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BLOG: Are Google and Apple really 'monopolies'?

Mike Elgan | Jan. 31, 2012
You hear the word "monopoly" thrown around a lot these days, especially about Google and Apple.

Does Google have monopoly power in search?

Time magazine Policy & Law columnist Jerry Brito wrote recently that Google can't be charged with violating antitrust law, mainly because it has only 65% market share for search.

Brito didn't specify his source for that number, but it's likely he was referring to comScore rankings, which count the number of queries conducted by users, rather than the number of users or the number of advertising dollars.

One underappreciated dimension of the M word when applied to Google is that it should not be about the percentage of queries, or even search users, who are not the customers. It's about search advertising. That's the "market." That's where the money is.

Markets are correctly measured in dollars, not in the nebulous currency of "queries." A good search engine reduces the number of queries for each user, anyway.

It turns out that Google owns more than 80% of the search engine advertising revenue market.

If you choose to segregate mobile search engine advertising, Google has something close to a perfect monopoly: about 98%.

So Google may meet the first criterion for a monopolistic company by today's legal standards.

On the other two criteria, however, Google fails the monopoly test.

For example, there are obvious substitutes for Google, including Bing and a few others. And these alternatives are easily embraced. Just type the URL, or the name of the search engine into Google, and you've switched. There are zero significant barriers to switching to the competition.

There are barriers for other companies to enter the market, but they appear surmountable. For example, a search engine called Blekko launched recently. And one called WireDoo will soon be launched.

It's not theoretical. Companies are in fact entering the search engine market and competing with Google.

To me, there's no question: Google does not have monopoly power in search -- not literally, not legally and not actually.

Does Apple have monopoly power in tablets?

The claims against Apple are more easily dismissed than those against Google.

First, Apple's share in tablets has been well below the 75% threshold for some time, and now hovers around 57% or 58%. And the overall trend is toward Android tablets gaining market share at the expense of Apple, so Apple's share is declining.

The fact that companies are selling touch tablets at $200 and below demonstrates that Apple is not in control of pricing. Literally dozens of new entrants into the market prove there are no insurmountable barriers to entry.

Any claims that Apple enjoys a monopolistic position in tablets are unsupportable and directly contradict the facts.

But that doesn't settle it

 

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