon, for example, benefits from more buyers and more sellers. Same with Netflix. But even here, the house usually wins.

Uber and Airbnb have more externalized effects. More drivers attract more riders. More hosts attract more guests. But even these suppliers are replaceable. The aggregator owns the demand. Drivers and hosts don't.

Power Abuses: The usual suspects

With power comes pettiness. Aggregators ban suppliers. Push their own offerings. Charge rent for visibility. Make life harder if you won’t pay to play.

Google’s hotel module gives OTA listings no choice. Pay up, or vanish. Facebook throttles reach unless you buy ads. Amazon nudges shoppers toward its own brands.

Sometimes they don't even hide it. They just do it.

Why Aggregators win

Aggregators don’t just disrupt markets. They absorb them. A critical mass of users becomes a critical mass of leverage. Suppliers, once valuable, turn into interchangeable widgets. All to maintain access to demand.

The math is brutal. Control the user, commoditize the supplier, and skim the value in between. It’s not personal. It’s structural.

Spotting an Aggregator in the wild

If you’re analyzing a company, ask:

• Does the company interact directly with users through accounts, payments, or habitual use?

• Can it serve the next million users without significant added expense?

• Are users coming for content, curation, search, or convenience—not for the company’s own product?

• Would the experience change meaningfully if one supplier left the platform?

• Are network effects internalized into the product, not just bolted on?

If the answer is “yes” to most of these, you’re probably looking at an aggregator.
If not, it might just be a marketplace, a platform, or a middleman wearing a hoodie.