Holiday Jeer: Google’s Pay-to-Fleece Game

[unhappycamper]

http://smirkingchimp.com/thread/tina-dupuy/53034/holiday-jeer-google-s-pay-to-fleece-game

Holiday Jeer: Google’s Pay-to-Fleece Game
by Tina Dupuy | December 6, 2013 - 10:52am

A hundred years ago the business tycoon Samuel Insull consolidated smaller utility companies to form the behemoth (albeit public charity-sounding), Commonwealth Edison. Because of the infrastructure needed to provide energy to an increasingly power-hunger public, Insull and others argued that Commonwealth Edison was a natural monopoly; inherently one company had to dominate the market. This battle cry enabled a mere 10 utility systems to control three-quarters of the nation’s electricity business by the time FDR was in the White House, subjecting consumers to higher rates with absolutely no competition save candles.

A series of New Deal regulations changed this, leading to decades of fair pricing to the consumer. (Until they were deregulated in the 1980s and 1990s, which is another column for another time.)

Google is a perfect example of a natural monopoly. Now every time that gets said, it inevitably gets countered by mentioning Google’s relatively small share of the smartphone market or their limited reach with their Chrome browser. I’m not talking about their other services in the slightest. I’m talking solely about their search engine. Google, which is now a verb, accounts for roughly 70 percent of the world’s searches. To put this into perspective, U.S. Steel held 67 percent of the market when it was subjected to an antitrust case in 1911.

On Google’s “Facts about Google and Competition” they state: “On the Internet, competition is one click away. Users aren’t locked in to using Google search, and the cost of switching to a different search engine is zero.” Yes. However the only asset of a search engine is its accuracy. The way their “mathematically-derived opinion” i.e., the way search engines figure out what we want is by an algorithm of user data. Meaning: you want the search engine the greatest amount of people use. So it lends itself to being a monopoly by virtue of its success.