Google Becoming a Monopoly

Opinion #Economy APR 23, 2017 @ 09:08 AM 6,423 

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Tim Worstall , CONTRIBUTOR I have opinions about economics, finance and public policy. FULL BIO  Opinions expressed by Forbes Contributors are their own.

The New York Times carries an OpEd telling us that Google--and some other tech firms are- is a monopoly and thus must either be broken up or regulated as such a monopoly. The slight problem with this idea being that the writer of the piece doesn't in fact understand the technical words that are being bandied about. Google is not, for example, a natural monopoly, and those areas where it is dominant are nothing at all to do with the utility model of a marketplace. Further, the author doesn't in fact understand the more basic points about monopolies. It's only if they are non-contestable that we need to anything about them. If it is possible for people to contest then we simply do not have a problem with the continued market dominance.

What's really happening here is that people aren't understanding the thought process which goes into economists worrying about monopolies. We do worry if, then if, then if and

Google Isn't A Monopoly - So Don't Break It Up Or Regulate It Like One

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then, if this fourth thing is also true, then perhaps we should do something. But the first couple of things happening are not instructions that we then need to act, it's the whole chain. It's rather like in reverse those people who tell us that free markets don't work because perfect information. You know, when we look at the entry level textbook models we see that perfect information is assumed. So, people then say that such perfection is never attained--it ain't--so therefore free markets don't work. Which is to confuse the model with reality of course. For when we go out there and test models against that reality we find that we don't in fact need all that much information for markets to trend, asymptotically of course, to how those simple models actually work. After all, there is a proof, the market for lemons, that we can never have an efficient market in used cars. And yet we do have such a market. You know, despite Janet Yellen's husband getting his Nobel for the proof.

That. I think, is the sort of thing which is happening here:

Is It Time to Break Up Google?

The proof of dominance is there, most certainly:

They’re all tech companies, and each dominates its corner of the industry: Google has an 88 percent market share in search advertising,

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The first question is do we care? Care about the market being dominated that is? I, for example-- and presumably until those bots get a bit better-- have a monopoly on the production of economic scribbling a la Tim Worstall stylee. No one cares about that at all and I'll be left alone to break up in my own good time as happens to us all as we reach that three score and ten. Is search advertising something we're actually worried about being dominated?

While Brandeis generally opposed regulation — which, he worried, inevitably led to the corruption of the regulator — and instead advocated breaking up “bigness,” he made an exception for “natural” monopolies, like telephone, water and power companies and railroads, where it made sense to have one or a few companies in control of an industry.

Could it be that these companies — and Google in particular — have become natural monopolies by supplying an entire market’s demand for a service, at a price lower than what would be offered by two competing firms?

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