Is Google Killing the Economy?

[Author's Note: It has been brought to my attention that the source of this report, Scott Cleland, may not be a credible source of information--at least not as it relates to Google. For more details about Mr. Cleland's background and industry affiliation, check these sources: "Scott Cleland: Google Using 21x The Bandwidth They Pay For" DSL Reports, 12/4/08; "Is Google Really Using 21x The Bandwidth It Pays For?" Techdirt, 12/4/08; and "Google Critic Paid by Microsoft," Tech Daily Dose, 6/16/09]

Google is virtually synonymous with the Web, and many have come to embrace virtually every product and service--from Gmail to Android--that Google rolls out. A new study, however, asserts that Google's apparent monopoly stifles competition in many industries, and has an adverse impact on the economy and the job market.

The report, titled "Googleopoly VI Seeing the Big Picture: How Google is Monopolizing Consumer Internet Media & Threatening a Price Deflationary Spiral & Job Losses in a $Trillion Sector", was prepared by Scott Cleland, President of Precursor--a tech communications research and consulting firm. It contains a number of damning assertions about Google's effect on the economy, and implores the United States Department of Justice (DOJ) to wield the antitrust hammer to put a stop to it.

Cleland has prepared a detailed and seemingly well-researched document which presents a number of conclusions including:

• There is no net-economic growth or job creation from Google's "free" Internet sector model, only a deflationary price spiral, negative growth, property devaluation, and hundreds of thousands of job losses in over 20 industries. Consumers don't win long term from a monopoly-gatekeeper of "free" information access and distribution.

• Lax antitrust merger enforcement is responsible for tipping Google to monopoly and facilitating its monopolization of consumer Internet media. If antitrust authorities do not wake up soon, a wide swath of a trillion dollar sector with millions of jobs-- i.e. video, maps, books, analytics, travel, etc.--will suffer the same fate as the music and newspaper industries.

• When Google rebrands its current YouTube-Double-Click video advertising business as "Google TV" this fall, it already will own an Internet video-streaming monopoly with 80 percent of the Internet audience, almost a billion viewers, 2 billion daily monetized views, and 45 billion ads served daily.

The report states that "Google is a vastly more serious antitrust threat to consumers and the economy than Microsoft, because the DOJ blocked Microsoft from extending its monopoly vertically into the broader economy, while antitrust authorities have unwittingly aided and abetted Google's vertical monopolization of vast parts of the broader economy."

There are many valid points in the report, ultimately arriving at the conclusion that the reality of Google is very different from its "Do No Evil" mantra. However, it also paints Google in a specifically damning light that may not be entirely accurate depending on your point of view.

It seems difficult to fault Google for making so many products and services available for free. Services like Gmail, Google Voice, Google Docs, and other products provide many users with access to tools they might not otherwise be able to afford. It can be argued that the Internet is only as universally valuable as it is as a result of contributions such as this from Google.

It is also worth noting that Google emerged at a time when many were making the same sorts of accusations against the growing threat of a Microsoft monopoly. With Yahoo and others already dominating the market, it seemed unlikely that a startup named "Google" could even compete in the search industry, much less evolve into a giant on par with Microsoft itself in only a decade.

If Google could start from nothing and take on Microsoft, it seems that the possibility still exists for a company to come along and knock Google off its perch as well. Facebook is an example of a company that emerged from the shadow of Google's Web dominance and yet has managed to capture its own market and rise to challenge Google directly in many ways.

The report itself may be an extreme point of view, but it does seem that the DOJ has treated the rise of Google differently than the rise of Microsoft, and that Google's virtually ubiquitous access to the data on the Internet poses a variety of security and privacy concerns. But, I think it is more accurate to suggest that Google is guilty of benign neglect than overt evil.

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