Google's Silent Monopoly

An anonymous reader writes "Isaac Garcia from Central Desktop Blog writes, 'How much does Google pay *itself* to claim the top ad position for searches relevant to its own products? Google holds the top advertisement (Adword) slot for the following key words: intranet, spreadsheet, documents, calendar, word processor, email, video, instant messenger, blog, photo sharing, online groups, maps, start page, restaurants, dining, and books... ...if you are trying to advertise a product that is competitive to Google, then you'll never be able to receive the Top Ad Position, no matter how much money you bid and spend. How different is it than MSFT placing its products (Internet Explorer) in a premium marketing position (embedded in the OS)?'"

Re:It's fine for Google to do that

Microsoft leverages their monopoly to trap you into using MSFT tools, most of which are in some way or shape flawed compared to alternatives.

So if Microsoft's tools were technologically superior to the alternatives, the behavior would be okay? I don't think so.

I don't see that Google has a monopoly on "the Internet."

No, but "the Internet" isn't a product. Google has a near-monopoly on web searches, and it is (allegedly) leveraging that monopoly to gain a competitive advantage in other industries that also happen to be web-based. Just because a product is offered on the Internet doesn't mean the product is "the Internet," and it doesn't mean that product isn't distinct from other offerings on the Internet.

Leveraging your position in the market for one product to increase your competitive advantage in the market for another product is nothing new. The problem comes when you are so dominant in Market A that leveraging that dominance in Market B would cause others to be unable to effectively compete in Market B.

The question here is whether Google is sufficiently dominant in Market A, the web search market, to be classified as a monopoly. If they are, then what they are doing could be classified as illegal abuse of that monopoly.

Re:It's fine for Google to do that

So if Microsoft's tools were technologically superior to the alternatives, the behavior would be okay? I don't think so.

Monopolies only become a problem when they stop doing what's in the best interests of the customers. If Microsoft produced quality software and listened to the customers, then I suspect most people wouldn't have a problem with them. Oddly enough, a fairly common criticism of MSFT is that they're all closed source. So if they listened to their customers and opened up more of the kernel, file formats, and what not, we wouldn't have this vendor lockin problem and hence no abuse of monopoly.

BTW there are quite a few natural monopolies like gas, water, telco, cable, etc. Which usually don't get broken up until they start really abusing their customers. (I'm waiting for Rogers to get a bitch slap...)

As for Google, I guess I can't comment since I'm not in the market to advertise and I mentally block out Adsense advertisements. But that said, I see [or acknowledge] more ads from slashdot and fark than I do from google.

Tom

Re:It's fine for Google to do that

Monopolies only become a problem when they stop doing what's in the best interests of the customers.

Make no mistake about it, people who use Google's free services are not Google's customers; they are Google's product.

Advertisers are Google's customers. They are the ones who pay. Granted they treat their users well with their offerings, but in no way are you a customer of Google's.

Re:It's fine for Google to do that

This seems a little too cut and dry. Without the users, Google would have no customers - it seems to me that we are customers of Google by proxy. In other words, we pay the advertisers (with eyeball/click through time) and the advertisers pay Google (with money). Remove any link in that chain and it all falls to pieces; therefore I'd say that we are indeed (though indirectly) Google's customers, as it is in Google's best interest to keep both us and the advertisers happy.

Marx is a wanker

Perhaps you're just a troll, but I'll assume for a moment you aren't.

Radical capitalism is based on an assumption of some kind of radical choice, which is basically a fantasy.

There are generally a lot more choices in capitalist societies than in socialist or communist ones. As it is, I can search with Yahoo, Dogpile, or any other number of search engines.

Part of my problem with MS is that they prevent other products from being compatible with theirs, in order to maintain their monopoly.

