The first post-Christmas casualty of the internet bubble was Value America of Virginia. This internet retailer - backed by a string of blue chip investors including Paul Allen, a founder of Microsoft - decided to sack half its staff and to concentrate in future on selling to businesses not consumers.

This may turn out to be a wise corporate move. It is the latest example of the how the world wide web is transforming the balance of power between corporations, consumers and governments. And the consumer is winning.

A few years ago globalisation appeared to have created a breed of monolithic multinationals answerable to no one and able to play governments and consumers against each other on a global basis. Not any more. Sure, the corporations are still winning against governments as the global nature of the internet enables them to minimise payment of sales taxes and to duck payment of corporate taxes by creating virtual HQs in offshore tax regimes.

The latest example, as reported in our financial pages last week, is the way chunks of the betting industry have migrated to Gibraltar to avoid the 9% betting tax.

However, corporations are losing out against consumers whose hitherto fragmented bargaining power has been harnessed by the awesome power of the web.

You saw it at the Seattle summit where the US agenda for the trade talks was undermined by the forces marshalled by non-governmental organisations and linked by the web. You saw it in the humbling of Monsanto's plans to dominate world agriculture through genetically modified foods. And you can see it everywhere in the way that hardly any of the exploding web retailers are making money. Amazon.com, the daddy of them all, is deemed to be doing well even though it is still making heavy losses.

Where companies have a monopoly or very strong market penetration like Microsoft, Sun Systems or Cisco they can make big money. But where they are operating in the newly democratised markets of the web - members of the click-ocracy who can move to a cheaper retailer at the click of a mouse - they are finding it almost impossible to make money. With a few exceptions the centrifugal forces of the web will keep prices down. The only thing that could change the new supremacy of consumer power is if there is such an almighty shakeout that oligopolistic conditions re-emerge.

The business school response to this is that "brands" will be all-important in retaining web business. I wonder. Take the most obvious example: Hotmail. Bought a few years ago by Microsoft it is the biggest provider of free email (apart from the call charge) and has built up a huge brand presence though it, presumably, loses pots of money. It is the internet café's raison d' etre and a lifestyle badge for millions of global travellers.It is also fantastic value for money (or no money in this case).

It is the sort of service that people would happily pay for. It would still be extraordinarily cheap at 5p a go (especially compared with the 26p cost of sending a domestic letter which takes a day to be delivered). Yet if Microsoft decided to levy a modest charge 5p it would soon discover that brand loyalty on the internet is only click-deep no matter how many millions companies spend on marketing and image building. Overnight millions of users would migrate to Yahoo or any one of the myriad companies offering a competing free service.

It is now much more difficult for multi-national companies to charge higher prices in countries even where market local conditions are favourable because surfers can soon find another country where the product is cheaper. We are now seeing the start of the long-awaited resurgence of consumer power as potential purchasers link up with each other to secure negotiated discounts. Companies like Letsbuyit.com are already doing innovative things to harness collective consumer power. But we haven't seen anything yet.

It is quite possible that a new kind of conglomerate - say Consumeristpower.com - will emerge to harness the global buying power of potential purchasers. If anyone wanting to buy a certain kind of car this year registered their intentions on the net, Consumeristpower.com would negotiate directly with the manufacturer: and the negotiating ploy would be a discount on the wholesale not the retail price.

It could be argued that the consumer is getting an almost unhealthily good deal at the moment. Giving away email, web building sites, instant messaging, web space, calendars and so forth is being justified by potential revenues from "banner ads" and other forms of advertising.

But how long can this purposive lossmaking continue? As Andrew Wileman observed in Management Today: "Products are being given away below cost (eg buy.com or Priceline.com) to build a customer base, while advertising rates for all but the highest traffic web pages are collapsing".

That there will eventually be a massive shakeout of internet companies is not really in doubt.

The "creative destruction" that the economist Joseph Schumpeter identified for mainstream capitalist companies (when competition destroys outdated ideas and firms) will be seen in spades with internet companies.

But even after this upheaval the balance of power between producer and consumer will have shifted decisively in favour of the consumer. Click, click.