“Google Is as Close to a Natural Monopoly as the Bell System Was in 1956”

Megalith

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Media scholar Jonathan Taplin says that if you were to start a company to compete with Google in search, he’d tell you that you were out of your mind, as it’d be an impossible feat. He argues that Google, and other giants that include Amazon and Facebook, have effectively cornered culture and undermined democracy, ravaging the digital economy and becoming so big that their dominance cannot even be challenged in court. Some say that monopolies can actually be good for innovation: is there any truth in that?

In terms of market share and profit margins, the big digital platforms, particularly Google and Facebook, enjoy an astounding level of dominance. Google, in effect the world’s largest media company, has an 88 percent market share in search advertising. Facebook (including Instagram, Messenger, and WhatsApp) controls over 70 percent of social media on mobile devices. Together, the two firms received 85 cents of every new dollar spent in online advertising in the first quarter of 2016. Amazon has an over 70 percent share in the e-book market. Along with Apple and Microsoft, they are now the most valuable companies (in terms of market capitalization) in the world.
 
No. Monopolies are not good for innovation because there's no competition. Competition is the mother of innovation because when two or more companies compete in similar areas, consumers will decide which ones are the winners and losers.
There are very few companies willing to compete with themselves. Google doesn't do it. Local monopolies like ISPs certainly don't do it. ISPs in general need another competitor to raise it's offerings.
Focusing on the search engine of google and saying they have a monopoly excludes the rest of the search engines like yahoo, bing, duckduckgo, etc. Saying that google is far better than all of them and has the market share isn't the same as saying google has a monopoly.
 
No, Bell had a LOT of government funding and government sanctioned monopolistic actions. Not remotely the same as Google simply being better than others at search.
 
Google. Maybe.

Facebook and others like Amazon? Fuck no. You're dumb as a box of rocks. Remember how huge MySpace was once upon a time? It dropped like a rock the moment Facebook innovated things a step further. Not to mention, plenty of social media sites are innovating beyond the simple "wall postings" and are doing things like Twitter and Snapchat. Not a monopoly in the least. Remember when Google released their social media? Instantly a billion people signed up for it to take a look around. They didn't like it as much, but you can see how quickly things can change.

Amazon? They are grabbing from the monopoly mecca known as Walmart, and plenty more are competing with the likes of curb-side grocery pickup, etc..
 
Yeah, I don't see it, plus the likes of ATT and cable companies command huge nation-wide infrastructure, a market that has been unnecessarily made nearly impossible to penetrate.
Yeah google and tech companies command a lot of money and all that, but infrastructure, that is value that stays.
 
The barrier to entry for a social media site is quite low. If someone comes up with a genuinely good idea Facebook could get squashed in an instant. It's no different than how myspace was crushed a decade ago.
 
jeremyshaw said:
No, Bell had a LOT of government funding and government sanctioned monopolistic actions. Not remotely the same as Google simply being better than others at search.
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Serious? Times have changed so the way monopolies work.
 
Smashing Young Man said:
Hypothetically, how would one breakup Google to end their monopoly on search?
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If I had to guess, I would think the easiest way would be for already established companies to try to do so.

For example, a lot of people already visit facebook daily if not hourly. Add on a search function that blends in well with it and COULD work.

But I agree if you're a company that is not yet established, I think it's next to impossible to simply say "I'm going to make a website for searching the interwebz" and instantly getting users
 
I agree, MS and Google need to be broken up into separate companies.

Google maps, Android, Youtube, Google hardware (they are going into chip making IIRC), and Google Software need to be broken up into their own companies. Similar for Microsoft, as IMO no operating system provider of that size should also be selling hardware, and their console branch should also be its own separate company.

The natural state of companies is acquisition and merging, and before long the entire world will be run by three competing mega corporations. If something isn't done soon, no individual government will be powerful enough to even be capable of challenging Google to try and attempt the feat... in fact, that may already be impossible.
 
Cyraxx said:
If I had to guess, I would think the easiest way would be for already established companies to try to do so.

For example, a lot of people already visit facebook daily if not hourly. Add on a search function that blends in well with it and COULD work.

But I agree if you're a company that is not yet established, I think it's next to impossible to simply say "I'm going to make a website for searching the interwebz" and instantly getting users
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What sort of industry can do you do that and be successful in anyways?
You think a new car company can just go "I'm going to make a new car manufacturer" and instantly get customers? Not even tesla could instantly get customers.
Any new company can start a new search engine and gain customers if their is better than google's in some sort of way. That's not considered a barrier to entry.
 
