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

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Re: “Google Is as Close to a Natural Monopoly as the Bell System Was in 1956″

#111

Post by ilanco »

ggggtez wrote: post #43
jessaustin wrote: post #14

Ma Bell's monopoly has never been "natural". It has been enforced by FCC, ever since FCC was formed for that specific purpose in 1934. Even before that, ICC through the Kingsbury Commitment had adopted an ill-considered and unjustified hands-off policy with respect to Ma Bell's anticompetitive actions.

I was a bit surprised myself. It's not illegal to write a chrome extension that blocks ads (yet), but if you try to cut off money from phone companies, you can be sure you'll get jail time...

> if you try to cut off money from phone companies, you can be sure you'll get jail time

What do you mean by that?

Re: “Google Is as Close to a Natural Monopoly as the Bell System Was in 1956″

#113

Post by zeteo »

scarface74 wrote: post #71
redm wrote: post #53

I think the key point here is not whether Google is abusing its effective monopoly willingly, its that it exists at all. There may be alternatives, but not viable ones. Try not supporting Chrome or ignoring Chrome requirements such as security mandates, you will go out of business. You can say these are 'good' for the consumer but the fact that Google has the ability to unilaterally change the web itself is partially…

Whats the viable alternative to Google Search? Sure you can use Bing as a customer, but if you're a website operator you HAVE to stay on Google's good side. (not always easy to do) Or you can not base your business on the fickleness of Google's search algorithms. Ben Thompson (stratechery.com) posts one article per week publically and charged $100 a year for his newsletter. The only time he gave numbers, he has over…

> There are other ways to build a business that don't depend on search.

There are also other ways to run a household that don't depend on running water. (Heck, my great-grandpa never complained about having an outhouse.) Are you saying your local water utility should be an unregulated monopoly?

Re: “Google Is as Close to a Natural Monopoly as the Bell System Was in 1956″

#114

Post by beagle3 »

pcwalton wrote: post #72
Omnius wrote: post #5

Google has a ton of competition across all of its products. It's dominating in some of them but being better then your competition is a lot different then there not being any.

> Google has a ton of competition across all of its products. It's dominating in some of them but being better then your competition is a lot different then there not being any. This was also true for Microsoft. There were plenty of other operating systems, even PC ones.

But unlike Google (AFAIK), Microsoft played very dirty - they eventually paid for it (see e.g. [0]), but the gains from remaining a not-even-threatened monopoly where at 100-1000 times larger than what they paid.

I experienced this first hand at a company I worked for in the early '90s - we had agreements signed with many PC manufacturers to include our software (which was a DOS launcher of sort, that -- in those days of Win3.0 barely coming out, was more favored by users than Win3), and then all of a sudden, within 3 weeks, every single one of the manufacturers canceled -- and it later turned out Microsoft just visited each and every PC manufacturer and told them their MSDOS "discount" is going away if they bundle our launcher or anything similar.

In other markets, e.g. Office. in which, at the time, they were not a dominant player (Lotus123 was king, Borland Quattro was a strong player, Excel was less so; WordPerfect was king of pword processing), they actually competed by turning out better products.

[0] http://www.computerweekly.com/news/2240052523/BeOS-will-live...

Re: “Google Is as Close to a Natural Monopoly as the Bell System Was in 1956″

#115

Post by Aloha »

tuna-piano wrote: post #77

The term "Natural Monopoly" has a special meaning besides just the common definition of both words, which is missing from this discussion, but is in my opinion the most interesting topic of discussion. Basically all software fits the economic definition of "Natural Monopoly". Natural monopolies exist in situations where the fixed cost is large and the marginal (per-customer) cost is small. In these situations, it onl…

You hit it on the head..

https://en.wikipedia.org/wiki/Natural_monopoly

I will strongly argue that most utilities are natural monopolies, google is not like that.. anyone could create a equivalent functionality search engine without massive resources to do so, this is most certainly not the case with say, a cellular carrier, where to build out one moderately sized market your're looking at starting cost ~100 million dollars, and around 5 billion to start for a national carrier (250k a site, times 20,000 sites)... and my numbers are likely too low by half, because they only factor in the site costs, not the overhead to get to the point where you can build sites.

