Why it’s hard to tell good monopolies from bad

Stan Alcorn and Molly Wood Apr 15, 2015
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Why it’s hard to tell good monopolies from bad

Stan Alcorn and Molly Wood Apr 15, 2015
HTML EMBED:
COPY

On Wednesday, the European Union’s antitrust division officially hit Google with an antitrust case, which could cost the search giant as much as $6.6 billion, according to Margrethe Vestager, the European Union competition commissioner. The accusation is that the search giant abused its power in the European market, by privileging its Google Shopping service in its Google Search results. 

But are monopolies always bad? Danny Sullivan, editor of Search Engine Land, says Google has been dominant in the European market for more than a decade.

“Having a big market share by itself is OK,” says Nicholas Economides, Professor of Economics at NYU Stern School of Business. He says the problem is when companies abuse that market share by taking anticompetitive actions that hurt its competitors and its customers.

Determining when competitors and customers are harmed is hardly straightforward, according to Peter Passell editor of The Milken Institute Review.

But some say when you look at Google’s business model, that debate is inevitable. Says Marketplace’s Molly Wood, “Google’s goal—and it’s a mission-driven company—is to organize the world’s information … And if that means occasionally buying a company so that they can deliver results from a company they already own, so be it.”

When asked if she thinks there is a possible happy ending in this situation, Wood points to the need for Google to return to filtering results, not owning them: “Let Yelp surface for restaurant reviews instead of having your own restaurant reviews.”

And as far as the possibility of an outcome affecting policy in the states, Wood says, “The EU has had a different standard, but I will say, if they have solid findings, it could cross the pond.”

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