There are several blogs where Google talks about monopolies and their business structure. Technically they do not meet any definition of a monopoly on paper. In the public's eye, this is of course much different.

Remember the recent Alphabet company change over? Yeah .... that's part of their structure to combat any legal definition of a monopoly.

Not only does Google do search very well ..... they also have an incredible team of corporate attorneys WORLD WIDE and especially here in the US.

Governments literally have to change or create new laws in their country to ensnare Google and some have. Some countries just simply give their existing laws a broader meaning to go after Google.

Google has very deep pockets and they are huge huge HUGE target for corrupt governments. Even China, not the fairest of nations have shook Apple and Google down for large payouts.
 
I hate to nitpick, but the term "natural monopoly" is used incorrectly here. A company that gets really big and succeeds at regulatory capture is not a natural monopoly - they're just a plain old monopoly. A natural monopoly is one that arises because an industry's inherent high barriers to entry make it difficult, impossible, or infeasible for competitors to arise.

Social media and search engines are anything but natural monopolies. Starting a new social media platform has an extraordinarily low barrier to entry; anyone can code an app and throw it up on AWS. There are virtually no barriers to entry outside of obtaining funding, which is a common barrier to entry in every industry.
 
Ducman69 said:
I agree, MS and Google need to be broken up into separate companies.

Google maps, Android, Youtube, Google hardware (they are going into chip making IIRC), and Google Software need to be broken up into their own companies. Similar for Microsoft, as IMO no operating system provider of that size should also be selling hardware, and their console branch should also be its own separate company.

The natural state of companies is acquisition and merging, and before long the entire world will be run by three competing mega corporations. If something isn't done soon, no individual government will be powerful enough to even be capable of challenging Google to try and attempt the feat... in fact, that may already be impossible.
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In your case that is ware your wrong you literally shut down google because all income is most from advertisement that about 80% of it where the other 20% is little stuff here and there and a lot of the other services are free and let not for get a lot of the software is freely open-source
 
Ducman69 said:
I agree, MS and Google need to be broken up into separate companies.

Google maps, Android, Youtube, Google hardware (they are going into chip making IIRC), and Google Software need to be broken up into their own companies. Similar for Microsoft, as IMO no operating system provider of that size should also be selling hardware, and their console branch should also be its own separate company.

The natural state of companies is acquisition and merging, and before long the entire world will be run by three competing mega corporations. If something isn't done soon, no individual government will be powerful enough to even be capable of challenging Google to try and attempt the feat... in fact, that may already be impossible.
Click to expand...


Umm ... they are all different companies all under Alphabet the parent company. They are structured as to not meet the definition of a monopoly.
 
SixFootDuo said:
They are structured as to not meet the definition of a monopoly.
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You know what I mean though, that's not operating under the spirit of anti-monopoly legislation, but rather legal loopholes. We all understand its one company, and that's not good.

Anyone ever play Feed and Grow Fish game? Eventually you become such a big fish that the game is basically broken, and you just sit with your mouth open near a spawn point, and no competition against you is possible.
 
Decades ago, Sears was the mega retailer. They had stores in most towns. Some were super stores with everything in stock, others were catalog stores with little local stock but you could order stuff from the inches thick S&R Catalog and it would be delivered to your local catalog store in a few days. Anything from underwear to complete car motors to build it yourself house kits. Kinda like Amazon today but without the Internet. Then some guy named Sam started a small local retail store. Didn't work out well for Sears.

Years ago, Yahoo was the search engine giant. Then some folks started an upstart small search company. Didn't work out well for Yahoo.

Provide a better experience then the established giant and folks will show up and spend money.
 
bd news is realyl that to few peopel are using serach engiens like duckduckgo that actually doesnt spy on you. ( or they say so hmmm)
 
If i am the best at something why should i be forced to allow competitors on my platform or be forced to do things that would hurt my firm? Google is the defacto portal for finding relevant data for me. If Bing wants to return results tyat are even more relevant then so be it ill switch. But until that happens tough shit.
 
