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May 10, 2017 10:00 pm

'Google Is As Close To a Natural Monopoly As the Bell System Was In 1956'

An anonymous reader quotes a report from ProMarket: In terms of market share and profit margins, the big digital platforms, particularly Google and Facebook, enjoy an astounding level of dominance. Google, in effect the world's largest media company, has an 88 percent market share in search advertising. Facebook (including Instagram, Messenger, and WhatsApp) controls over 70 percent of social media on mobile devices. Together, the two firms received 85 cents of every new dollar spent in online advertising in the first quarter of 2016. Amazon has an over 70 percent share in the e-book market. Along with Apple and Microsoft, they are now the most valuable companies (in terms of market capitalization) in the world. The rise of digital platforms has had profound political, economic, and social effects, not least of which on the creators of content. While the internet brought immense benefits to consumers of content, the so-called "creative class" -- authors, journalists, filmmakers, musicians, artists -- has been particularly ravaged by the digital economy. This ravaging, and its roots in the monopolization of content delivery and data in the hands of a few digital giants, are at the heart of the new book Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy by media scholar Jonathan Taplin. In the book, Taplin explores the way in which the internet came to be dominated by a handful of monopoly platforms, and the subsequent capturing of regulators that has since all but ensured their dominance would not be challenged in court. In an interview with ProMarket, Taplin said in response to a question: "I would say Google is as close to a natural monopoly as the Bell System was in 1956. If you came to me and said 'Hey, I want to start a company to compete with Google in search,' I would say you're out of your mind and don't waste your energy or your time or your money, there's just no way. Classic economics would say that if there's a business in which there are 35 percent net margins, that would attract a huge amount of new capital to capture some of that, and none of that has happened. That tells you there's something wrong."

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