Slashdot Mirror
'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.
I'd really like to know.
capturing of regulators
Exactly! Just like in transportation, energy, and other forms of communications. And aren't we the ones that vote for the 'regulators'? Don't blame Google for winning. Look to yourselves to vote for open markets. Vote the captured regulators out.
“He’s not deformed, he’s just drunk!”
Yes, they do have hundreds of thousands of rack-mounted servers in data centers around the world, but so does Amazon, and companies can rent virtual servers in them.
AT&T provided universal point-to-point phone service. There was just no way to compete against that until a Federal judge broke up the company in the early '80s (sure, the Internet with VOIP might've done the job, but that came more than 10 years later).
Who's to say that Google's search bar and query results, accompanied by targeted ads, will be good enough for the public ten or even five years from now. There's plenty of room for innovation and entrepreneurship. I'll bet Jeff Bezos has more than one pet project aimed squarely at Google search right now.
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
I'm not following this argument. How does being large and popular equate to being a monopoly? Ma Bell had to run wires everywhere, Google just uses the existing infrastructure. No one's forcing you to use Google and there are plenty of other search engines.
You also don't need a lot of capital to compete with Google if you want to build your own search engine. Cloud servers are damn cheap these days compared to putting something in a colocation facility like you used to have to do. If you're doing something niche like shodan.io it makes complete sense to go ahead and build your own.
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
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.
Not really. At the time there were a lot of players with small marketshare operating in a contestable market (much lower entry barrier than they would face today). That project was destined to be funded. Today, a startup looking to compete with Google on search is doomed, even if they have a brilliant idea.
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.
I for one, love my Chrome browser and gmail.
Winston Smith loved Big Brother by the end of the book, too.
A few months ago Google stopped letting me use pop.google.com for two Gmail accounts at once with my Sylpheed email client. I can still log onto the google.com web portal to read the mail on the second account.
At that point in time I decided Google was being too controlling. I actively went out to find a robust commercial email provider who would charge me a few dollars a month for unencumbered and non-data mined email service. There are such providers out there, and it's worth it.
Thiel's problem is that he contributed a large amount of money to the government's ability to pick winners and losers, which doesn't sound libertarian to me.
I'm fine with getting the government out of the marriage business, and I suspect most libertarians would agree with me there. There do need to be ways to establish legal family relationships (adoption is another one), but there's no reason that can't be separate from marriage. If the government is in the marriage business, the government needs to stop picking exactly who can get married to whom.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
Not true, at all. The US was a hodgepodge of phone companies, state tariffs, interstate tariffs, intrastate tariffs, LATAs, and was owned by a lot of co-ops.
Ah, youngsters. Don't remember the old days.
No, you're talking about after the breakup of AT&T. Before the breakup, there was Ma Bell. There were a few places that still had other phone companies, but for the most part, it was the one giant monopoly, Ma Bell.
Some still remain... use Cincinnati Bell as an example.
That name, "Cincinnati Bell," should be a clue that this is a piece of one of the seven Regional Bell Operating Companies ("Baby Bells") that were formed as a result of the breakup of AT&T.
https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System
http://www.techpolicydaily.com/communications/lessons-att-break-30-years-later/
http://money.cnn.com/2014/05/20/technology/att-merger-history/