A woman uses Twitter’s Periscope app to live broadcast the announcement of the 2015 Billboard Music Awards finalists at Twitter’s office space in Santa Monica, California. (Jonathan Alcorn/AFP/Getty Images)

There is something very interesting going on in the Internet industry right now. The biggest companies – especially Facebook and Twitter – have done a remarkably good job of holding on to market share despite the threat posed by a constant stream of new innovators – such as Instagram, Vine, Snapchat and now Periscope. In short, it’s getting harder and harder to find the next big breakout hit in Silicon Valley that can topple one of the market leaders.

That’s actually more significant than it sounds, because it flies in the face of the traditional Silicon Valley narratives of “disruptive innovation” and “creative destruction.” Big companies are not dying off, being replaced by others. The Web, which has been proclaimed dead over and over again, has not died.

Instead, the giants of the Internet world seem to be doing a remarkably good job of staying ahead. Arguably, as M.G. Siegler of Google Ventures has pointed out, the most interesting thing about Facebook right now is not the social network, but everything built on top of it – Messenger, Instagram, WhatsApp and Oculus. The same is true for Twitter – the six-second Vine videos and livestreams from Periscope are now more interesting than the deluge of daily tweets.

Facebook’s $2 billion acquisition of Oculus is further proof of how adept Silicon Valley’s top firms have been at disrupting themselves before others do. (Jae C. Hong/AP)

The reason for this ability of the industry giants to hold out against the innovative start-ups might be that Silicon Valley has finally matured as an industry, and what we are witnessing right now is what we’d expect from any industry once it reaches its maturation phase. You get a few big winners and the most interesting upstarts are either acquired or bought up by the winners — or they are simply innovated out of business.

This is the classic paradigm for any competitive industry that was first proposed by Bruce Henderson of BCG back in 1976. The “Rule of Three and Four” postulates that three dominant firms tend to lead almost every market, regardless of industry size or geographic location. Moreover, these three “generalist” firms tend to control approximately 70 percent of total market share, with the rest controlled by a host of product and market “specialist” firms. Henderson further notes that, “Industry structure will find equilibrium when the market shares of the three companies reach a ratio of approximately 4:2:1.”

Since the “Rule of Three and Four” (now known as the “Rule of Three”) was first proposed, it has been tested empirically, first in 2002, and then again in 2010 and 2012. As researchers at Ivey Business School, Chapman University, Loyola Marymount University and the BCG Strategy Institute found, the “Rule of Three” appears to apply to as many as 200 different industries. Time and time again, mature competitive markets sort themselves out in such a way that three “generalists” control anywhere from 70 to 90 percent of the market, with a group of specialist companies accounting for the remaining 20 to 30 percent of market share. The “Rule of Three” is, in short, a “powerful empirical reality,” much as Moore’s Law is a powerful empirical reality.

In nearly every industry – whether it’s airlines, automakers, breweries, soft drink companies or steel producers – there are three generalist firms that tend to control 70 percent of total market share, typically in the proportion 40:20:10. Once a market is fully mature, the only way to gain new market share is by constantly spawning more “specialists” that are capable of controlling niches of the broader overall market.

From this perspective, the current market structure of Silicon Valley starts to come into focus. Depending on how you define the “Internet industry” – as either a broad industry or as a specific niche – you can start to test the “Rule of Three.” In the world of social networking, for example, the three “generalists” appear to be Facebook, Twitter and LinkedIn. Innovators such as Foursquare, Vine, Snapchat, WhatsApp or Periscope are simply the product and market specialists, fulfilling very specific tasks, but with very little ability to shape overall market share.

Eventually, these specialist companies are either absorbed by the generalists or continue to chug along, hoping for some slice of the broader market. Their innovations – location-based updates, six-second looping videos, live streaming video, ephemeral content, and 1-to-1 (instead of 1-to-many) communication – will continue to persist, but over time, will be acquired, copied or improved upon by the big market leaders. In the case of Meerkat, this process might take only a few weeks. In other cases, it might take years.

All of this, of course, has enormous implications for both how Silicon Valley invests in companies and how Wall Street values these companies once they are brought to market. If you believe in Silicon Valley as a high-growth, disruptive industry, then you also believe in the billion-dollar valuations being tossed around like baseballs during spring training. If, on the other hand, you start to view Silicon Valley as a mature, competitive industry, then you start to view the hype surrounding start-ups such as Meerkat or Periscope with a bit more circumspection. In short, Periscope could change the way we view the world – or it could lead to a bunch of really silly refrigerator videos.

Which is not to say that something is not capable of coming along and disrupting the Internet industry. You could make the case that the arrival of big Chinese Internet players such as Alibaba could lead to a shakeout amongst the dominant Internet companies. Or, the new era of wearable devices could be as disruptive as the shift from the desktop to the mobile device. However, for now, the biggest Internet players seem to be doing a remarkably good job of disrupting themselves before others can.