The state has significant advantages when competing against private market actors because it can sustainably fund public goods, due to the fact that its vast tax collection apparatus can capture a much higher proportion of the value generated by public goods than private actors can.
An adequately funded public good has several advantages over private goods:
* Wide public buy-in: Due to the absence of barriers to contribution, such as secret code or restrictive licensing requirements for modifications.
* Generally favorable public perceptions: Public goods often enjoy more trust and support.
If the state provides a compelling option, it can naturally attract users, and without having to impose mandates on existing market options.
This is greatly preferrable to the regulatory approach, which can have unintended consequences that slow innovation and reduce market options. For example, if regulations impose heavy compliance burdens on tech companies, they would divert resources to legal and administrative expenses, leading to less resources for R&D.
Regulatory regimentation to ostensibly achieve some public policy goal, can also prevent companies from experimenting with new ideas and approaches, which ultimately slows the industry's rate of progress.
So by having the state compete rather than regulate coercively, we get the benefits of market-driven innovation while also testing the potential of public goods to provide superior value than what market-provisioned goods can.
Such state-funded public options can also be used to non-coercively bolster open standards, by giving then the critical mass of adoption needed to become market standards.