“The news that Google is in trouble in Europe for its data-gathering practices is a reminder of the global effect of this one company. It is an accomplished company, but also one the Justice Department needs to look at, and on an issue more central than data collection,” The Seattle Times editorial board argues. “The issue is monopoly power.”
“Google makes most of its money by selling ads that appear on the top of your screen as ‘sponsored links’ when you search with certain words. Advertisers set prices for these ads by bidding in an automated auction,” The Seattle Times writes. “It may seem odd that a company could exercise monopoly power without setting its own prices. Eric Clemons, professor at the Wharton School, responds with an analogy. Suppose an airplane is going to crash, and there is only one parachute. The owner of that parachute, he says, can easily get a monopoly price by auctioning it. This is like what Google does.”
“To make such a case against Google, the Justice Department will have to establish several points. One, says Clemons… will be establishing what ‘relevant market’ Google is in. The company will argue it is a mere minnow in the market for all advertising,” The Seattle Times writes. “The government will have to argue that in the market for Internet search advertising — the relevant market — Google is a whale.”
The Seattle Times writes, “Its case against Microsoft did not work out well. The Justice Department won in District Court and lost on appeal. But that was a decade ago. Times have changed. Google could be different.”
Full article here.
MacDailyNews Take: In the U.S. achieving a monopoly is legal; in fact, it’s the ultimate goal. It’s monopoly abuse that’s illegal. Therefore, the question is: If Google has a monopoly, what did they do, if anything, to abuse their monopoly position?