Is Google a monopoly?

It's a question worth considering this week as we examine market structures, and consider where media companies and products fit in the context of the theory of the firm. Jeff Jarvis takes this up in a blog post titled "Google: Monopoly or Marketplace?"

... the issue isn't that Google is a monopoly. It’s that Google has become the marketplace. It where we all go for information. It’s where advertisers go for us.

It’s no different from a newspaper. Even when there were two papers in towns, one of them was the marketplace for homes, cars and jobs. That allowed the paper to set rates as high as the market could bear, which was very high. Google would say the difference is that it doesn’t set rates, the market does in auctions for keywords. Except in this case, by punishing Sourcetool, Google did set the rate. And it has the power to do that.

craigslist is also no different, except that Craig Newmark set most rates at zero. He’s the marketplace now and now that he has us by the neck, he could raise rates — as eBay did once it dominated the marketplace it created (though that invited competition from Amazon, Etsy, et al).

In his Guardian column on the subject, Jarvis writes:

But the problem with going after Google is that - unlike typical monopolies - it didn't steal its booty like a pirate in the night. It didn't win by being closed and proprietary. Google won by being open and distributed - which is not the image of the monopolist. The rest of the marketing universe, from media companies to advertising agencies, handed Google its dominance on a silver platter.

In other words, Google has become a monopoly of sorts, and remains that way, because consumers and advertisers have made it that way (e.g., newspaper companies spend big money and time optimizing headlines and keywords to win the SEO wars). ... Just something for us to chew on during class.