What is in fact happening is the continued alienation of human beings from each other and our social worlds

This 'alienation of human beings from so and so' line (usually from the product of their labor) is one of the worst Marxist criticism of capitalism I've heard. As if I can't call up my friends and spend time with them if I want to. Or get a job outside a corporation making handmade art... if I wanted to. Corporations pay much better,generally, than smaller businesses. If people thought "alienation" was a problem, they'd work in jobs that didn't "alienate" them. (And how does Google alienate people? By making it easier to find people or businesses, it would seem to do the opposite.)

Re:Monopoly Behavior

The argument is that since Google has close to 73% world market share in search traffic, that they also have that same 73% in search advertising.

An argument which is invalid, to start with.

If you leverage that by showing your listings first in the adverts, you are unfairly manipulating a monopoly.

Which is, as stated, false as well, as a monopoly is defined by price-setting power, not marketshare.

Re:It's fine for Google to do that

Don't be ridiculous. Google is nothing like Microsoft. Here's a few important differences:

1) Cost to the average user. When you decide you want to or need to use Microsoft software, it'll cost you. Non-OEM copies of Windows are quite expensive (~$300?). When you decide to use Google to look for a website, it's free, other than having a few ads on the right side of the screen. I've never sent Google a dime, even though I've used many of their services (search, maps, etc.) for years.

2) Availability of alternatives. If you have a copy of TurboTax or AutoCAD and want to use it, you need a copy of Windows installed on your computer. You might be able to get it to work with WINE on Linux, but don't count on it; most likely it won't work fully. If you work at a company with an internal website that uses ActiveX crap, you're basically forced to use Windows/IE. However, if you want to search for a website, you can choose from Google, Yahoo, and MSN searches. Nothing's stopping you from using one of Google's competitors. The only reason they command the overwhelming majority of search uses is because they have a reputation for returning the best results. But most searches will probably work fine with any of them. Similarly, you can use Google Maps to find directions someplace, or you can use Mapquest or one of several others. People happen to like Google Maps, but the others all work fine, and will probably find your destination for you as well (and the results may actually be more accurate, though the user interface will suck more in my experience).

Google only has a huge market share because people like them and choose to use their services. This could change at the drop of a hat since several competing services are available which do all the same stuff (just not as well), and there's absolutely no lock-in forcing anyone to stick with Google.

Re:It's fine for Google to do that

Google has a near-monopoly on web searches...

Google has nothing like a monopoly on web searches. There are countless close substitutes. Even if Google has a large portion of the market share, as long as those substitutes exist (or can exist), Google cannot function as a monopoly. (If Google could function as a monopoly, they could charge for their search services and anyone wanting to search would have no choice but to pay.)

We're talking about their advertising business, though. In that context, whether they have a monopoly on searches is irrelevant because they're competing against the entire internet for eyeballs. In this context we would be even less justified in calling Google a monopoly.

Re:It's fine for Google to do that

Agreed. And Google has nothing like a near-monopoly on searches. According to the search engine stats I've seen [searchenginewatch.com], Google hovers somehwere around a 45% viewer share. Sure, that's bigger than anyone else, but it's less than half of total searches.

Re:It's fine for Google to do that

It doesn't matter what their market share is... it could be 99.9%, and there still wouldn't necessarily be a problem. It could only be described as a monopoly (really an abusive monopoly) if they then leveraged that market share to artificially raise the barrier to entry into the market for their competitors.

For example, if Google started telling it's advertisers that they can't advertise with anyone else if they want to be able to advertise with Google, that would be an attempt to illegally (or at least abusively) leverage their position in order to harm their competitors. Sort of like Microsoft telling computer manufacturers that if they want to be able to sell computers with Windows installed, they better not be selling computers with any other OS (or with no OS) - at that point, they are abusing their market position to build artificial barriers to entry in the desktop OS market.

There can only be a monopoly if there is a significant barrier to entry in a market. It is only an abusive monopoly if they either use their position to raise artificial barriers, or if significant "natural" barriers exist, when they start abusing their customers.

