Abstract
A company qualifies to be a monopoly depending on its control over the market. In the contemporary world, many people have embraced technology which has increased the numbers of internet users. This study examines Google as a monopoly in the web search. The company has dominated the market by acquiring more than half of the market share. This leaves its competitors with just less than half to share among themselves. This has tended to boost the company’s control over the market.
Introduction
Monopoly can be viewed as a situation where one company owns all or nearly all of the market for a certain service or commodity. In most cases, monopolies develop in situations where there are barriers to entry into the market. This may be due to regulations or even the amount required in providing the service or product in the market. Monopolies are characterized by a very low level of competition. This may reduce the social welfare in the society.
Discussion
Google is one of the largest search engines in the world. Google has been in the industry for quite some time. Currently, the number of users is increasing at an increasingly high rate. This has led to the company acquiring a relative higher fraction of the market. As already noted, a company gains monopolistic power depending on its share in the market of the product or service it provides. Therefore, this growth tends to develop a monopolistic power for the company
According to the recent statistics, Google dominates all other search engines in the world. For instance, the company’s share of all the web searches was found to be approximately 64% (Ulanoff, 2007). In addition, this number is growing at a very high rate per year and similarly is the company’s monopolistic power.
The company is also said to have the biggest indexed database (Sheu & Carley, not dated). Some of the Google’s close competitors in the industry include Yahoo, Microsoft and Ask.com. Although these companies have a significant number of queries, the demand is too high that Google has developed monopolistic powers due to its large market share.
Recently, other search engines have put down some measures to expand their market share. For instance, most of them have spent a significant amount of money in search engine developments. Despite of these efforts applied by the majority of the people, a great number of people still cling on Google as their search engines (Ulanoff, 2007).
Google has become an important player in the internet by playing a major role in directing the users. Recently, there is a need to have search neutrality because Google controls a significant part of the market. In United States, Google controls 71% of the market and 90% in Britain (Business Insider, 2009).
According to statistics released on June 2010, Google accounted for 72.17 per cent of the total searches conducted in the United States (Experian Hitwise, 2011). This clearly indicates that the company has some kind of monopolistic power from the fraction of the market at its disposal. The company has also dominated the advertisement, which has given it an enormous control.
Google has applied several mechanisms to acquire this control. For instance, the company has been imposing covert penalties that adversely affects important websites hence eliminating them entirely from its search results or rather placing them down in their ranks which makes them difficult to be found (Business Insider, 2009). By so doing, Google restricts other players from actively participating in the market. This is one of the aspects of monopoly powers.
The company uses such operations to expand its powers hence winning a greater fraction of the market share. Google is also exercising monopoly through preferential placement.
Through the introduction of universal search, the company started promoting own services at the top of its search services (Business Insider, 2009). Therefore, the company now favors its products which have contributed to its dominance in the market. However, it is necessary to note that Google does not dominate all the fields. In other words, its monopolistic powers do not lie in all the fields.
The monopolistic power is associated with low social welfare. For instance, due to lack of competition, the company with monopolistic powers will tend to be lowly innovative. For instance, most of the developments in Google has been acquired rather than invented. In other words, the company tends to be less innovative in the case of monopoly. This leads to low quality services.
Despite of the fact that Google has a monopolistic power, the search engine does not charge the searchers, it only charges the advertisers. Therefore, the impacts of any monopolistic power will not have any direct effect on the users. Google provides a free search for its users.
Conclusion/ Recommendation
In conclusion, this discussion has clearly shown that Google has a significant control overt the market. The company has control over the largest fraction in the market. This control has made the company to gain monopolistic power. The company has demonstrated its power through activities like preferential placements and covert penalties. Therefore, Google can be considered as a monopoly in this sense.
Reference List
Business Insider. (2009). Google’s Monopoly Power: Economist’s view. Web.
Experian Hitwise. (2011). Google share of searches at 72 percent for May 2010. Web.
Sheu, T. & Carley, K. Monopoly Power on the Web A Preliminary Investigation of Search Engines. Web.
Ulanoff, L. (2007). Is Google a Monopoly? Web.