IMHO they're not a monopoly, at least not in the traditional sense of the word.
Traditional monopolies "control supply of a good or service, and where the entry of new producers is prevented or highly restricted."
In this case, the supply of a good or service (social networking, webpage indexing and searching) are not controlled by Facebook and Google because they aren't finite resources. Anyone can index the web and anyone can build a social network and Google/Facebook aren't going to crush you with lawsuits or some other nefarious tactic to maintain their position (AFAIK).
Entry of new producers of these services is not prevented or highly restricted. New social networks and search engines pop up all the time.
What Facebook and Google have is massive, large scale user loyalty. Despite alternatives existing (Bing, Mastadon, DuckDuckGo, Myspace, etc.), users are voluntarily choosing to use Google and Facebook. This is not a monopoly.
The antitrust laws prohibit conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power. Most Section 2 claims involve the conduct of a firm with a leading market position, although Section 2 of the Sherman Act also bans attempts to monopolize and conspiracies to monopolize. As a first step, courts ask if the firm has "monopoly power" in any market. This requires in-depth study of the products sold by the leading firm, and any alternative products consumers may turn to if the firm attempted to raise prices. Then courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident. Here courts evaluate the anticompetitive effects of the conduct and its procompetitive justifications.
"Market Power"
Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power — that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power.
> Then courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident.
It seems like this is exactly what GP was saying...
"If you're not paying for the product, then you are the product" is how the old adage goes. If users are the product, then couldn't one argue that it's a monopoly over the supply of users?
I think this is a good point. Users are the product. From a typical consumer's perspective, there are other viable options for google-like services. From the perspective of a small business trying to target a specific audience with ads, are there viable alternatives?
I think economists are still happy to use the current term.
The Herfinadahl-Hirschman Index is a widely used measure of market concentration. It's calculated completely independently of how the firms in the market go about getting and protecting their market share.
If the HHI is high enough, and depending on how important the market is, this can be a sign that the market should be investigated to ensure that there aren't monopolistic anti-competitive or anti-consumer practices taking place.
Google is by far the biggest player in the search market (outside China at least), so I don't think an investigation is unjustified. There have been more than enough posts on HN and elsewhere about decisions Google have made over the years that show disregard for both competitors (not so much in search, but in other areas where Google has a footprint) and consumers.
No one can build a search engine as good as Google without the data flowing through it every day. That have so many click logs to train their models and see what works, there is just no way to compete.
If all Google engineers left at the same time, Google would still probably end up dominant by hiring new folks to get things back up and running.
No amount of human labor will be able to close that data gap.
The Google search engine didn't have anything to build off of when it was introduced since it was using an algorithm and not ML. You could create a search engine today without utilizing any click data outside of "what link did this user click on the result page and did they search for a similar query or try another link as their next action".
In fact, this is already happening. DDG is building its own crawler (I often see the ddg user agent on my web properties) and they don't have any open "machine learning expert" positions.
Sure, but when Google have been starting out they didn’t have to compete with...Google (as it is today). While companies that would like to enter the market now have to. And Google has a massive competitive advantage: their data and their scale. Not saying that regulation will necessarily help, and it’s not Google’s fault that they’re so good, but it’s silly not to admit that it’s hard to enter the search market today.
Now DDG is interesting. Their results are noticeably worse (YMMV). But they are using privacy as the selling point. I wonder if you can possibly have results as good as Google’s, or be as big and profitable as Google, while maintaining user’s privacy. I guess we’ll find out.
You're broadening the context. I am not saying Google as company is something you can't compete with. Many companies do so successfully in various markets. I am talking about search in particular. Which is why you bringing Microsoft in is convenient for my point. How's Microsoft's attempt to compete with Google search doing? And that's one of the few companies that can challenge Google in terms of resources.
Yes, broadening the context is my whole point. 20 years ago it was the OS, 10 years ago it was search, today it's social networks, tomorrow? The monopolies from each era struggle in the next. Let Google solve & dominate search while innovation moves on to the next big thing.
The history is antitrust rulings are what prevents monopolies of the past from dominating the next era.
