Thursday May 11, 2017

"Google Is as Close to a Natural Monopoly as the Bell System Was in 1956"

Media scholar Jonathan Taplin says that if you were to start a company to compete with Google in search, he’d tell you that you were out of your mind, as it’d be an impossible feat. He argues that Google, and other giants that include Amazon and Facebook, have effectively cornered culture and undermined democracy, ravaging the digital economy and becoming so big that their dominance cannot even be challenged in court. Some say that monopolies can actually be good for innovation: is there any truth in that?

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In terms of market share and profit margins, the big digital platforms, particularly Google and Facebook, enjoy an astounding level of dominance. Google, in effect the world’s largest media company, has an 88 percent market share in search advertising. Facebook (including Instagram, Messenger, and WhatsApp) controls over 70 percent of social media on mobile devices. Together, the two firms received 85 cents of every new dollar spent in online advertising in the first quarter of 2016. Amazon has an over 70 percent share in the e-book market. Along with Apple and Microsoft, they are now the most valuable companies (in terms of market capitalization) in the world.