Recently, many people have been arguing about whether or not Google should be considered a monopoly. For five years now, Google has been engaged in an anti-trust investigation with the European Union. It is clear that many people are concerned about how Google’s dominance in the search engine market is affecting consumers.
According to numerous sources, Google holds a shocking 68% of the U.S. search engine market share. Current “competitors” such as Bing and Yahoo each hold much smaller percentages of the search engine market share – all below 20%. It is not surprising that Google is engaged in an anti-trust investigation when we consider that the U.S. government filed anti-trust suits against U.S. Steel when they had only 67% of the market.
The most important question here is whether Google’s monopoly (or near-monopoly) is beneficial or detrimental to consumers. One argument against Google’s monopolization of the search engine market is that Google is supposed to provide unbiased search results. However, this may be impossible when we consider how Google has to rank its own products in comparison to its competitors’ products. For example, when you type in “email” on Google Search, Gmail is ranked first even though it is only the third largest email service out there.
Additionally, monopolies are (by definition) not as beneficial to society as perfectly competitive markets are. Unlike in perfectly competitive markets, One the main outcomes of a monopoly is that social welfare is not maximized. Thus, if Google is in fact a monopoly, it is true that social welfare is not maximized in the current search engine market.
On the other hand, some people believe that Google’s dominance in the search engine market is a good thing. One such person is Peter Thiel, “Paypal founder, billionaire tech investor, and suit-hater,” who argues in his new book, Zero to One, that Google is a monopoly and that this is beneficial to everyone (businessinsider.com). Thiel’s main argument is that in a perfectly competitive market, there is no room for innovation because the firms’ products are identical. Thus, in perfect competition, consumers cannot benefit from the progress being made by the firm because no progress is truly being made.
Thiel also argues that natural monopolies are good for society because they mean that a firm has either created something that is far superior to any potential competing product or it has invented something entirely new. He also claims that monopolists like Google “can afford to think about things other than making money” and that this sparks new creation and innovation that benefits consumers (businessinsider.com).
It is hard to say whether monopolists like Google help or hurt consumers. On the one hand, Thiel’s argument that monopolies allow for new innovation and progression is fairly convincing. However, it must be noted that in writing this article I used Google to look up sources in support of Google’s monopoly (this is how I found Thiel’s argument). This shows how the mechanism of monopoly (or near-monopoly) does allow Google to be biased in some of its search results. Also, as a monopoly, Google cannot technically maximize social welfare. As you can see, this issue is clearly very complicated. Perhaps other factors need to be considered and analyzed in depth in order to truly determine whether or not consumers truly benefit from Google’s domination in the search engine market.
Baer, Drake. “Peter Thiel: Google Has Insane Perks Because It’s A Monopoly.” Business Insider. Business Insider, Inc., 16 Sept. 2014. Web. 26 Apr. 2015. <http://www.businessinsider.com/peter-thiel-google-monopoly-2014-9>.
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Pagliery, Jose. “Google Abused Its Monopoly Power, FTC Experts Found.” CNN Money. N.p., n.d. Web. 24 Apr. 2015. <http%3A%2F%2Fmoney.cnn.com%2F2015%2F03%2F19%2Ftechnology%2Fgoogle-monopoly-ftc%2F>.
Reuters. “EU Preparing Antitrust Charges Against Google: WSJ.” The Huffington Post. TheHuffingtonPost.com, 1 Apr. 2015. Web. 26 Apr. 2015. <http://www.huffingtonpost.com/2015/04/01/eu-antitrust-charges-google_n_6989346.html>.
Zeckman, Ashley. “Google Search Engine Market Share Nears 68%.” Search Engine Watch. N.p., 20 May 2014. Web. 26 Apr. 2015. <http%3A%2F%2Fsearchenginewatch.com%2Fsew%2Fstudy%2F2345837%2Fgoogle-search-engine-market-share-nears-68>.