The trio of Ryan Grim, Zach Carter, and Paul Blumenthal have an awesome longform look at Google’s massively stepped-up lobbying presence in Washington, DC and its multi-front competition with Microsoft. I did, however, want to quibble a bit over the idea that anti-trust regulators “may be all that stands between Google, which now handles some 90 percent of all searches worldwide, and a monopoly on the market for knowledge.”
There’s obviously some different conceptions of monopoly out there. But I think the most useful one has to do with market power, and that looking at a measure of gross market share isn’t a very helpful way of seeing where the power is. Safeway, for example, doesn’t have anything close to a 90 percent marketshare in global supermarkets. Not American supermarkets either. Not even Washington, DC supermarkets. But there is a Safeway on my block. The next-closest supermarket is a 15 minute walk away. The convenience cost of switching supermarkets would be substantial. So I and most people on my block shop at the Safeway even though it’s generally acknowledged that the other supermarket is better. And that’s how it goes generally for supermarkets in the city. Relatively few people live equidistant between supermarkets, so for most people switching supermarkets would be a bit inconvenient. That gives the individual markets a bit of market power and insulation from competition.
The great thing about Microsoft launching Bing is that the convenience costs of switching search engines are tiny. It’s much easier for me to switch from Google to Bing than to switch from Safeway at 490 L Street NW to Harris Teeter at 1201 1st Street NE. If it happens to be the case that a large majority of people use Google, that doesn’t necessarily indicate any monopoly power. You’d have to make the case that some feature of the institutional landscape would allow Google to be complacent about users coming to believe that its product is inferior. People on my block like the Harris Teeter better than the Safeway, but we go to Safeway anyway because it’s closer. Google has a first-mover advantage and can benefits from the fact that people are moderately lazy about switching products, but the nature of the Internet is that there are remarkably few barriers to switching from one site to another.
For the record, I like Bing’s travel search function a lot and use it regularly now.
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