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February 10, 2009

Googopoly vs Micropoly

dastardly The excellent Tom Slee (aka. Whimsley) has been on my blogroll for some time. Tom writes longish posts about a range of interesting topics – at the moment he’s in the middle of a dissertation about whether Amazon’s recommendation service really does help unknown authors to find an audience and side-step the ‘evil’ publishing business (I have a suspicion about how the answer will turn out).

Part of Whimsley’s appeal is that he seems to toil away in the same kind of semi-obscurity that I do [violins]; but recently he’s had a burst of traffic to his site thanks to a link from Jeff Atwood, who referenced an excellent Whimsley post about the role of Google in shaping the Internet. The short version of Whimsley’s thesis is that because of the way Google’s ranking algorithm (especially the PageRank part) works, Google is as much as driver of what’s popular on the Internet as it is a reflector of that. You should read the whole post to get the full story.

But the interesting point raised by Jeff Atwood is, is Google a monopoly? The comments to Jeff’s post are full of people echoing Google’s official response to the accusation of monoplism – which is that users are free to switch their search engine at any time.But Whimsley makes the point that it’s extremely difficult for an advertiser to switch away from Google. This is not because Google makes it difficult, but because Google provides such an essential service – AdWords – to advertisers that it’s almost impossible to run certain kinds of businesses without it. And, of course, it’s the advertisers that provide Google’s income, not the end users executing searches.

Now, I’m aware that I would be on extremely thin ice, both morally and legally, if I were to speculate on whether Google’s market position constitutes a monopoly. And, just to be clear, I’m not. I’m also not speculating on how it was that Microsoft ended up in trouble with the DOJ (I in fact have very little knowledge of the specifics of the case). All I would say is that Google and Microsoft have a lot more in common than people might like to believe. Neither is staffed by moustache-twirling evildoers (to borrow Whimsley’s excellent phrase); both are trying to develop their business and improve the services that they provide to customers. The challenge is to do so from a strong market position without ending up behaving in a monopolistic fashion.

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