Is Google Really a Natural Monopoly? Or Are They Just Better?

May 15th, 2008 · No Comments

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GoogleWatch For some reason there is a meme going around that Google is a “natural monopoly,” but no one has made a convincing case on why that is. Henry Blodget compares them to Microsoft’s natural monopoly in operating systems, but never supports this claim. He simply states that they “should continue to appraoch…” Microsoft’s share of 90% in operating systems. But are Google and the search business a natural monopoly? No, they aren’t.

Search is different from operating systems in many ways. Programmers have thrived in the windows environment and neglected Macs because of the benefits of scale (this is less true now, but I’m thinking historically here). Program for windows first and you reach billions of users. Program for mac first, and you miss 90% of your market. Google’s leverage is nothing like that. Design a website for Google, and Yahoo will still find it. Design it for Live Search, and Google will find it. There is no lock in.

However, there are certainly advantages of scale that Google HAS exploited. Their buisness is about search results, yes, but it’s also about servers. Do SERP’s change much when more people are using them? Not really. But the fact that Google adds servers like crazy and seems to have the best cloud computing engineers in the world means they are quicker in almost every way than their search competitors. That’s what scale brings you.

The problem, though, is that the data google uses to build its superior indexes with is almost all public information, i.e. links. Anyone can analyze link data if they have the computing power, and google can’t protect that. It’s not a weakness for google, since they’re better than everyone at indexing, but it is a vulnerability. They are taking steps to address that, though, gathering data from all sorts of proprietary channels, such as gmail, igoogle, and google accounts in general. But they may not even lead in that department, with Yahoo Mail and Hotmail boasting much larger user bases. Not to mention the treasure troves of data that News Corp is compiling in MySpace, or the data that Microsoft may snatch via a Facebook acquisition.

None of this is to say that Google is in trouble, but they’re not in a position that would allow them to release a “Google Vista” either.

Tags: Google · Opinionated · Tech