2.0

Is Google a Monopoly? // Update: May 10, 2011 Re: Microsoft Instigated Antitrust Investigation of Google

In Uncategorized on July 10, 2006 at 6:13 am

Important Update:  Late 2011

Since the #occupyWallStreet protests, Google has completely buried this article (I believe due to its Anti-Corporatism verbiage) after having been in the top 10 results (1st page) for over five years.

They had done this once (a few years ago) where they completely buried it and then brought it back magically. We hope it will be uncensored once again. We also hope that Google is demoted to a back end service for the centralized corporate web and that everyone moves to embrace the emerging P2P/Mesh internet.

Why do we give Google so much power over our us?

What choices do we have?

Is this debate too academic/intellectual or is there a real issue here that we need to address?

All good questions that must be asked.

Author: Marc Fawzi

>>> Twitter: http://twitter.com/marcfawzi <<<<

License: Attribution-NonCommercial-ShareAlike 3.0

I must not question corporate rule

May 10, 2011 Update:

Microsoft, an aggressive [former?] monopoly, has filed a monopoly complaint against Google. Say what?! One giant corporation fighting another giant corporation? What can small businesses and startups who supply most jobs in this country do re: either of them?

I encourage you to read the rest of this to see why it’s important for software startups to have a better-than-good chance of competing against Google.

December 7, 2010 Update:

Google attempted to purchase Groupon, the online daily deal company, for a reported $6 billion. Some sources have indicated that the deal fell through due to concerns around regulatory interference and pending antitrust investigations (i.e. someone is watching.)

November 23, 2010 Update:

In response to Facebook’s highly targeted ad serving system, which threatens Google’s dominance of online advertising, Google is expected to launch the widely reported “Google Me” service, which may leverage Google’s other resources like Google Apps, Google App Engine and Android to build a powerful social networking and applications platform that can, a least in theory, leave Facebook in the dust, or it can go nowhere given Google’s history with social networking ventures. See this related post about the failure of the Facebook social networking model.

Sept. 12th, 2010 Update:

Google has moved its China operation from the mainland to Hong Kong, which is also under Chinese control. This does not mean that they’ve stopped censoring search result in China and as far as this author is aware there has not been any public statement from Google to that effect since their move to Hong Kong.

Jan. 12th, 2010 Update:

Years after Google decided to censor their China search results (where they basically acted as an oppressive instrument of the Chinese government) they announced that they’ll un-censor their China search results or, if not possible, leave China. People at their China division have a different idea though. So we’ll wait and see.


Article

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 had 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, the situation for Google has changed now that it has a huge installed base on the Web (Google.com as the default search engine for Firefox and Google Chrome), mobile phones (Google Android) and desktop (Google Chrome and Chrome OS.) This rather huge installed base should allow Google to dominate almost every application category on every platform.

While building such an advantage is both natural as well as permitted by law (or absence of it), it is unfair to Google’s smaller competitors. The key issue, aside from fairness, is that Google’s continued drive to dominate the search and advertising markets for Web, desktop and mobile platforms clearly threatens innovation by making it harder for more innovative, smaller companies to compete against it. It is akin to Wholefoods (or maybe WalMart, depending on your view of the quality of Google’s innovation) moving into a new neighborhood (or market) and wiping out a whole bunch of smaller more consumer-friendly operators. It’s kind of inevitable in some sense for the winner to take all, but it’s also very bad for society and our economy that we have just one or two big players in any given industry, which eventually become too big to fail and have to be bailed out as they age and start to fall apart. It’s just not sane not to think of what will happen when our global online economy becomes dependent on just a handful of giant corporations (hint: certain disaster.)

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 users 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 global online economy, online businesses and online lives.

Google has accumulated not just a huge installed base, but too many deeply embedded strategic channels and hooks, and ignoring that would lead to Google eventually becoming “way too big to fail.”

Unchecked monopolies, even when “lawful,” create too much dependence on a single vendor, which reduces the number of choices we have as consumers and exposes our economy to the risk of failure in the long run.

