Google’s Dominance Doesn’t Require Anti-Competition

Google permeates everything we do. Our society could be described as a “Google generation,” for better or worse.

Some suggest that Google undermines our democracy, specifically by fostering greater inequality and eroding our notions of privacy. Others point to Google’s potential role in fighting back against “fake news,” and the crucial role that flows of information and media play in a democracy.

Google’s market share in search engines in Canada is estimated between 60% to over 90%. It’s Google’s dominance in the market that has some concerned about the centralization of power and information flows.

The broader practices of Google have people like Jonathan Taplin in the New York Times asking yesterday, “Is It Time to Break Up Google?” Taplin says that Google, as well as Facebook and Amazon, meet the classic economic terms of a monopoly for their respective segment of the industry.

He points to the early days of telecommunications regulation and finds commonalities between Google and traditional public utilities,

It is impossible to deny that Facebook, Google and Amazon have stymied innovation on a broad scale. To begin with, the platforms of Google and Facebook are the point of access to all media for the majority of Americans. While profits at Google, Facebook and Amazon have soared, revenues in media businesses like newspaper publishing or the music business have, since 2001, fallen by 70 percent.

The impact on these traditional forms of media have been hundreds of thousands of jobs, and billions of dollars.

Taplin suggests that regulation could be implemented from further acquisitions, requiring licensing out patents for nominal fees, or removal of the safe harbour clause from the Digital Millennium Copyright Act. Social network sites host and provide content that circumvent other forms of copyright incentives for production, and allow them to profit from the content of others through their own advertising.

Unfortunately I believe that ship has already sailed out of the safe harbour – never to return. Public behaviours of media consumption are already ingrained, and far removed from the traditional forms of media. Whatever solution does emerge may have to be equally as innovative as the platform that is providing the content.

Tim Worstall at Forbes also rejects this premise of a monopoly. Market dominance does not necessarily give rise to concerns, unless they are actually supplying the entire market and then using that dominance to exploit the market. The technology companies in question, especially Google, are entirely contestable by newer entrants into the market.

In other segments of the world, Google is not always the common verb used in popular conveyance. China’s Baidu processes over two billion searches every quarter, and has 56% of the Chinese market. Yandex is the fourth largest search engine in the world, but is barely used outside of Russia, where it has 62% of the market share. Naver has 80% of the market share in South Korea, Seznam has a 93% usage rate in Czech Republic, and Yahoo! is strangely still immensely popular in Japan, with 55% of the market share.

This global diversification of dominance allows for newer ideas to emerge, and if they are not adopted by Google, allow them to provide some competitive advantage. Where Google does have dominance, the areas of potential exploitation are still very limited.

This week, the Financial Post revealed they had obtained an internal memo from the Heritage’s broadcasting and digital communications branch of the Competition Bureau. It appears as if the bureau was conducting an antitrust investigation, but only dropped it because the Android operating system did not have as much market penetration in Canada as in other jurisdictions,

In Canada, the Android operating system accounts for 50.5 percent of mobile phone operating systems according to a report by Com Score, while the European Commission claims that Google accounts for more than 90 percent of market share in the same industry in Europe. This difference could give the EC a larger relative justification for investigation, but does not tell the whole story with regard to why. the Competition Bureau decided not to investigate further.

Both the EU and the US have conducted anti-competition investigations into Google. In Europe, the 2013 investigations were successful in having Google change the following practices:

  • Exclusivity requirements in its agreements with publishers for the provision of search
    advertisements;
  • Restrictions on advertisers being able to run their search advertising campaigns across
    Google’s and competing search advertising platforms, and
  • Manipulating search results on its search engine to give preference to its own products, such as Google Maps, Google Flights, and Google Play Store.

However, a new investigation has been undertaken as of 2016 in the EU for Google’s behaviour in pre-installing Google on Android devices and setting Google Search as a default.

The 2013 FTC investigation into Google in the US was successful in having them change the following practices:

  • Blocking rivals from using patents on critical standardized technologies needed to make popular devices such as smart phones, laptop and tablet computers, and gaming consoles;
  • Restricting advertisers’ management of their search engine ad campaigns across different platforms such as Google, Bing, and Yahoo, and ·
  • Manipulating search results on its search engine to give preference to its own products by demoting competitor sites while promoting its own such as Google Maps and its Google Play application store.

The fact that regulators have had to reign in Google in these areas are in fact a further testament to the fact that Google’s position is not guaranteed. These practices around Android devices illustrate they are constantly trying to maintain or grow their market share further. And in Canada, their share in the mobile still is not sufficiently high to warrant concern.

The five largest companies in the world by market capitalization are Apple, Alphabet (the parent company of Google), Microsoft, Amazon and Facebook.

In Canada at least, Google’s Android devices are still surpassed by the ubiquitous iPhone. PCs still predominate desktop devices. Google’s foray into digital books hit so many copyright hurdles that they have yet to gain widespread popularity. And Google+, their attempt to foray into social media, was largely a bust. Although Google hasn’t been incredibly successful in these areas, their innovation and lessons learned still provides benefit to the larger markets.

While Google still predominates search engine use in Canada, it is hardly so popular across the different niche areas as to warrant anti-competition measures. For now at least, the others have demonstrated that they are in fact limits to Google’s pervasive reach.

Comments

  1. Background details in layperson’s terms on Google Books case and issues in recent issue of Atlantic Monthly: https://www.theatlantic.com/technology/archive/2017/04/the-tragedy-of-google-books/523320/