Dead Parrot said:
Decades ago, Sears was the mega retailer. They had stores in most towns. Some were super stores with everything in stock, others were catalog stores with little local stock but you could order stuff from the inches thick S&R Catalog and it would be delivered to your local catalog store in a few days. Anything from underwear to complete car motors to build it yourself house kits. Kinda like Amazon today but without the Internet. Then some guy named Sam started a small local retail store. Didn't work out well for Sears.

Years ago, Yahoo was the search engine giant. Then some folks started an upstart small search company. Didn't work out well for Yahoo.

Provide a better experience then the established giant and folks will show up and spend money.
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It's funny because now Walmart is having an increasingly difficult time effectively competing against more forward thinking retailers like Amazon and Costco.
 
I don't think this guy knows what a natural monopoly is. A natural monopoly is something where there's a natural condition that prevents feasible competition. For example, a crossing a river where there's only one small part that has a reasonable crossing isn't going to have competing ferries or multiple bridges. Last mile electric distribution is probably a natural monopoly as well, it's just not desirable to have competing electricity distribution (although there are some cases where it happened, eg: DC electricity distribution in parts of SF), and realistically last mile residential communication (phone/cable/internet) isn't going to have much because logistics for more than three or so lines to houses gets really messy -- see Google Fiber's difficulties trying to be a fourth line after electric, cable and phone; it's possible but hard, moving up to more choices would be even more crazy.

The Bell system monopoly was government enabled and enforced, although local lines for residences may be a natural monopoly within a service area. Long distance lines became competitive, even when government regulations prohibited straight up competition. None of Google's monopolies are 'natural' -- they out competed all other search engines, they out competed all other advertising networks, they out competed all other browsers, they've done a decent job at mobile operating systems too; mail is a very diverse space, I don't think they have close to a monopoly. There may be some amount of anti-competitive behavior to bring up market share in some of their subsequent markets, but they haven't gotten too many investigations, so it's not terrible.

Is it hard to bring up a new search engine, or advertising marketplace to compete against Google? Sure, Google is doing a really good job with those, but it's not impossible, and I don't think they'll remain on top forever.
 
jeremyshaw said:
No, Bell had a LOT of government funding and government sanctioned monopolistic actions. Not remotely the same as Google simply being better than others at search.
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Google spends millions per year on lobbying, they spent significant resources and developed technology to help Hillary Clinton's run for president. They don't do these without getting something in return.
 
NeoNemesis said:
It's funny because now Walmart is having an increasingly difficult time effectively competing against more forward thinking retailers like Amazon and Costco.
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Yep. The horrible irony for Sears is they HAD the very type of infrastructure in place that both Amazon and Walmart are trying to create. Amazon with local partners/lockboxes and Walmart with Ship to Store. The only difference is the the method of selecting the stuff you want, massive paper catalog vs massive online database.
 
NeoNemesis said:
The barrier to entry for a social media site is quite low. If someone comes up with a genuinely good idea Facebook could get squashed in an instant. It's no different than how myspace was crushed a decade ago.
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Somehow, I don't think thats true these days.

Looks like people just got comfortable with FB and ignored everything else.

Personally, I think that G+ was/is better than FB, but people didnt want to be even try another social media place, after jumping from myspace, to friendster, Hi5 and finally FB.

Hell, having people to even try Duo, Allo or telegram instead of whatsapp is almost impossible.
 
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Competition may be great for innovation, but monopolies are also great for progress. WE NEED BOTH...

As for the established giants getting "squished", there may have been a point in time when it was possible, but we're probably past that point.
 
InorganicMatter said:
I hate to nitpick, but the term "natural monopoly" is used incorrectly here. A company that gets really big and succeeds at regulatory capture is not a natural monopoly - they're just a plain old monopoly. A natural monopoly is one that arises because an industry's inherent high barriers to entry make it difficult, impossible, or infeasible for competitors to arise.

Social media and search engines are anything but natural monopolies. Starting a new social media platform has an extraordinarily low barrier to entry; anyone can code an app and throw it up on AWS. There are virtually no barriers to entry outside of obtaining funding, which is a common barrier to entry in every industry.
Click to expand...

Except the barrier to entry is the network effect. The more inclusive your social network the easier it is to attract even more people. If you want to find someone and connect with them, odds are you'll try Facebook first because that's the most likely place you'll find them. If Bob down the street codes up a social platform you are simply *not* going to use it no matter how good it is unless it also becomes the best place to find and connect with the people you're looking for.

