Winner-Takes-All Market

You live in a town where 22 candidates run for mayor. On the day of the election, the top candidate gets 12% of the vote. The runner up has 11%. There are two others with 10%, one with 9%, and then everyone else has between 1% and 5%. The candidate with 12% becomes mayor.

Even though they didn't get anywhere near 50% of the vote, they had the highest total in the election. Therefore, they win. Everyone else goes back to running their Honda dealership or monetizing their home-schooling YouTube channel, or whatever else they were doing before they threw their hats into the mayoral race.

That's a winner-take-all situation. The top candidate just had to be a little better than everyone else and they get the prize.

In a market context, the concept means that a product with a little bit of an edge becomes a massively dominant force. Almost all the market share, despite the fact that the product has perhaps only a marginal advantage.

The market for search is an example. Google's competitors might be almost as good as Google. But Google remains a near monopoly, while everyone else is a distant also-ran.