Google is under fire–with antitrust claims levied from a handful of competitors. What the cries of monopoly and investigations into business practices fail to address though is that being dominant isn’t all bad.
Google’s virtual monopoly in the search engine and search advertising markets comes with some benefits that essentially make its success both a vicious circle and a self-fulfilling prophecy. The better Google is at search and search advertising, the more market share it captures. The more market share it captures, the better it is at search and search advertising. Rinse, and repeat.
My PCWorld colleague David Coursey points out “Nobody seems to have forced anyone, at least not large numbers of people, to use Google search. Nor have I seen allegations of people forced at gunpoint to use Google AdWords for their promotions.”
So, Google isn’t being accused—at least not yet–of any sort of extortion or unfair business practices. Competitors are just upset that Google has won so much of the market. Google’s dominant position is one of the main ingredients in its recipe for success. Let’s take a look at how Google’s “monopoly” is beneficial.
1. The more search traffic Google gets, the better it is able to tune and improve its search algorithms–returning more relevant results, faster. The US Department of Justice said as much in approving the Bing-Yahoo partnership and citing why it’s good for competition.
2. Improved search results yields improved ad targeting. Improved ad targeting is better for advertisers because it gets their message in front of the right audience, and it provides a better value for users because the ads they see are more likely to be relevant to their search, and hence their interests.
3. Google’s dominance across multiple areas–search, advertising, and mapping–puts it in a unique position to correlate that data and provide new opportunities for businesses to target advertising on a localized level.
If users didn’t prefer Google, it wouldn’t be as successful as it is, and it wouldn’t hold the market share(s) that it does. If users didn’t prefer Google, advertisers wouldn’t flock to jump on the AdWords bandwagon to take advantage of the huge search audience. Google’s success is a vicious circle.
Unfortunately, free market capitalism is like physics. The Newtonian laws of physics you learned in fourth grade make sense based on observation: an object at rest stays at rest, a reaction has an equal and opposite reaction, etc. However, at a certain point those laws no longer apply and the world of physics behaves differently than expected.
The idea that businesses should be allowed to operate free of governance or oversight, and that the ability of the market to choose will fuel competition and level the playing field works to a certain point. However, when a company is so successful in the free market that it achieves a dominant stake, it becomes a victim of its own success and intervention is required to open the market to competition once again.
Coursey also notes “Google is a dominant player because it’s done an excellent job of meeting customer needs. Its success is built upon customer acceptance, as well as perhaps the desire of the marketplace to standardize around a single search engine that we all use.”
Unfortunately for Google, Microsoft, and any other company that is “too successful”–regardless of how fairly they achieved that status–the world of free market capitalism requires that there be some competition in the market.
The world abhors a monopoly, no matter how legitimate, but competitors need to understand that the market will still choose and they can’t litigate their way to the top.