Resiliency can only come from ‘millions of individuals and small producers cooperating and competing in a free market’ not from a few giant corporations that have cornered the market (see: The Shift From Top-Down To Bottom-Up Production.)

If the Internet has proved anything, it is that we, the users, can have everything we need without the massive, profit-driven (and often morally indifferent) corporations.

It’s time we took a serious look at the version of Capitalism that we have today, which is more like Corporatism than Capitalism, with giant corporations defining the law in their favor.

If we don’t, giant, morally indifferent corporations will continue to hold power over the rest of us.

As an example of the power Google holds, consider the case of site blocking where Google has been forcing its own policy on site owners, without the site owners agreeing to the terms of that policy and without having any way to quickly resolve (or avoid) Google’s site blocking process. 2

In order for us to get out from under all such ‘lawful’ monopolies, we can either change the Law itself or lessen our dependence on those monopolies whether they’re lawful or not.

It’s probably much easier for us as individuals to start developing and/or supporting p2p alternatives that go around centralized infrastructure and services than to try and fix the law.

To that effect, we should consider moving from centralized technologies like Google and Facebook to peer-to-peer technologies like the emerging p2p search engines, Skype (or its open source alternatives, given that it’s now owned by Microsoft), and the emerging p2p social networking apps. Doing so would reduce our dependence on capital-intensive, centralized infrastructure like Google’s and allow us to be not only the consumers but also the producers of the infrastructure (by having our PCs and maybe one day mobile phones collaborate with each other to provide all the infrastructure we need.)

We would also benefit from moving to wireless mesh networks as replacement to centralized Internet Service Providers (ISPs) like Verizon who was recently caught colluding with Google to kill ‘network neutrality’ and hand Google even more leverage. Such a transition to a truly decentralized, P2P Internet is not only possible, it has already began in certain niches.

The Internet should be entirely decentralized (from both the power-structure and technological points of view) and it should be owned and operated by its users, not a few too-big-to-fail corporations.

That can be done by having each PC and mobile device act as a relay for the data in the network (same way as when using BitTorrent and in p2p apps like Skype) and not just be a consumer of the data.

The new version of the Internet protocol, IP v6, being deployed today in many places, will allow P2P networking to take place on a grander scale and in a more pervasive and direct manner. So it’s just a matter of time before Google and other big centralized players will be a thing of the past, as long as innovative startups are funded and allowed to reach their full potential (as opposed to being plucked by Google or Facebook et al and co-opted), and for that we need some changes in the attitudes of the founders and the investors of those startups with respect to the immediate gratification of being sold to a big player vs the long term reward of seeing their vision come through…

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.)

2. Even more recently, Google, Mozilla, Apple, and others have implemented a feature in their respective browsers that detects and filters out malicious sites based on what ‘Google crawlers’ decide and what is reported to StopBadWare.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 boils down to Google establishing the ‘law’ (site blocking in this case) as well as enforcing it. Google’s defense has been that StopBadWare.org is an independent authority, but they’re clearly not (i.e. Google is being misleading) since the site review process goes through Google itself and there is no way for legitimate site owners to manage the process.

Related

  1. Wikipedia 3.0: The End of Google?

P2P Related

  1. Towards a World-Wide Mesh
  2. P2P DNS For Firefox
  3. The People’s Google
  4. Using Google To Send Smoke Signals
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  1. Google is large and influential. That doesn’t make it a monopoly.

    They have 39% market share in Search in the US – http://searchenginewatch.com/reports/article.php/3099931 – a lot more than their closest competitor, but it’s wrong to describe them as a monopoly. A monopoly has a legal entitlement to be the only provider of a product or service. More loosely, it can be used to describe a company with such dominance in the market that it makes no sense to try to compete with them. Neither apply to Google. I think your correspondents are simply reacting against the biggest player because they are the biggest, the same way people knock Microsoft, Symantec, Adobe, etc.

