Society and Culture, Media and Technology

Google: An example of success in a free market

Image Credit: Robert Scoble (Flickr) (CC BY 2.0)


Last week, former Supreme Court Justice nominee Robert Bork, along with antitrust expert Gregory Sidak, published an investigation into allegations that Google violated U.S. antitrust laws. As It turns out, Google is just really good at what it does.

Google’s marquee product is the same as it ever was: search. In August, the company enjoyed a market share of 66.4% compared with competitors Microsoft (15.9%), Yahoo (12.8%), and others. Google has managed to dominate the search engine market since its genesis through its persistent customer loyalty.

Google kicked off its streak of success back in 1996 by popularizing the now-standard of search engine results: Ranking algorithms. Instead of conducting a general search offering results based on the number of times the word is found on the page, Google devised a way to rank pages based on the relationship among pages, according to how many times a page is linked by another page, and the quality of those pages. The effect is that when you search for something, the top results are the authorities on the subject. As you can imagine, this method vastly improved the efficacy of search results, boosting its usefulness and drawing loyal consumers.

Competing companies like Bing, Yahoo!, and drone in unison on that Google’s dominance inhibits competition. Specific practices that allegedly violate antitrust laws, however, remain obscure.

The first is that Google is a “gateway” to the internet, harming consumers by specialized search results and favoring their own products. Well not really, as economist Randal Picker pointed out the Google Anti-trust debate at AEI last week, since consumers can easily open a different search engine without charge if they do not like Google’s results.

The second complaint is that Google deprives competitors of a necessary scale for them to compete. “Is there some kind of central facility that Google has that competitors need to get access to in order to compete effectively?” asked Gregory Sidak on Friday. Judge Bork’s ruling is that Google is no Microsoft, which violated antitrust laws in the 1990s when it bundled its operating system and web browser, restricting the market for competing web browsers.

Google is not impervious to vulnerabilities either, especially with search rapidly changing due to trends in mobile and social avenues. Fandango, Gasbuddy, and a thousand other smartphone apps decentralize searches, creating real competition for search engines. Google must also respond to the trend of consumers relying on recommendations from people instead of appealing to impersonal search engines. In fact, Google saw a drop in their market dominance just this past month by 0.4%.

Competing companies can belly-ache that their products have not left the ground, but they can’t point the finger at Google for any wrong doing.

Leave a Reply