Re: “Google Is as Close to a Natural Monopoly as the Bell System Was in 1956″

#116

Post by beagle3 »

mikeash wrote: post #100

It's hard to see any comparison. At the peak of AT&T's power, they were able to block sales of a third-party device that attached to your phone that helped keep people from overhearing your conversations. The device was just a cup, it didn't do anything electrical, but AT&T still decided they didn't like it and shut it down. That was eventually overturned in court, but it was a decade-long fight. It took another deca…

I agree with what you wrote, but the comparison is apples to oranges: Google customers are businesses; end users (who CAN switch easily) are the product.

Right now the only (supposedly) viable competitor is Facebook, but it's more of an advertising duopoly that divides the market - all the people I know who advertise say that you use FB for brand/interaction/marketing and Google for sales, and for a specific spend it is usually clear which one gets it (and seldom if ever anyone other than FB or Google).

Re: “Google Is as Close to a Natural Monopoly as the Bell System Was in 1956″

#117

Post by ocdtrekkie »

ouid wrote: post #83
tuna-piano wrote: post #77

The term "Natural Monopoly" has a special meaning besides just the common definition of both words, which is missing from this discussion, but is in my opinion the most interesting topic of discussion. Basically all software fits the economic definition of "Natural Monopoly". Natural monopolies exist in situations where the fixed cost is large and the marginal (per-customer) cost is small. In these situations, it onl…

>Bing seems pretty close in search quality, but yet few switch over. a) Why would anyone switch if they are both equal and both free? b) Most people use chrome. Most people don't change their default search engine. c) As much as people pretend to hate Google, they actually hate Microsoft a lot more, and for good reason. Microsoft operates on bad faith far more frequently than Google does, most of their business decis…

In fact, you are self-defeating your arguments. Chrome was entirely built to be leveraged to force people to use Google Search, since people don't change their default search engine. Bear in mind, they paid Apple and Mozilla each over a billion dollars to be everyone's default search. Sundar Pichai, the current CEO of Google, got started by pushing the Google Toolbar as one of those bloatware add-ons when you install other software, that would hijack your default search when you installed it.

Google also leverages Android to force people to use all sorts of Google products, using their agreements with OEMs which ensure things like default search, default maps, default email setup, etc. That's the whole point of Android.

Google's anticompetitive behavior is extremely active, and they make Microsoft look like an innocent kitten in comparison. It sounds like you don't know a whole lot about how Google operates as a business.

Re: “Google Is as Close to a Natural Monopoly as the Bell System Was in 1956″

#118

Post by DamonHD »

ouid wrote: post #83
tuna-piano wrote: post #77

The term "Natural Monopoly" has a special meaning besides just the common definition of both words, which is missing from this discussion, but is in my opinion the most interesting topic of discussion. Basically all software fits the economic definition of "Natural Monopoly". Natural monopolies exist in situations where the fixed cost is large and the marginal (per-customer) cost is small. In these situations, it onl…

>Bing seems pretty close in search quality, but yet few switch over. a) Why would anyone switch if they are both equal and both free? b) Most people use chrome. Most people don't change their default search engine. c) As much as people pretend to hate Google, they actually hate Microsoft a lot more, and for good reason. Microsoft operates on bad faith far more frequently than Google does, most of their business decis…

Never mind free. In the UK most people would save £200/y with no interruption in service simply by switching energy suppliers, and yet they don't...

Re: “Google Is as Close to a Natural Monopoly as the Bell System Was in 1956″

#120

Post by scarface74 »

zeteo wrote: post #113
scarface74 wrote: post #71

Earlier quoted context omitted.

Whats the viable alternative to Google Search? Sure you can use Bing as a customer, but if you're a website operator you HAVE to stay on Google's good side. (not always easy to do) Or you can not base your business on the fickleness of Google's search algorithms. Ben Thompson (stratechery.com) posts one article per week publically and charged $100 a year for his newsletter. The only time he gave numbers, he has over…

> There are other ways to build a business that don't depend on search. There are also other ways to run a household that don't depend on running water. (Heck, my great-grandpa never complained about having an outhouse.) Are you saying your local water utility should be an unregulated monopoly?

Yes and there are plenty of houses that couldn't get water from the municipality and got their water from a well. My grandparents had a well for 30 years.
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