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'Google Is As Close To a Natural Monopoly As the Bell System Was In 1956' (promarket.org)
An anonymous reader quotes a report from ProMarket: 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. The rise of digital platforms has had profound political, economic, and social effects, not least of which on the creators of content. While the internet brought immense benefits to consumers of content, the so-called "creative class" -- authors, journalists, filmmakers, musicians, artists -- has been particularly ravaged by the digital economy. This ravaging, and its roots in the monopolization of content delivery and data in the hands of a few digital giants, are at the heart of the new book Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy by media scholar Jonathan Taplin. In the book, Taplin explores the way in which the internet came to be dominated by a handful of monopoly platforms, and the subsequent capturing of regulators that has since all but ensured their dominance would not be challenged in court. In an interview with ProMarket, Taplin said in response to a question: "I would say Google is as close to a natural monopoly as the Bell System was in 1956. If you came to me and said 'Hey, I want to start a company to compete with Google in search,' I would say you're out of your mind and don't waste your energy or your time or your money, there's just no way. Classic economics would say that if there's a business in which there are 35 percent net margins, that would attract a huge amount of new capital to capture some of that, and none of that has happened. That tells you there's something wrong."
I've been saying this for years. When I started, people, even techies, still thought google "[did] no evil." I can't imagine anything will be done about this. Google will be intertwined with government in no time; they practically are now.
This comment is pretty absurd. When Google was looking for venture funding, there were already several well established search vendors. Almost all VC told Google the same thing, dumb idea move along. Yes, Google has captured a lot of advertizing business. All while the cost of those ads has been driven way down... and they've passed a lot of this onto us... in the form of a lot of free tools. (Free save for the eyeballs we put on those ads). I for one, love my Chrome browser and gmail.
People in 50s had to use Bell or no telephone system at all!
With google just the opposite. Mint makes it a struggle to set your search to google. They force Yahoo on you. MS products push Bing on you. I really have to go out of my way to use google.
People choose google, because they like it , not because of some monopoly influence.
Natural Monopoly is a term for when two equal-sized companies doing the same thing would have near double the cost of a single company doing the same thing, and costs drop as market share increases. A Telephone company is a natural monopoly because if every person was a customer of ATT and Verizon both, then both companies would roll out infrastructure to all of the customers, duplicating costs. If ATT had 100% of the people as a customer, then Verizon would have an insane incremental cost for the first customer.
Also, in the Telephone example, but not explicitly required for a natural monopoly (because government regulations usually prevent it), is that network effects make the company with more people stronger. Telephone companies predate exchanges. So if you were on ATT, you couldn't call someone on Verizon. So if everyone you knew was on ATT, the value to you for a Verizon connection that wouldn't let you call anyone you know, would be worthless. And would cost Verizon more than an ATT connection would.
So the market would naturally drift to a monopoly.
Google can have a startup take over tomorrow. They aren't doing anything in search that some guy in a garage can't do. They scrape sites, give results.
Google is more a benevolent abusive monopoly. But because that doesn't exist, it sounds more like people are abusing well-defined words, rather than using the right words. Google's browser feeds their search results. Google's ads feed and are fed by browser and search results. That's not a "natural monopoly", that's an abusive monopoly. That they don't "require" people use their services, like MS/IE, but people still choose to do it, because they are the only option. That warrants a new term, I dub it "benevolent abusive monopoly".
Learn to love Alaska
Because it costs me a fortune to use Google and i have to lease a big black Google machine from the company to do it.
The difference: You don't subscribe to google. You don't pay for Google. Google shows you ads (if you aren't using tools to avoid them) to make their money, they don't get the bulk of their income from folks paying for access to services, but by advertising through those services.
Google is not a natural monopoly in the classic sense - they are widely popular, but they don't exist as an unavoidable gateway to essential services like the phone companies in the previous century.
Instead, they provide optional services through a public network, and tend to be less objectionable than the alternatives, so people use them.
I'm personally often against a LOT of the actions of corporations in the world, and even against Google's decisions sometimes - but they don't even approach Ma Bell in the terms presented here.
Ryan Fenton
capturing of regulators
Why does on-line search need to be "regulated"?
I use duck duck go as my daily search engine. I use gmail and android but both could easily be switched out. Facebook? Never had an account, never logged on.
In the past there was no way to avoid the Bell System if you wanted a telephone, and you had to have a telephone.
More importantly what are the natural barriers to entry that google presides over?
Last mile? No.
National interconnect? No.
Vertical or horizontal ownership of key resources? No.
Insidious patent, copyright, license or arbitrary government backed anti-competitive government sponsored meddling? No more than everyone else.
In fact how many search engines where there before google? Remember all the add ridden, crap infested search engines of the late 90s?
Google has a good product we voluntarily want. It also has a lot of data gained from its masses of users that help it provide relevant searches, but that it has to balance against various sponsorships and clickbait crap. It has a good S:N versus competitors like Bing, which is mostly crap most of the time.
Why does on-line search need to be "regulated"?
Because you never can know when your hobby or innocent curiosity can get you locked up and used against you.
For instant if I want to know something I look it up, and I rarely think about the consequences. I have a strange fascination with nuclear weapons. Their history, how they are made, how they would be deployed, and under what circumstance would they be used. It's probably safe to say that outside someone with a security clearance I know almost everything that can be known.
Does this mean I have any incantation to build a nuclear device in my basement or blow up a city with one. Not in the slightest, but you can't tell that from my search history.
Without that protection out of context just about anything you search for can be used to hang you. Just because you google "how to excite 12 year old girls" doesn't mean you are cursing for jail bait.
I read at +2. If your post doesn't reach that level I will not see or respond to it.
I haven't, for years... I use duck duck go. works for me.
You are not Google's Customer! The advertisers are. From the advertisers perspective Google is a monopolist. Excluding apps made by Facebook, adwords is the only place I can reasonably advertising on the general web. Yes there are other companies but the advertising industry favors one monopolist. If I create a website I will sign up with Google to get ads for my site because they are the biggest and it's just not worth my time using someone else. Since most websites only get ads from Google then advertisers only use Google.
So you're saying in order to prevent the government from using your search history against you, you want to make sure the government is in charge of controlling search history information?
Something about that logic doesn't seem quite right...
The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.