Re:It's fine for Google to do that

No, but "the Internet" isn't a product. Google has a near-monopoly on web searches, and it is (allegedly) leveraging that monopoly to gain a competitive advantage in other industries that also happen to be web-based

I'm not sure it is possible to have a monopoly on something on the internet. There is *no* penalty for using other products. They are not harder to find, they are not more expensive to use, and google can't do anything to prevent you from using them. The definition of a monopoly on a product is that it is the only (or "almost" only, se MS Windows) available one of its type.

There are plenty of other search engines, the reason people dont use them is that they suck compared to google. I'm not sure that makes a monopoly. If google went around buying up start-up search engines to close them doen or bullying isps to block acces to other engines besides google, then you might have a monopoly.

Hardly a monopoly

Google has a near-monopoly on web searches

44 percent [searchenginewatch.com] is hardly a monopoly. Or a near-monopoly.

Re:It's fine for Google to do that

How different is it than MSFT placing its products (Internet Explorer) in a premium marketing position (embedded in the OS)?'"

Simple. Microsoft is a convicted monopoly, google is not. Next there will be complaining that Linux distro's bundle media player software. You play by a different set of rules when you are a convicted monopoly.

Re:How about Google isn't an Illegal Monopoly?

Obviously the answer would be to force Microsoft to advocate for its competitors. Nothing else makes sense.

so slashdot can decide which stories they choose?

thats an evil monopoly!

"Do No Harm"

Doesn't anyone watch movies? Any company that claims to "Do No Harm" is obviously the most evil vile company of them all.

what is the secret of google search?

google search is people!

Overlooking the obvious...

Maybe you need to find a product or service that doesn't compete with Google Enterprises?

Did I miss something?

Google is the only way one can advertise a product on the web anymore?

Last I checked, Google was *one* place where you could buy ads. If you don't like it, advertise elsewhere.

Google *does* pay itself.

Consider: When Google grants itself the top ad slot for a search term, it denies itself the revenue of a third-party advertiser who might have paid for that slot. Thus, in a very real sense, Google pays exactly the same rate as everyone else.

Re:Google *does* pay itself.

And when I **** my wife, I'm denying myself the revenue of a third-party john who might have rented her for that slot. Thus, in a very real sense, I pay the same rate as everyone else.

Re:Google *does* pay itself.

No. Since you're married, you pay much, much more.

Re:Google *does* pay itself.

That sounds ridiculous, but its true, really. Opportunity cost. Bet you didn't know that about your wife. :)

Re:Google *does* pay itself.

By "renting out" that "slot" (!)

Was it really necesary to give us an ascii representation of the female anatomy after you describe it as a slot?

~Wx

Re:Google *does* pay itself.

Strange. When I **** your wife, I don't pay anything. I think you're getting ripped off.

Monopoly

Two areas of "monopoly" which do concern commentators and commercial organisations are only indirectly commercial. In one sense, although it is a search engine, Google has some of the powers of a major newspaper or periodical. It does and can exercise editorial control and influence.

Secondly, the power and use of on-line purchase is growing. Google, and other search engines for that matter, have more power to influence the selection, availability and immediacy of purchases in the way it sets the so-called algorithms for prioritising and selection of websites, bringing distinct commercial advantage to some and disadvantage to others. Much of that will invariably be determined by the commercial power of advertising revenues. This could trigger investigation by Competition Authorities.

You mean like TV channels?

Sounds a lot like a television channels running ads for their own shows. How often do you see NBC airing an ad for a CBS show? Is that wrong?

Umm...

How much does Google pay *itself* to claim the top ad position for searches relevant to its own products?

The cost to google is loss in revenue from not being able to sell those top positions, presumably...

How hard was that?

Re:Maybe not diffrent.

The guy who wrote this article is very clearly a troll. He's "concerned" because his ads frequently take second place to Google's ads. He even blows the whole thing out of proportion by claiming that it's the same as Microsoft embedding IE into its operating system. This, of course, assumes that we all(95%) use Google, that Google is in fact the only search engine that anyone is aware of, and that Google actively prevents us from using alternatives. None of these things is true.

