26 Oct Google is Not a Coercive Monopoly
The US Department of Justice has filed a complaint against “Monopolist Google for Violating Antitrust Laws.” Google is the biggest player in the world of internet search and the company has come under fire in recent weeks for allegedly rigging search results for political reasons, but Google isn’t a monopoly. There are a lot of firms in the spaces where Google does business, and as far as I know, they don’t have any special privileges from the government that deliberately bar people from competing with them. Big? Yes. A “monopoly?” No. I’m sure if we looked closely enough we could find people at the Googleplex committing a host of sins. Being a “monopoly” isn’t one of them.
When people use the word “monopoly” they mean “really big company with a lot of market share.” There’s nothing necessarily wrong with this. “Monopoly” means, however, either “the only firm in an industry” or “a firm with explicit, government-granted privileges that prevent other people from competing with it.” I don’t think Google fits the bill.
First, Google isn’t the only firm in the search and search advertising space–or web browsing, or word processing, or any of the other fields in which Google does business. Within my Google Chrome browser yesterday, I was able to switch my default search engine from Google to DuckDuckGo with just a few clicks. I could delete Chrome and have Safari, Opera, Firefox, or Brave running the way I want it in a matter of minutes. I’m typing this in Google Docs, but it wouldn’t be hard to switch to Word, Pages, a typewriter, quill and ink on parchment, or another word processing solution.
I don’t use Google products because they’re the only feasible option or because switching from one platform to another is particularly onerous. I use Google products because they offer convenience and quality at a price of $0. While the Department of Justice worries about Google’s market power and innovation, the ease of switching to a different browser or search engine keeps them on their innovative toes. There’s a lot of information in what people do compared to what they say, and computer users have voted and continue to vote for Google products. I saw a “Most Interesting Man in the World” meme one time that illustrates this nicely. It was captioned “I don’t always open Internet Explorer, But When I Do, It’s to Download Chrome.” I listen to a lot of productivity podcasts and have written a bit in that space before, and a sizable chunk of the productivity industry consists of evaluating apps and software. Some of Google’s market position is likely explained by inertia, but it’s probably not that much.
If you build a better browser, people will beat a path to your door because switching costs are pretty low. I’m a couple of weeks into trying to learn my way around a new app or piece of software every week and I have a computer upgrade coming next month, and my phone is just about due for a replacement. This means I’ll be reevaluating my browser choices pretty soon (if you have any suggestions, please let me know). For all its alleged control over the market and control over consumers, Google couldn’t make Google Glass, Google Buzz, and Google+ work, and those are now one with Nineveh and Tyre. If only government agencies had the kind of “market power” that forces them to close when it’s clear they’re wasting resources!
Second, what Randall Holcombe called Political Capitalism flourishes in the world of antitrust regulation. In a 1985 article in the International Review of Law and Economics that should be a classic, Thomas J. DiLorenzo explains “The Origins of Antitrust: An Interest Group Perspective.” Fred McChesney relies on it for his article on Antitrust in the Concise Encyclopedia of Economics. DiLorenzo found that the allegedly-market-restricting trusts were expanding output and lowering prices more rapidly than the rest of the economy. If the trusts were monopolizers, they would be restricting output and raising prices; McChesney points out that even the muckraker Ida Tarbell and the “trustbuster” Theodore Roosevelt admitted that the trusts were raising output and lowering prices.
In the golden age of trustbusting and antitrust, big firms were being singled out and punished for doing exactly what we expect to see in a vigorously competitive market: expanding output and lowering prices. Judge Learned Hand’s decision in United States v. Aluminum Co. of America (1945) is remarkable in its explanation of Alcoa’s alleged crimes of expanding output and lowering prices and his claim that “…it is no excuse for ‘monopolizing’ a market that the monopoly has not been used to extract from the consumer moore than a ‘fair’ profit.” Alcoa’s crime was not that they served consumers poorly. It was that they served them too well.
Third, the markets Google is alleged to have monopolized–Internet search and Internet search advertising–didn’t exist a few decades ago. The basis for prosecution, then, seems incoherent. Why do we prosecute Google for monopolizing a market they have largely created rather than people who could have invented Internet search and Internet search advertising but didn’t? In an abstract sense, we could have had everything Google does centuries or millennia ago had our ancestors been more inventive. Moreover, there are all sorts of innovations our grandchildren will enjoy that we could enjoy too if only people would innovate more. It’s not clear why Google is blameworthy while a cluster of lawyers and activists–to say nothing of people like us who are using the tools Google created in order to denounce it–who could have started a tech company but chose not to are either blameless or heroic.
When Whole Foods and Wild Oats merged, they attracted antitrust attention because they might monopolize the market for “premium natural and organic supermarkets.” This seems like an oddly narrow definition of the market for groceries, particularly given how many decidedly non-premium, non-natural, and non-organic supermarkets like Walmart have hustled to add more and more premium, natural, and organic products to compete with Whole Foods.
Finally, even if Google is an insidious, welfare-reducing monopoly, I’m not sure I trust the federal government to fix it. If you have the time and the stomach for it, look up clips of Google CEO Sundar Pichal and Facebook CEO Mark Zuckerberg testifying before Congress. It’s political theater that is simply painful to watch. I understand that a lot of what the inquisitors were doing was just posturing for the camera, but I got a headache watching Pichal calmly explain to a member of the committee that he wouldn’t know whether or not Google could track his movements on an Apple product without seeing first of all whether or not he had downloaded any Google apps and second of all what his settings were.
Google is a lot of things. Maybe they have become evil, as the left would tell us when alleging that YouTube’s algorithms are unwittingly supporting, galvanizing, and expanding the alt-right or as the right would tell us when alleging that Google’s search results are rigged to advance a progressive agenda. The charge of “monopoly” doesn’t stick, though, because it’s pretty easy for people who don’t want what Google has to offer to take their business elsewhere.
Made available by the American Institute for Economic Research.
Read the Full Article here: >Capitalism Magazine