The tech giant was the focus of a 60 Minutes segment on Sunday, May 20, titled "How Did Google Get So Big." The segment focused on "critics who say the company has stifled competition, and an antitrust enforcer who is taking action." Google shares finished down 1% on Friday on news of the segment.
"Google makes the internet work. The internet would not be accessible to us without a search engine," prominent antitrust lawyer Gary Reback told 60 Minutes in the piece. "They control access to it. That's the important part. Google is the gatekeeper for-- for the World Wide Web, for the internet as we know it. It is every bit as important today as petroleum was when John D. Rockefeller was monopolizing that," Reback said.
"People tell their search engines things they wouldn't even tell their wives. I mean, it's a very powerful and yet very intimate technology. And that gives the company that controls it a mind-boggling degree of control over our entire society," Reback continued.
"If I were starting out today, I would have no shot of building Yelp. That opportunity has been closed off by Google and their approach," said Jeremy Stoppelman, founder of online review platform Yelp. "Because if you provide great content in one of these categories that is lucrative to Google, and seen as potentially threatening, they will snuff you out...They will make you disappear. They will bury you."
It's not the first time Google has come under fire for allegedly squashing competition or raising the barriers to entry too much. The company was fined about $2.7 billion by the European Commission last June after the watchdog group said it abused its dominance as a search engine by giving itself an advantage in comparison shopping services. Google parent company Alphabet appealed in September.
But the notion that in 2018 these "exposés" are still mind-blowing news is nothing short of ridiculous. Of course these companies have almost untouchable positions in their respective markets. It's dumb to have ever thought any differently. Google and its parent company Alphabet are taking the heat for a phenomenon that implicates nearly every big tech company, including Microsoft Corp. (MSFT - Get Report) , Amazon.com Inc. (AMZN - Get Report) , Apple Inc. (AAPL - Get Report) and Facebook Inc. (FB - Get Report) .
Let's start with Amazon. The company has executed acquisitions into new verticals like Whole Foods Market last year. That has sent shockwaves throughout the grocery store industry. Amazon has a top production studio, a surging cloud services business, an unrivaled retail business and more. Who else can say they do as much under one Bezos-like banner, and do it with such success that makes rivals shake in their boots?
With such heft, Amazon in many cases is able to set prices in the market. It's retail ruthlessness and it's subsequent ability to put rivals out of business is now legendary.
"The Amazon people are pretty smart in that what they're acquiring are not horizontal competitors," said Rob Baumann, chair of the economics department at the College of the Holy Cross. "These large firms -- they merge smartly."
Imagine attempting to create an alternative to Amazon today. Even if you had the best backing from the best venture capitalists and the best value-adding ideas, trying to dethrone Amazon and its CEO Jeff Bezos would be like David versus Goliath, but with a much different ending.
"I think if you look at the classic view of a monopoly, you could argue that they are not because prices aren't going up per say," said Bill Friend, managing director and VP of North America at Fluent Commerce. "But they're establishing a level of control that is unprecedented."
Because of that, Friend explained, it could soon be high time to establish a new sense of what a monopoly is. These tech companies don't meaningfully drive prices higher for consumers, but they absolutely raise the barrier to entry to impossible to jump over heights.
Now take Facebook. When CEO Mark Zuckerberg testified in front of Congress last month following the Cambridge Analytics debacle, one of his most tenuous moments came as Sen. Lindsey Graham (R., S.C.) asked if there was an alternative to Facebook for users upset with the platform. Zuckerberg tossed out some statistics and danced around the question before Graham explicitly asked, "You don't think you have a monopoly?"
Zuckerberg's response? "It certainly doesn't feel like that to me." Not exactly keeping it real, Zuck.
The reason Zuckerberg couldn't name a competitor is because there isn't another company that does exactly what Facebook does and does it at its scale. Twitter (TWTR - Get Report) just tweets, while Snapchat (SNAP - Get Report) just snaps vanishing photos and text.
Facebook has more than 2.2 billion monthly active users, and it's still growing. Good luck trying to dethrone that business.
Same goes for Alphabet. Sure, it's a data-collecting search engine that dominates the internet. But it's also a leading advertising sales company (thanks to its data pool) with a top video sharing platform in YouTube, a leading smart home devices company, and a best in class self-driving car upstart via Waymo and so much more.
YouTube has a commanding 1.57 billion plus monthly active users. How do you even go about trying to create a business that challenges that? What venture capitalist would give someone a nice chunk of money to even try?
"Somebody else coming along? It's not really possible, even just based on the amount of capital it would take," Friend said.
Microsoft is really the only tech giant that has faced significant regulatory backlash on the monopoly topic. In 2001, Microsoft found itself at the center of a contentious regulatory case questioning whether the company could in good faith bundle its web browser and operating system. It ended in a settlement. It was 17 years ago.
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