    Certainly, Yahoo!, MSN and Ask Jeeves, etc. aren’t ready to throw in the towel yet. Arguably, if they were struggling, and I don’t know if they are, DabbleDB would need to differentiate a little more against Google to make their model work as a business. I am not sure they need to.

    One last point, there isn’t a finite number of people looking for spreadsheets, etc., online. It’s a growing market with enormous untapped potential. The winners will be those best able to overcome the serious objections people have towards online apps – security & stability. Spreadsheets and databases are business apps – it will not be good enough to throw up something that is marked beta and sometimes works and might be secure. I think people dealing with business data *want* to pay for such products, because it guarantees them levels of service and the likelihood that the company will still be around in a year.

  2. If MS and Interactive Corp. are having to struggle against Google then how can any small company compete against them?

    Google’s economies of scale cannot be matched so easily, except through P2P subversion of the centralized search engine model.

    It’s getting tough out there because of Google’s economies of scale and their ability/willingess to copy-and-co-opt innovations across a broad segment of the market.

    Ian wrote:

    “A monopoly has a legal entitlement to be the only provider of a product or service.”

    Response:
    The definition of Monopoly in the US does not equate to state run companies or any such concept. It comes down to the concentration (and consolidation) of power.

  3. Don’t forget that Google prevents AdSense publishers from using other context-based advertising services on the same pages that have AdSense ads.

  4. [...] impact it has over a worldwide, super-connected tool like the Internet. An article by Marc Fawzi on Evolving Trends expressed this effectively [...]

  5. [...] with existing and growing economies of scale is what makes Google a monopoly,” states Evolving Trends. As Google grows, many smaller companies will die. In order to set up its monopoly, Google is used [...]

  6. Contrary to what the Google fan club and the Google propoganda machine would have you believe, Here are some real facts:

    - People do have a choice with operating systems. They can buy a MAC or use Linux.

    - Google has a terrible tack record of abusing its power:
    - click fraud lawsuit where they used a grubby lawyer and tricks to pay almost nothing.
    - they pass on a very small share to adsense publishers and make them sign a confidentiality agreement.
    - They tried to prevent publishers from showing other ads.

    - Google Adsense is responsible for the majority of spam on the Internet.

    - Google has a PR machine which includes Matt Cutts and others, who suppress criticism and even make personal attacks on people who are critical of them. They are also constantly releasing a barrage press releases with gimmicks to improve their image with the public.

    Wake up people. Excessive power leads to abuse.

  7. I think this is a really important discussion which has been started here, thank you Marc.
    I got suspicious today when I heard about MS wanting to take over Yahoo! – or will it be Google…

    Anyway, this is really crucial stuff here, it’s the much praised freedom of the information age and hence the real hope for a truly open world which is at stake here, I hope there’s some degree of acknowledgment on this.

    So to feed the discussion more,

    - what can we do as users?
    - are there alternative independent search engines out there?
    - should we think of starting new strategies in information retrieval?
    - what ideas are around?

    Is there a good active community somewhere discussing these issues? would be interested in participating…

    thank you
    fabio

  8. [...] You’re better off annotating Wikipedia (using Semantic MediaWiki) and applying your knowledge of a given subject (or domain) to build intelligence into Wikipedia, which is owned by the people (as a non-profit, people funded, people powered encyclopedia.) Why be a squirrel in Google’s squirrel wheel only to have Google abuse your good will? [...]

  9. “Why be a squirrel in Google’s squirrel wheel only to have Google abuse your good will?”

    Good point.

  10. [...] of doing business will rise.  This view of the new world of work worries some, who say that this opens the door to monopolization of a business necessity (by Google, of course…), and additionally will have the effect of [...]

  11. [...] a monopoly” or “monopoly google” you will get the Evolving Trends article “Is Google a Monopoly?” as the first result. It’s been like this since I published the article two years [...]

