Google's increasing bottleneck control over digital info distribution is currently the leading threat to Internet competition and user's competitive access to the information of their choice. While many generally appreciate Google's growing Internet dominance, they want to better understand how Google increasingly dominates the distribution of digital information.
- To explain this Google anti-competitive problem succinctly and visually, I have produced a one-page chart PDF that shows how distribution competition for digital information -- that supplies digital information to Internet consumers -- is being squeezed between Google's search advertising monopoly selling power on one side and Google's wholesale info access monopsony buying power on the other -- creating growing info-opoly control over digital information by Google.
The antitrust problems that emerge from this increasing monopoly/monopsony Google bottleneck control are two-fold:
- It anti-competitively forecloses competition among digital info distributors; and
- It anti-competitively lessens the quality, integrity and diversity of digital information for consumers.
Most have not appreciated the full scope of Google's increasing bottleneck control over digital information, because they did not understand how Google's wholesale dominance of both the "selling" of information via advertising and the "buying" of information via indexing makes Google the world's dominant broker of information.
- This chart helps people better see the big picture, and how my Googleopoly II and Googleopoly IV white paper analyses actually describe flip sides of the same antitrust problem.
- Very importantly, this chart also helps advertisers better understand how Google can extract above market prices for search advertising from advertisers (monopoly rents) at the same time it helps content producers better understand how Google can also pressure to gain access to their information at below market prices (monopsony rents).
- This chart shows advertisers and information producers/distributors that they share the same relative anti-competitive predicament vis a vis Google.
Interestingly, Google CEO Eric Schmidt just effectively admitted that the Internet is increasingly becoming Google'sNet because Google is getting blamed for so much that is wrong with the Internet:
- “Because we play such a central role in information, we’ve become somewhat used to being blamed for everything,” Schmidt said. “Imagine if Google didn’t exist. Would the same criticism still exist? You betcha.”
- Au contraire Mr. Schmidt, the one-page chart strongly suggests that if Google's "central role in information" "didn't exist" there would be much less criticism because there would be a lot more competition for, and value in, digital information.
- Simply, Google is facing so much criticism because Google is increasingly taking de facto control over the distribution of information on the Internet.
A key takeaway from this chart is that Google's new favorite antitrust defense -- that it is "the Internet's fault not Google's" -- is untrue, just like their superficial antitrust defense that "competition is a click away" is untrue.
- Much of the disruption newspapers and other information distributors are experiencing emanate from Google and its one-two punch of monopoly/monopsony market power. As I concluded in Googleopoly IV:
- "The Internet or technology does not make information free, Google and other like-minded people and business models are proactively trying to make information free."
Lastly, this chart is interesting because of its fairness implications for any proposed FCC net neutrality regulations.
- FCC Chairman Julius Genachowski recently said in a speech on preserving the free and open Internet, that the FCC will propose new FCC regulations which would preemptively restrict only broadband providers from leveraging distribution and content via a new "Fifth Principle" non-discrimination regulatory requirement.
If the rationale justifying preemptive net neutrality regulations is that broadband providers face limited competition and have inherent incentives to be anti-competitive in providing consumers access to the content of their choice... why has the FCC paid zero attention to the most dominant access provider to Internet information, Google, which routinely favors its own content over competitors?
- If preventing potential exercise of market power anti-competitively over info/apps on the Internet is truly the real FCC goal here, why would the FCC totally ignore that Google is:
- The only Internet-related company that the U.S. DOJ Antitrust Division has determined to have monopoly power in blocking the Google-Yahoo Ad agreement last December? and
- The only Internet-related company that the DOJ antitrust Division has suggested (in a letter to the Court) has control over a de facto essential facility in the Google Book Settlement -- that other competitors need access to in order to compete in Internet distribution?
- In short, how would applying a non-discrimination principle to competitive broadband providers not acting anti-competitively, but not applying it to an Internet information access monopoly found to be acting anti-competitively by the DOJ twice in the last eleven months -- be fact-based, consistent, principled, or fair?
The PDF chart can also be accessed at this URL:
