Remember the heady days of the late 1990s? The unstoppable growth of the Internet seemed to promise the dawn of a perfect market. We were told that a small start-up on one side of the world could compete with huge corporations on the other side of the world — and win.
Fast forward 20 years and the world looks quite different. Internet traffic is corralled through a small handful of websites like Facebook, Twitter and Amazon. Each of these sites are not just the biggest, but often the only serious players in their own market.
When they search the Internet, about 64% of Americans use Google
. We also rely on other services offered by Google like Gmail, Google Maps and Google Docs. Scientists use Google Scholar to discover the latest scientific research. Historians use Google Books to trawl through the archives of the world.
Celebrities use YouTube (owned by Google) to share their latest cosmetics tips.
We all use Google, all the time.
It seems that instead of creating a perfect market, the Internet has generated perfect monopolies
. But unlike the monopolies of old — like Standard Oil — firms like Google are global in scope. They don’t just dominate a market for a single type of good (like oil), they dominate many different markets.
Concerns about a handful of companies’ dominance over the online world have been rumbling away for years.
Indeed, the US Federal Trade Commission conducted an investigation into anti-competitive practices, dropping it in 2013
after Google made some minor design changes to its search screens.
But now, after a seven-year investigation, The European Commission has fined
Google $2.7 billion for anti-competitive behavior. The European Union’s specific concern is that Google used its dominance of the Internet search market to dominate another market: Internet advertising.