IBM was constrained by an antitrust ruling. Which gave Microsoft an opening. Microsoft itself was then subject to a similar action 20 years later. So it's been another 20 years since then, so the time is ripe to clip googles wings.
That seems extremely short-sighted. There’s nothing stopping people from coming up with a better way to find what you’re looking for than Google’s search engine.
I just think any attempt would quickly be overwhelmed by Google pointing their data engine at something similar. Whatever your idea is, it will have to not just be slightly more data efficient at learning how to serve results. It will have to be millions or billions of times more data efficient. It doesn’t seem humanly possible to compete with.
What mechanism do you propose for keeping any one alternative frommsimply becomming the new abusive monopoly?
Railroads begat AT&T begat IBM begat Microsoft begat Google begat Facebook begat Amazon.
What some of us who've seen this rodeo a few times are beginning, slowly and dimly, to realise is that what we'd prefer is a healthy competitive marketplace within, sa, telecoms, chips, operating systems, publishing, search, retail, and the like. Simply crowning an endless succession of new storks as king of the frogs is losing its lustre.
This came up in the railroad era, the first big antitrust issue. Railroads were in a strong enough position to push up shipping rates. And push towns, and sometimes states, around. Pressure for antitrust action came from their customers, especially farmers, not from other railroads.
That led to the Interstate Commerce Commission and considerable price regulation.
Having the best product? Google and Facebook are just flat out better than Bing, Myspace, or duckduckgo for most applications. (Notice I said most, I get it, your super specific need does in fact fetch better results using ddg rather than google)
Platforms are defined as connecting two (or more) sides of a market.
There is a lot of economic literature in this space over the past several decades. Glen Weyl is pretty active in the area, as well as many known economists over the years.
It's not user loyalty that drives this, typically, but rather ease of ingress / difficulty of egress (adoption/switching costs) into the various platforms. Integration among common services helps too.
The economic definition of a natural monopoly is where firms have increasing returns to scale. That means where firms can produce more product per unit cost as the volume sold of that product gets large. https://cs.stanford.edu/people/eroberts/cs181/projects/1997-...
A good example is electricity -- it's super duper hard to put up electrical wires all around a country. But once the wires are up, it's not so hard to maintain them or extend them to cover more people over time.
Google and Facebook are perfect examples. The software engineer salaries ain't cheap to build their product, but once built the products can be scaled quickly at relatively low cost. Furthermore, their products' value itself has increasing returns to scale; the more people on a social network or using a search engine, the more valuable to advertise on them.
That’s a very simplified definition. I don’t think economists consider any market with significant barriers to entry and economies of scale to be a natural monopoly. From what I’ve seen, the term is usually used whenever the market actually has become a monopoly, or if it appears that the barriers to entry and economies of scale are so significant that the optimum number of firms is one.
The Scylla is scale, if you aren't big you can't do search at all, and only a behemoth like Google can do free-form AI assisted questions.
The Charybdis is trust. You can't monetize search directly, or it becomes a bunch of transparent lies that nobody wants. You can't be a rapacious predator that has already tried to eat the internet several times (sorry, Microsoft). It mattered that early Google said "don't be evil". You have to monetize something else, but weave it into your search so that you aren't bleeding money.
Only Google has threaded the needle. It may never happen a second time.
> IMHO they're not a monopoly, at least not in the traditional sense of the word.
The antitrust sense is about empirical control demonstrated by how markets respond in practice rather than the abstract theoretical potential you describe.
Traditional monopolies "control supply of a good or service, and where the entry of new producers is prevented or highly restricted."
In this case, the supply of a good or service (social networking, webpage indexing and searching) are not controlled by Facebook and Google because they aren't finite resources. Anyone can index the web and anyone can build a social network and Google/Facebook aren't going to crush you with lawsuits or some other nefarious tactic to maintain their position (AFAIK).
Entry of new producers of these services is not prevented or highly restricted. New social networks and search engines pop up all the time.
What Facebook and Google have is massive, large scale user loyalty. Despite alternatives existing (Bing, Mastadon, DuckDuckGo, Myspace, etc.), users are voluntarily choosing to use Google and Facebook. This is not a monopoly.
I think we need a new term for this situation.