Is Google a Monopoly? (Updated September 16, 2009)

Author: Marc Fawzi
License: Attribution-NonCommercial-ShareAlike 3.0

Update:

Within just a week or so of posting this note, Google announced that they’re launching an online version of Monopoly. They’ve also added Google News results referring to that, so now the #1 result for the keywords “Google” and “monopoly” is their own news… about the game!

September 18 Update:

The top three results, including this article at number one, are now showing above the News links.

Now, let’s talk about the real game of monopoly (not the board game!)

September 20 Update:

Google has completely buried this article after I expanded on the footnote to talk about Google practicing vigilante justice with site owners. The article didn’t just drop to #2 or even the 2nd or 3rd page. It has been completely buried deep in search results. This is obviously an act of censorship. And there you have it, the power of Google.

Article

(first published in July 2006 and updated in September 2009)

Given the growing feeling that Google holds too much power over the future of the Web, without any proof that they can use that power wisely, and with sufficient proof to the contrary¹, it’s easy to see why some of us are growing increasingly worried about Google’s continued drive to embed itself in all aspects of our lives.

In the software industry, economies of scale do not derive as much from production capacity as from the size of the installed user base, and that’s because software is made of electrical pulses (or bits) that can be replicated and downloaded by the users, at a relatively very small cost to the producer. This means that the size of the installed user base replaces production capacity in classical economic terms.

So far Google has managed to build a dominant market share in search based mostly on the strength of its technology, not by leveraging an installed user base as Microsoft had done with desktop applications.

However, this is changing as Google extends its huge presence on the Web to the desktop (search: Google Chrome) and mobile phones (search: “Google Android”), a move that should allow it to dominate almost every application category on the Web, desktop and mobile phones.

While Google’s leveraging of its humongous user base on the Web to create this advantage is lawful, it is unfair, with the consequence being Google’s domination of the mobile phone, desktop and Web applications and search markets, which is sure to stifle innovation across the board and make it even harder for smaller companies to compete against Google.

Theoretically speaking, the patent system is designed to enable companies of all sizes to carve out new niches to themselves. However, obtaining patents can be a very costly and prolonged process and small companies often get their inventions copied and co-opted by bigger players like Google, Microsoft, etc. In fact, in the Microsoft dominated era, very few companies succeeded in suing them for patent infringement. I happen to know of one small software company and their CEO who succeeded in suing and then settling with Microsoft for millions. But that’s a rare exception to a common rule: the one with the deeper pockets always has the advantage in court (they can drag the lawsuit for years and make it too costly for others to sue them.)

So for  small companies competing against Google , it’s not any better or worse than it used to be under the Microsoft monopoly. But for us the people it’s much worse because what is at stake now is much bigger. It’s no longer about our PCs and LANs, it’s about our online economy.

Unchecked monopolies, even when “lawful,” create too much dependency on single sources, which reduces the number of choices we have and exposes our economy to the risk of failure in the long run. After all, strength and resiliency come from ‘inter-dependent peers’ (think: billions of us trading goods and services with each other without any middlemen) not from the the few giant corporations that hold power over billions of us and control our economy.

If the Internet proved anything, it is that we, the people, can have everything we need without the profit-driven –and often morally suspect– giant corporations.

Cash-strapped governments of the world should try and extract billions of dollars in anti-trust fines from these so-called “lawful” monopolies (by changing the law to support the Davids, not the Goliaths) and then feed all those billions of dollars downstream in the form of better public services and zero-interest loans to entrepreneurs.

Otherwise, the governments are pretty much useless, as the giant corporations continue to grow in power and shape our world, for the worse, with their profit driven focus and lack of moral principles.¹

It’s time to abandon the old thinking about capitalism as we have it today being great and take a fresh look at the flawed version of capitalism that we’ve created or, else, we’re bound to end up at the mercy of a few giant corporations that control all or most aspects of our lives, including our freedom (or whether we have it or not), which is the case when companies like Google enforce a policy on people that the people had not agreed to. An example is the policy of “site blocking” that Google is forcing on site owners, without site owners having agreed to it. In other words, Google is coming up with its own law (in the form of their policies) and law enforcement for the Web (in the form of enforcing those policies without agreement by the party the policy is forced upon. 1)

Time to wake up to the real game of monopoly.

–

1. What leaps to mind as far as Google’s lack of wisdom is their cooperation with the Chinese government in oppressing the already-oppressed (see: Google Chinese censorship.) More recently, Google’s shareholders, on advice from Google’s Board of Directors, have voted against two proposals that would have compelled Google to change its human rights policies (for the better.) Even more recently, Google (and Firefox, which is largely funded by Google), Apple, and others have implemented a feature in their respective browsers that detects and filters out malicious sites based on what Google crawlers detect and what is reported on StopBarWare.org. The first part of the problem is that in both cases, whether malicious code was detected by Google crawlers or reported by some 3rd party to StopBadWare.org, Google is the main authority in deciding which site is malicious, for all browsers from Google, Firefox and Apple (and possibly others.) This means that web site owners whose sites had been injected with malicious code by hackers are at the mercy of Google’s review process which may not resolve (with the removal of the site from the list of malicious sites) for many hours or even days after the site owner has removed the malicious code. This holds the site owners hostage to Google. The second part of the problem is that the site owners do not have a choice as far as what browser their users use, and, therefore, Google’s site blocking policy is being forced on them, without their agreement. The problem in its two parts is that Google is establishing the law and enforcing it. I thought that in this country and elsewhere only the government can make laws and enforce them. The case that Google is forcing the site blocking policy on site owners can be easily established  based on: A) site owners cannot dictate what browsers their users use, and B) Google is the main party in charge of the detection and resolution process of sites infected with malicious code by 3rd parties, e.g. hackers, business competitors, etc, for all popular browsers from Google itself, Firefox, Apple and possibly others. To reiterate, Google forcing their site blocking policy on site owners  is tantamount to Google establishing a law and enforcing it, which is akin to vigilante justice, and Google maybe legally liable for damages incurred to honest site owners for acting as a vigilante justice enforcer.

Related

1. Beyond Google: The P2P Economy
2. Still No. 1 Blog for “Google Monopoly”
3. Wikipedia 3.0: The End of Google?

Also Related

1. Towards a World-Wide Mesh
2. People-Hosted “P2P” version of Wikipedia
3. The People’s Google

Tags:

Web 2.0, Google,  Monopoly, Trends, economies of scale, innovation, Startup, Google Writely, Google spreadsheets, DabbleDB, Google Base, Web 3.0