A state case for showing that Google is guilty of monopolization will have to establish (1) that Google has “monopoly power in the relevant market,” and (2) that it willfully acquired or maintained that power “as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident,” under the precedent established by the Supreme Court in U.S. v. Grinnell Corp. in 1966.
A market analysis produced by Plum Consulting in the U.K., that’s largely critical of Google, argues that defining the relevant market for online advertising is difficult for several reasons. First, these markets are multi-sided: Is the relevant market the market for advertisers or is it the market for publishers that stand on the other side of Google’s intermediation? Second, there are lots of different market segments and they all overlap. Third, and most important, the market structure itself is changing at rapid speed.
Google has achieved astonishing success in both the web browser and search engine sectors. The firm controls well over 90 percent of global search-engine traffic, with much of the rest divided between Microsoft’s Bing and Verizon’s Yahoo. But nothing guarantees that Google will be able to maintain this position indefinitely, or even for very long. Already in the U.S., Amazon, with its treasure trove of high-quality data, has overtaken both Microsoft and Verizon in online advertising, and could rapidly become a compelling alternative to Google.
Read: The Google feature magnifying disinformation
Has Google engaged in anti-competitive practices to achieve or maintain its monopoly position? There are several ways it could theoretically do so, according the Plum report, including by using network effects, economies of scale and scope, vertical integration, and data access to exclude competitors. But in each of these cases, as the Plum report concedes, the potential for abuse exists alongside enormous benefits to the public. For example, the public prefers a network with more advertisers and publishers on it, an example of a clearly beneficial network effect. Meanwhile publishers and advertisers are able to reach their target markets more easily and accurately, which means much greater bang for the buck. And paradoxically, the reduced transmission of raw data among different firms means that privacy and security may be more easily and accountably maintained by a Google than by multiple firms in a more fractured market.
As the famous antitrust cases against IBM and AT&T demonstrated, investigations of the dreaded monopoly power take little account of the technology industry’s actual history, which in the modern era has been one of relentless disruptive innovation. The answer to Microsoft’s supposedly fearsome “tying arrangement” of Internet Explorer to Windows was not antitrust litigation, but rather a disruptive innovation in the combination of search and browser, as Google soon showed. Netscape must be kicking itself.
