The truth is somewhere in the middle: definitely, you see some large companies invest heavily but (more commonly) you see small firms nibble at the edges of an existing product until it is too late for the larger companies.
Saying that monopoly produces innovation is like saying government produces innovation. It happens but given a long enough period all things happen. The question is about incentives: the incentives to innovate within large companies are terrible, that is why it doesn't happen most of the time.
Also, consolidation has happened in all industries at all times. It is a function of things that repeat: knowledge curves, lindy effects, etc.
Just generally: be wary of Thiel and his ilk. They have a predilection for ahistorical nonsense. The history in this area, broadly business history, is particularly difficult and not well known (the only tech person who I have seen get close is Patrick Collison..and then...not really).
That's not Thiel's argument at all. His argument is that the most innovative companies tend to become monopolies.
However monopolies are not always due to innovation, nor our monopolies inefficient. As you mentioned, it's a function of things that repeat, but also due to stronger players that gobble up less efficient and/or innovative firms.
I would read between the lines. Business history is indeed difficult.
First, I replied to a comment. The majority of your points should be directed there. Second, your point about monopolies or why they happen is just uninteresting (the question of "always" is not something that can be answered). Third, your point about the most innovative companies tending to become monopolies is wrong...I am not sure how little you have to know to think this but it is certainly very minimal. The historical evidence is that industries consolidate down to a few large companies, not that they become monopolies. Fourth, again, I repeat what I said about ahistorical nonsense. Neither in theory or reality is monopoly a natural consequence of capitalism. Fifth, most monopolies that have existed in reality, by number, are not privately-owned, they are not innovative. There is a fairly obvious inverse correlation between monopoly and innovation (again though, the issue that is confusing you is thinking that innovation -> monopoly...this isn't a thing).
Thiel’s point is on the extreme end if you have hyper-competition, firms will have no money leftover to invest in moonshots (self driving cars, cloud computing, etc. ) instead they focus on pure survival.
I don’t see how a company that’s in a life or death struggle could pour hundreds of millions/billions of dollars into R&D but perhaps I’m missing something
The truth is somewhere in the middle: definitely, you see some large companies invest heavily but (more commonly) you see small firms nibble at the edges of an existing product until it is too late for the larger companies.
Saying that monopoly produces innovation is like saying government produces innovation. It happens but given a long enough period all things happen. The question is about incentives: the incentives to innovate within large companies are terrible, that is why it doesn't happen most of the time.
Also, consolidation has happened in all industries at all times. It is a function of things that repeat: knowledge curves, lindy effects, etc.
Just generally: be wary of Thiel and his ilk. They have a predilection for ahistorical nonsense. The history in this area, broadly business history, is particularly difficult and not well known (the only tech person who I have seen get close is Patrick Collison..and then...not really).