Microsoft actually has a monopoly and has abused it, whereas Google has no monopoly and doesn't appear to be willing to abuse it, judging by their past behavior. Even if all they care about is shoving as many ads down our throats as possible, they at least present the ads in a tasteful manner, where I can choose to click or not. They don't display flashing ad banners that distract from the material on the page, which I do consider an abusive practice. When Google has 90% of the search market, and everyone is advertising with them, then they have to start allowing competitive ads to appear in whatever slot the advertiser pays for. They also have to be careful to not abuse their customers by losing mail in gmail inboxes, filtering mail from competing companies, etc.. As it stands, it's impossible for Google to exploit a monopoly Google doesn't have.

Fine by me..

Sure, it has a monopoly, in its own domain. I would only be concerned about it if I started to see Google's ads at the top spot on multiple search engines.

Its the difference between seeing Mobile ads at a Shell gas station. Of course your going to see ads from Shell rather than Mobile, but if you don't want to see that, just go to a different service station.

I think that is called "Smart"

This is important like a press release saying the sky is blue is important. Of course a company that is in competition with other companies is going to promote its products before theirs. Google is not trying to launch all these services as individual entities, they are all part of Google. That means that Google will try to cross promote and advertise (for free) its own products. It is common sense as far as I can tell.

Why don't you go to a cab company and ask to advertise another cab service on their cars. Good luck!

it's so different

It's a lot different, so different it's not a point of discussion, yet. There are so many alternative options for search engines out there.

I've tried many other search engines. I like that there are so many to choose from and try. And try again. But so far Google for most uses is the best first choice (for me). Google isn't forcing me to use them.

When I do use Google, I have no qualms they would ratchet up any ad placement or search results in their favor, it's their widget, and as long as it is giving me results that help me get through my research requirements,... hmmmm, not really the issue. Oh yes, abuse of monopoly.

Google isn't a monopoly. Google is dominant because they are good. They haven't stifled competition, they've created red hot innovation competition. Heck, Google has even gotten Microsoft to look like they're at least now trying to innovate.

Google's behavior is nothing like Microsoft's.... at least not yet, but additionally Google's beginnings look nothing like Microsoft's. Google emerged from a couple of people putting together cool ways of getting to information and grew that into some pretty amazing technology (do a Google and find and check out how their Google File System works -- it's amazing in its elegance, simplicity, and power). Google caught on in a world technology dominated by others and by dint of excellence have taken top spot.

As for the author's claim Google holds the top spot for the words:

• intranet [google.com]
• spreadsheet [google.com]
• documents [google.com]
• calendar [google.com]
• word processor [google.com]
• email [google.com]
• video [google.com]
• instant messenger [google.com]
• blog [google.com]
• photo sharing [google.com]
• online [google.com]
• groups [google.com]
• maps [google.com]
• start page [google.com]
• restaurants [google.com]
• dining [google.com]

I tried a bunch of these -- while I do see google as a top spot ad, it's hardly a dominant position. And there are many other sponsored links. This is nothing like the old Microsoft "don't dare put any icons or links of any competitor on any machine you sell or we won't give you license to sell Windows" fiat.

I don't care if they hold on to the top spot... I just care that the playing field remains level. I'm sure Google plays tough, but in the big picture I still hold faith Google plays fair.

Re:it's so different

Considering that Excel is the dominant spreadsheet product

Maybe Microsoft felt that Excel had already reached the maximum mindshare and that advertising wouldn't do anything for them anymore. After all, if everyone thinks spreadsheet: Excel, then paying google to tell people spreadsheet: Excel doesn't help.

not true

I just tested "intranet"

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google's ad comes in at #2 on this one Google Checkout

Does this really derserve an answer?

Microsoft was not at fault for putting their browser in an exclusive position on Windows. They were at fault for using their OS monopoly to stunt competition in the browser market. Every large multi-market company uses their products to enhance their other products (e.g. Apple = iPod + OSX + iTunes). The difference is that Google does not have a monopoly on search or advertising.