Thoughts on Google's Monopoly

It's often said that Google has a monopoly on search. And it certainly has incredible market dominance. According to statcounter Google has a 91% market share across desktop and mobile. But Google can't raise prices. If they charged even a penny per search their market share would drop to the single digits overnight [1]. And there are a ton of search competitors, Bing, Yahoo and DuckDuckGo to name a few.

I claim Google doesn't have a monopoly on search and thinking of it that way will lead to confused thinking and policy. What Google does have a monopoly on is search advertiser space. Because the value of that is directly related to the search volume. In fact, the value of the volume is super linear in the volume because the more searchers, advertisers and data you have the more efficiently you can match up ad space bidders to readers.

Why is a monopoly bad? In a competitive market prices will fall to the marginal cost of production. In a monopoly the monopolist will produce where marginal cost equals marginal revenue. Which will lead to a higher price and lower quantity than the competitive market. But because Google has a monopoly on search advertising space not search it's not the search market that's distorted but the search advertising market. And here's the thing advertising sucks! Everyone hates it, no one wants to see it. So it's good that search advertising space is a monopoly. I don't care if the advertisers have to pay more and I'm glad if that means there's less of it [2].

[1] Alright arguably 0 is a pretty high price for search. With bing rewards the effective price for using Bing is negative.

[2] I could make some arguments about advertising actually being good as it informs consumers. But I don't really believe it and in my personal life go to great lengths to avoid seeing them. It's mind control man!