Facebook and Google: The M Word Is Not Enough. The C Word Arises.
January 19, 2017
I believe everything I read on the Internet. I am so superficial. Perhaps I am the most superficial person living in rural Kentucky. The write up “The Google-Facebook Online Ad Cartel is the Biggest Competition Problem” seems to be the work of a person who specializes in future Internet competition. He has worked for presidents and written op eds for “real” journalistic outfits. I am convinced… almost.
The main point of the write up is that Facebook and Google operate as a cartel. I highlighted this statement:
Google commands ~90% market share of mobile search and search advertising. It protects those monopolies with an anti-competitive moat around Alphabet-Google by cross-subsidizing the global offering over 200 expensive-to-create, products and services for free, i.e. dramatically below Google’s total costs. Those many expensive subsidized products and services make Google’s moat competitively impregnable, because no competitor could afford to recreate them without a highly profitable online ad business, and the Goobook ad cartel forecloses that very competitive possibility.
The statement echoes Chaos Monkeys, the tell all about the high flying world of Silicon Valley.
I also noted:
In early 2013, Facebook launched its alternative to Google search, called “Facebook Graph Search” in partnership with Microsoft’s Bing search engine. Then in 2014, Google and Facebook obviously, abruptly, and relatively quietly, chose to no longer directly compete with one another. In the first half of 2014, Google reversed course in social, defunding Google+, ending its forced integration, and announcing the shutdown of Orkut, Google’s 300 million user social network. In the second half of 2014, Facebook quietly dropped its Facebook Graph Search alternative to Google search and its search partnership with Microsoft’s Bing.
One consequence is:
Goobook’s customers – advertisers — pay higher ad prices and have less cohesive and effective ad campaigns under the Goobook ad cartel than they would have if Google and Facebook continued to compete. No material competition to keep them honest, also means Google and Facebook can avoid third party accountability for the core advertising activity metrics that they use to charge for their ad services.
The net net is that US laws and policies:
favors free-content models over paid content models, ultimately produces monopolies and monopolies colluding in cartel behaviors that are hostile to property rights. Monopsonies [sic] de facto forcing property owners to offer their property for sale at a wholesale price at zero, is anti-competitive and predatory. Free is not a price, it’s a subsidy or a loss.
No monopoly word. The cartel word is the moniker for these two esteemed outfits grouped under the neologism “Goobook.” WWTD? Oh, that means “What will Trump do?” Perhaps the Trump White House will retain the author as a policy adviser for cartels?
Stephen E Arnold, January 19, 2017
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