Google Is A Monopoly And Should Be Regulated

There are a lot of tech companies which dominate a different part of the tech industry but Google with its billion-dollar revenues is not a monopoly for reasons discussed below and must neither be broken up or regulated.

Arguments

Point 1: Choice and Competition

By definition “a monopoly is an enterprise that is the only seller of a good or service. Assuming that a monopoly exists, it will then be free to determine the price of its products with no regard to consumer demands. ” (Worstall, 2017)It also talks about the fact that monopolies quench or slow down the innovation process of the industry they operate in since they are so good at what they do that no other firm can potentially offer a close substitute. The question that we ask ourselves now is, what makes a monopoly, an actual monopoly? The answer to that would be zero or no competition which includes present competition or the potential for any competition in the future. The reason why we talk about competition is that in case of a monopoly, the general rule is that they are trying to exercise or exploit their monopoly power or even market dominance.

In fact, Google is so afraid of competition from giants like Amazon and so many other start-ups, that every year it spends billions of dollars each year on R&D. That is not the behavior of some dominant monopoly which is trying to inhibit innovation. Every year Google spends billions of dollars each year on research and development. It funds more than 250 research projects annually. It pushes everyone to innovate, be it the top management or the bottom-most employees in the hierarchy. Small teams can work on moonshot projects at Google X and it also encourages quick collaboration amongst its employees.

Point 3: Transparent strategy

It is no surprise that Google owns about 86% of the global search market and around 32% of the global advertising market. It is not buying companies that compete with it in search or advertising which includes services like email, advertising etc. Rather, it is diversifying into new domains with its strong R&D. When we talk about monopoly, a great starting point is to find something that assesses market definition and its competitive advantages on the side of a market where the company charges prices above marginal cost without regard to its customers. But we see that in Google's case, it actually charges a zero price to its customers to use its search platform. This totally counters what we consider as a monopolistic action. To add to the point above, the bulk of Google’s revenue comes from advertising, AdWords to be specific.

Adwords works in a similar way as an auction works. An ad space is awarded to advertisers who have the highest bid. This means the cost of advertising is determined by auction participants and the market but not by Google. It only facilitates competition these entities. If you look at Bing, Google’s most aggressive competitor, it engages heavily in price competition. So naturally, Google cannot its think about raising its price without losing market share as these advertisers can choose to move over to Bing any day. Therefore, there is no free adjustment of prices for Google, and hence, it should not be considered a monopoly.

Defense Arguments

Point 1

To be considered as a monopoly harming the industry, a monopolist's act must have an 'anticompetitive effect. ' That means that it must not only harm the competitive process of the industry but also harm consumersLet’s take an example of Facebook and Snapchat. Every time Snapchat introduces a new feature on its app, Facebook copies it soon after and doesn’t leave any room for any differentiation. The reason we don't like monopoly is because it restrains and even prevents innovation but the proof we are using here is that if a monopoly exists, innovation is accelerated.

Point 2

Now the opposition could bring up that Google was accused of being anticompetitive by skewing its algorithm to bring search results that work in favor of Google. But a recent study found out that Google rarely ranks its own content higher than rival search engines do. Its algorithm works in a way that the most popular websites or search results are displayed on the first page followed by less popular items. Also, the FTC did allege the fact that Google was exercising its monopolistic advantage, but it was never proved that it actually did. In fact, it turns out that Bing actually displays alleged search bias almost twice as often as Google.

Almost every major multinational corporation has had a history of being accused of exercising power or exploiting at least one law or regulation. Just as Google is subject to a 20-year consent decree with the FTC over alleged privacy and anticompetitive violations, so are Facebook, Twitter, Microsoft to name a few.

Closing Statement

Nobel Prize-winning economist Ronald Coase said that “when an economist finds a business practice he doesn’t understand, he looks for a monopoly explanation”. (Radia, 2012)This gives us the correct picture and brings this debate to a conclusion that sometimes Google’s behavior might be frustrating, its products might also be inconsistent sometimes - but Google is a perfect example of an American success story that has vouched to bring about a huge difference and change the internet as is. In the Silicon Valley, brilliant ideas are born and are successful only when they are free to induce healthy competition and in turn, promote economic wealth.

Regulating such minds and ideas would slow down the economy bringing innovation to a standstill. Questions to the OppositionIf all the Google critics are right, and the company has abused its dominance in the past or abusing it now, where is the evidence that it had or is still doing it? Is there proof that Google's efforts to improve search quality have actually harmed both users and consumers?This question can come into consideration because the opposition will likely point out that Google has been dominating its search engine to its own benefit which has harmed competition from entering into certain domains. If Google is so powerful that it can make its rivals go obsolete and spread its dominance throughout the internet without being challenged, why did its much-hyped products like Wave and Buzz fall flat? Why does Google+ have only 100 million users compared to Facebook's staggering 1 billion users? And why are VC’s and other investors investing in startups more than they ever have since the peak of the dot-com bubble?This question is relevant since every monopoly is considered as this evil entity which no one is capable of turning against. This question exposes Google’s weaknesses and the mistakes it has made in the past, further confirming, that like any other company, it can lose its market share or can be taken over by its competitors if it is not careful.