  12. It is a monopoly, but it is incorrect to compare it to the types of monopolies in the past. Things like “competition is just a click away” indicate a misunderstanding or an intent to deceive. The reality is, is that online monopolies are new and there is nothing quite like them. I have thought of this every day for about two years (not full-time ; ) ). This is the model I discovered:

    1) Google controls the ad space
    2) Google can “out monetize” any “internet service” by using their superior ad inventory
    3) “internet service” does not include retail/commerce product-related sites
    4) Google can therefore out-compete any up and coming web service
    5) The money Google makes from the ads goes back into improving the service
    6) The ads strengthen their other services, and the services strengthen their ads
    7) The more services that display their ads, the more advertisers they get, and the more they can monetize services
    8) Their strength grows unbounded in a feedback loop
    9) The monopoly of the network is quite different and arguably superior to monopolies of lore, notably desktop/software monopolies

    Examples:
    Take the search space. Their ad dominance gives the funds to improve their search relevance, which grows in popularity and thus feedback into the ads.

    Now they are seeking to beat wikipedia using knol, and their ad market dominance.

    In my opinion, and I am no expert, this is potentially a monopoly like no other monopoly.

  13. Thanks for the comment.

    It’s incorrect, IMO, to say “unbounded” when the ad market is finite.

    Look at the logistic map for population growth (e.g of a species of fish.) The feedback is non-linear. If something grows too fast for it’s environment the feedback loop brings it down violently as the system overcompensates.

    Anti-trust laws (sometimes) help save rapidly growing companies like Google from themselves by effectively stabilizing/dampening their rate growth.

    No such thing as infinite growth in a finite space. So, other than the obvious difference that Google is online and previous monopolies were offline I fail to see why Google can’t be compared against say Microsoft in the mid-90s.

    I’m glad we both agree that Google’s case is more significant even though we differ as to the wording of it.

  14. I’m not surprised at all. Google may be just another branch of the United States CIA. Literally.

    Ex-Agent: CIA Seed Money Helped Launch Google
    http://www.prisonplanet.com/articles/december2006/061206seedmoney.htm

    Yahoo’s search engine API is totally open, providing free unrestricted “raw” data access. Unlike Google which requires an API key that limits the # of searches per day per application/person. So I use Yahoo’s API for web and image search in some software I develop.

    http://developer.yahoo.com/

  15. I’m not anti-government. Yahoo funded Google
    more than anyone else. Like IBM funding MS.

    I am anti-monopoly and against anything that takes
    power from the people and concentrates it in
    the hands of the few.

    The government role is to protect the people and
    we should hold our government to the highest
    standard.

    The government is already looking into Google
    as a monoply but corporations have more
    power now than our elected officials and that
    is where the problem is. Corporations are
    becoming governments and you can see the
    beginning of it with google playing Web cop globally

    as well as censoring search results in Chinao

  16. You have to work with the system to make it better (i.e. make it work equally well
    for the people as for corporations) and you do that by containing
    monopolies and regulating markets to protect the consumer.

    You don’t want anarchy or chaos.

    Marc

  17. You said, “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 contrary,”

    I find something very wrong with just this first sentence. You say that google has too much power and that there is proof that they don’t use it wisely. What proof are you speaking of. As far as i am aware, Google has never abused their power that they have over peoples lives and data. In fact their USE of power has given us as small business owners incredible abilities to market our business’s outside of conventional means. We no one would have thought possible. Because of Google’s AdSense we are put in positions to expand much faster then ever thought possible. And as consumers the quality of websites that Google has posted has allowed even the most unorganized and inefficient person to find exactly what they need. So i am sorry but Google (with their great power) has done an incredible job of pushing the boundaries of the internet that no small time business could have ever done. As quoted from Spider-man “With great power, Comes great responsibility.” And i think that Google is proving their responsibility.

  18. Branden,

    Some of the proof is in the footenote!

    Please feel free to contest those. They’re pretty much recognized by many of us who feel that Google has way too much power.

    Marc

  19. [...] services cover more properties than someone who’s been cheating at monopoly (no pun-based accusation intended), but some of these services are far more venerated than others. Blogger is among these. [...]

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