The U.S. is considering anti-trust action against Google. What arguments would you (and the
government) make for why the firm is engaging in monopolistic behaviour?
Monopoly itself is not illegal. But when Monopolists abuse their power at the expense of consumers
and competitors, it will become illegal. Historically monopolists like Standard oil have controlled
their markets and often abused their market dominance. Firms engage in monopolists’ behaviour in
order.
The supply curve is non existent in a monopoly market like that of search engine.
1) to kill competition and avert future threats
2) to earn more profit or even super normal
profits
3) To create a risk-free business model.
Similar to this Google has abused its markets
dominance to pre install its own apps in android
phones forcing consumers and phone makers to use
google technology. This preserves their monopoly.
Google has been fine $5 Billion penalty by the EU for this activity.
Google chrome and android does not make any money but helps to prevent other players from
entering. It is a part of the sharecropping adjustment where google shares its revenue from search
ads. This strategy Enable google to create barrier to entry and
thus kill competition
Google has abused its dominance in Search engine where it has
90% share, by giving priority to searches from bigger businesses
from where it earns revenue and hence harming smaller ones
and start-ups. Thus, they are killing innovation and free market.
This strategy enables Google to enhance its revenue from Ads
Further
What arguments would you make for why the firm is not engaging in monopolistic behaviour?
CEO Sundar Pichai argues that Google helps customers by giving more options at an affordable rate.
It is a fact that unlike historical monopolists like standard Oil, Google has decreased the prices to
customers. Hence customers are benefitted by Google’s action.
Other companies like Apple have its app stores searches and sir. FB has its its own ecosystem where
even google search cannot have access. Amazon, Apple, FB all are using similar strategies and
expanding their Search engines. When Google’s competitors are using more aggressive and
restrictive methods in their own platforms, Google cannot be singularly criticised only based on its
size.
Note: Credits for pictures from internet