Monopolies, Like Google, Are Innovators, Which Is Good for Consumers by Ryan Radia

Last week, the European Commission brought new antitrust charges against Google, alleging the
company unfairly favors its own services on smartphones running its Android operating system. In a separate
European case, Google stands accused of manipulating its search engine to harm rival firms. Both cases rest on
the assumption that Googles dominant position creates a monopoly that merits exacting government regulation to
prevent the company from trampling competition. But this premise overestimates regulators abilities and
understates the resiliency of dynamic markets.
Fears over the winner-take-all trend ignores humans desire to create unforeseen opportunities to supply
us with products and services we never knew we wanted.
Sectors dominated by one or two firms tend to stagnate, or so goes the conventional wisdom. But realworld experience belies this view. The worlds Web users have preferred Google to other search engines since the
early 2000s, and Android smartphones to all other phones since 2010. In this time, search results have moved far
beyond a series of blue links. For many queries, users now get an actual answer, rather than a list of web pages to
investigate. Meanwhile, todays smartphones are much bigger and faster than their predecessors from six years
ago, offering desktop-like multitasking and even virtual reality experiences.
Google is no stranger to overtaking dominant firms by entering new markets. When Google launched
Android in 2008, most smartphone buyers opted for an iPhone or BlackBerry. While the iPhone remains popular
among affluent consumers, Android is now on top especially in the developing world, where Android devices
are much more affordable.
Does Androids success mean it should be illegal for Google to promote its other services on Android
devices? Not at all. Were Google to exert too much control over the Android ecosystem, it would risk alienating
independent developers of Android apps and, in turn, consumers who value alternatives to Googles own apps.
To antitrust regulators, competition suffers when too few viable firms exist in a market. Yet even a hyperdominant incumbent wont rest on its laurels while enjoying monopoly profits if doing so will attract newer,
nimbler entrants. In fact, Googles risky bet on Android could be seen as an attempt to prevent rivals like
Microsoft and Apple from dominating the fast-growing smartphone market. Competitive discipline comes from
many angles, and dreary monopolies are not born simply because they lack head-to-head rivals.
Some economists dismiss the threat of competition as effective in deterring harmful behavior only in
markets with minimal entry barriers and sunk costs, but this presumes that would-be entrants focus on markets as
they exist today. For example, when Uber upended the local transportation market, it didnt need to buy an
automobile fleet or get permission from city taxi commissions. Had taxi companies foreseen the vulnerability of
their business model, cabs might have flocked to smartphone apps and electronic payments years ago.
Even some of the European Commissions antitrust counterparts recognize the pitfalls of going after
Google. Canada dropped a multiyear probe of the company just last week, while the United States Federal Trade
Commission accepted modest concessions from Google in 2013 to settle a wide-ranging investigation. In
American competition law, determining whether a dominant firm has harmed consumers in a particular case is
rarely clear-cut. Wrongly punishing a company for beneficial conduct, however, is far more dangerous than letting
it get away with anticompetitive behavior, as U.S. Court of Appeals Judge Frank Easterbrook explained in
a seminal 1984 article.
How should governments react to successful, disruptive firms as they seek to reap the fruits of their
innovation? This question will only grow in importance as technology advances. As PayPal co-founder Peter
Thiel has observed, the best entrepreneurs look to escape competition, not defeat it. Creating new markets, or
reinventing existing ones, is the path to riches that Google, Facebook and Apple all have followed. Some fear that
this winner-take-all trend portends less innovation and greater economic inequality. But this pessimism ignores
humans limitless capacity to desire more to create unforeseen opportunities to supply us with products and
services we never knew we wanted.
Yes, meeting this demand makes some people incredibly rich, but it enriches consumers in ways that
conventional metrics struggle to measure. If governments reward such success with a regulatory straitjacket, we
will pay a steep price.

Emily Delgado Salceda

Monopolies, Like Google, Are Innovators, Which Is Good for Consumers by Ryan Radia

Article 9

Summary: There has been debates of whether google is considered a monopoly or not. Although there are a couple other
companies who are in the business of search engines, they feel that it is no longer a fair competition. Although, many would
disagree with these accusations and say that google is just being an innovator and has tapped into a new market that other
search engines didnt consider.
Analysis: The allegations of google being a monopoly1 (the only supplier of a unique product with no close substitutes) are
not accepted by many consumers and even producers because google is seen as an entrepreneur2 (special labor, creative
thinking) in technology3 (practical application of scientific knowledge). Many would consider these allegations to be
normative economic4 (Attempts to assess the economy & economic policies and involves the use of value judgments Cannot be tested scientifically) statements because positive economic5 (Attempts to assess the economy & economic policies
without resorting to value judgments; based on scientific facts) data shows that there is a higher demand6 (ability and
willingness to buy specific quantities of a good at alternative prices in a given time period) for google as a search engine than
any other search engine firm7 (any organization of individuals that purchase factors of production in order to produce goods
and services that are sold to consumers, government, or other firms). Many would even argue that google provides a greater
utility8 (pleasure, satisfaction, or need fulfillment a person gets from consuming a good or service) to consumers because
they get direct answers to a question as opposed to other search engines. Google provides both a service9 (intangible, or
something you cant touch) of search engines and a good10 (tangible, things you can touch) with the new cell phone they are
coming out with, that is why they are economically successful in the market11 (group of buyers and sellers, same place, same
time). Although today google is actually considered an oligopoly12 (a firm that produces a product for which there are only a
few rival firms that produce a close substitute) by many, depending on the change of laws in the future they could be
considered a monopoly. Google wouldnt be considered a price taker13 (cannot control the price of the good it sells) but a
price setter, for example, google knows that consumers have a budget constraint14 (the limit income places on the
combination of goods an individual can buy) therefore, they have opted to make their new phone a bit more affordable than
Apple has. Although, consumers may still face opportunity cost15 (value of the best alternative choice sacrificed) situations
while deciding to purchase Googles new phone, therefore a marginal analysis16 (comparisons of marginal benefit and
marginal cost) would probably be helpful, that is what a rational decision maker17 (make decisions by comparing marginal
benefit and marginal cost) would do anyways. Google will probably use labor or human resources18 (work effort of human
beings both mental and physical) to produce its new phone, and it could use some type of capital or investment goods19
(productive implements made by people to make more things) in production as well. Many will say that Googles success is
due to full production20 (employed resources are providing maximum satisfaction of our economic wants) and innovation.

Works Cited
Radia, Ryan. "The Opinion Pages: Monopolies, Like Google, Are Innovators, Which Is Good for
Consumers." 28 April 2016. New York Times. Article. 12 December 2016.
<http://www.nytimes.com/roomfordebate/2016/04/28/is-google-a-harmfulmonopoly/monopolies-like-google-are-innovators-which-is-good-for-consumers>.