In search, the barrier is the algorithms as well as all of the user data that leads to those algorithms. If you want to outdo search, you have to first code something as clever as Google's, then get enough users to use it every day to validate the model. The math is hard, the user base is even harder. Network effect applies here too. Google has infinitely more data to test with than Bob's Search. Google is highly likely to out innovate Bob, because it can see and account for all of the outliers and changes in behavior because it will see them first.

There's also the issue of their mapping data. Map data is *expensive* to acquire, and nobody will use it unless it covers their area well.

Natural monopoly is an accurate description. They are not DeBeers.

Hypergreatthing said:
No. Monopolies are not good for innovation because there's no competition. Competition is the mother of innovation because when two or more companies compete in similar areas, consumers will decide which ones are the winners and losers.
There are very few companies willing to compete with themselves. Google doesn't do it. Local monopolies like ISPs certainly don't do it. ISPs in general need another competitor to raise it's offerings.
Focusing on the search engine of google and saying they have a monopoly excludes the rest of the search engines like yahoo, bing, duckduckgo, etc. Saying that google is far better than all of them and has the market share isn't the same as saying google has a monopoly.
Click to expand...

Natural monopolies are inevitable unless the government actively prevents them in most cases. However, in this case, the natural monopolies only persist so long as the companies in question stay far ahead of the competition. If Google stops investing in R&D, Microsoft (or possibly a startup formed by former Google SE's and there's always the Chinese) will eat their lunch. Would we have better products if it was a proper duopoly or oligopoly? Maybe. Things move so fast on the web it's hard to tell how much faster it could go.

As for pricing, Google isn't the only ad firm on the web. You can use other providers, even cheaper ones. You can even swap around continuously. However, people buy from Google because they get a better return on their ad dollars. They own the market because they are the best. The moment they stop being the best they will collapse as quickly as they rose.

To restate what I said above, barriers to entry are low. Barriers to growth are extremely high. Barriers to becoming the biggest are almost insurmountable. However, the biggest cannot rest.
 
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Ducman69 said:
I agree, MS and Google need to be broken up into separate companies.
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Why though? !) It's not illegal to outperform other companies as long as you don't engage in anti-competitive behavior 2) Bing, Duck duck go, Baidu all exists and provide "competition" in the same way you'd say AMD provided competition to Intel (ignoring recent events where they actually are competitive).

Same story with MS. Republican predisent George Bush blessed their prior anti-competitive behavior back when he was selected. These days they actually face competition and aren't winning like they used to.[/QUOTE]
 
captainyarr said:
Google spends millions per year on lobbying, they spent significant resources and developed technology to help Hillary Clinton's run for president. They don't do these without getting something in return.
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Correct me if I'm wrong, but I think that's a relatively recent event and doesn't account for their rise to power. My understanding is their lobbying started back around when SOPA was gaining traction, as they saw that a threat to their business, so they wanted to become more involved in our "democratic process."
 
It certainly is good for those "competitors" and their financial backers being bought out far above their fair market value! Good for the consumer? It all depends on whether the monopolist holds the IP hostage (troll style) or actually does something meaningful with it a manner the public can get behind, i.e., free-to-reasonable pricing, expanded/enhanced functionality, releasing source code or plans via open source or creative commons, etc.

When private companies become public companies and answer to the boardroom and stockholders while tossing to the curb the core of moral righteousness that made them heroes in the eyes of legions adoring fans in the first place, those fans quickly realize how little difference there is between being a hero and the devil when ideals can be so easily trampled if there is money to be made by doing so. And by this point, those fans have become a captive consumer/user base to be preyed on as much as is legally possible.

But, it's okay! I own stock in several of these companies and giggle every time they put the screws to their consumer base just to make me, the shareholder, happy(y)

I SAID, DANCE MONKEYS! *cracks whip and tightens screws* Daddy needs a solid 1% uptick in volume to be able to afford that new McD's Select's sandwich for lunch tomorrow..muhahaha:wideyed:
 
This is as dumb as saying cheese has a monopoly on the pizza market. The fact is Google is good at what they do and that is why people use them, not because they don't have an alternative. Also there is nothing stopping anyone from creating an alternative to Google, and that's what monopolies do. ATT had a monopoly on telephone service because they owned all the lines and could prevent you from digging your own. If Richard Hendricks can concoct a new search algorithm in his bedroom tonight then he is free to do so and share it with the world.
 
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