Google’s monopoly under regulatory attack
As Google’s share of web search advertising approaches 90 per cent, MPs are calling for its effective monopoly to be broken.
Google’s success is all the more remarkable given that it is in a competitive marketplace with rival products from significant players like Microsoft and Yahoo!. Some us remember when AltaVista was the search engine and Yahoo! was a handcrafted directory. Today consumers have a wide choice of search engine and 2008 saw at least seven new entrants to the market.
Consumers are free to change search engine on a whim and at no cost. And yet nobody can touch Google.
In this market where each competing product is equally accessible and cost is not an issue, consumers gravitate to whichever product is reputed to be best and a monopoly emerges. This has created a secondary monopoly in the advertising sales market.
Google’s automated system for auctioning space reduces some of the dangers of monopoly by making it difficult for them to alter prices directly. But there are other issues; Google imposes a moral code on advertisers that is not always sensitive to all the markets in which it operates.
MPs should be worried by the emergence of any monopoly, but have so far failed to articulate concrete concerns; the sponsor of this Early Day Motion has also criticised Google’s relaxation of rules for gambling ads and so may simply be looking for another stick to beat them with.
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