No, Its Not Time to Break Up Google

225px-google_2015_logo-svgA recent article in the infamous New York Times claims that Google, Facebook, and other tech companies are monopolies “in classic economic terms”. Such a statement is always funny coming from someone guaranteed to be completely ignorant of classic economics. In fact, none of these are monopolies. A monopoly is usually defined as a exclusive control of a good or service in a market. Just about every dictionary I consulted emphasized exclusivity, and sometimes a government grant. Aha!

The author claims that because Google has 88% of search advertising, Facebook has 77% of mobile social media (as opposed to non-mobile?), and Amazon has 74% of the e-book market, they are all monopolies. Last I checked, 88%, 77%, and 74% were not in any way equal to 100%. Therefore, none of them are monopolies. They all compete with whatever makes up the remaining share, and substitute goods (which monopoly alarmists always forget about). Not only that, they compete with companies that dont even exist yet. All of these companies would lose market share quickly if a better competitor arose, or if they reduced the quality of their product. Unlike government, they dont have to force people to give them a dominant position. They provide a wonderful product that we all want. Google, in particular, has been fascinating in the services it provides free of charge. Some evil monopoly they are.

Quoting Louis Brandeis, our friend says “in a democratic society the existence of large centers of private power is dangerous to the continuing vitality of a free people”. Large centers of public power, however, are perfectly fine and dont endanger a free people at all. Brandeis and the author advocate breaking up bigness, whatever that means, unless its the government or its pets, which are ok. Then he talks about the age old myth of the natural monopoly. Supposedly it makes sense for one company to control all the telephone, water, power, or railroads. And the government can just regulate the prices. This reminds me of how its good to subsidize corn farmers and also good to tax the use of corn syrup. The author even notes a time when you might have 20 phone companies with wires going into one building. Apparently, this is bad. Consequently, the government encouraged consolidation into AT&T and regulated it. AT&T has since been forcibly broken up by the very government that forced it together.

Where I grew up in New Jersey, the town government has granted a monopoly to Comcast. A few adjacent towns have Cablevision instead. We all know cable and internet prices are expensive. Why cant Cablevision string a wire across the road into my town and offer its product at a lower price than Comcast? Because its illegal! There is no such thing as a natural monopoly. In a free market, all of these companies would be competing. Indeed, internet used to be provided by phone companies, but their product was low quality and cable companies developed a better alternative. Now phone and cable companies compete with each other on everything. Phone companies offer television, cable companies offer phone service. Imagine what it would be like if we could choose other phone companies and cable companies.

After granting some of these monopolies, the government then forced the companies to license their patents and conduct research. Patents themselves are yet another government granted monopoly. Maybe if the government didnt grant such monopolies, the companies wouldnt get so big by forcing out potential competitors in the first place.

Next, the claim that “Google and Amazon have stymied innovation”. This is so absurd to anyone with a brain that it should not require refutation. Google has enabled massive amounts of innovation thru the use of its products and by funding and encouraging development. Google has provided various environments for developers to create products and promote them, often for free, on Googles platforms. Amazon has enabled millions of people to publish their writing and sell their old books, and more. It has saved the post office when email was killing it. It has caused entire new industries and created thousands of jobs.

The author cries that Google, Facebook, and Amazon have grown and gained revenue, while traditional media (like the New York Times) have declined and lost. Woe to the horse and buggy maker wiped out by the automobile. This author is nothing but a Luddite.

As a solution, we are told that these companies should be forbidden from buying any more startups. Developers should live in poverty without the opportunity to sell their apps or websites. They should never be able to get their product out there. It should languish in the shadows so the big three have more power. Yes, the logic is that backwards. He also says Google should be regulated like a public utility, so something that is not a problem should become one. Finally, he suggests holding companies somehow responsible for what they publish. If that is not suppressing speech, I dont know what is.

He ends with a Woodrow Wilson quote: “If monopoly persists, [it] will always sit at the helm of the government.” Well, certainly. The government is a monopoly.


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