The Breakdown

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Google's antitrust win and the perfect monopoly on search

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UPDATE: Google offers its own take at the Google blog.

The big news out of Washington on Thursday morning isn't yet another installment in the fiscal cliff melodrama — it's that Google isn't breaking antitrust laws, the Federal Trade Commission concludes.

The investigation zeroed in on the thrumming heart of Google's business, which has rewarded the California tech colossus with a whopping $239 billion market capitalization: search. This is from the New York Times:

Companies that rely on Google to drive traffic to their sites have complained that Google adjusts its search algorithm to favor its own growing number of commerce sites — including shopping, local listings and travel.

But the [FTC] faced an uphill battle in proving malicious intent — that Google changes its search algorithm to purposely harm competitors and favor itself. Antitrust lawyers say anticompetitive behavior cannot be proved simply by showing that a change in the algorithm affects other Web sites and causes sites to show up lower in results, even though studies have shown that users rarely look beyond the first page of search results.

Anyone who uses Google regularly — and that would include...oh, pretty much everyone who has a computer, smartphone, or tablet — knows that Google leverages its veritable search monopoly to favor its own products. It would be stupid not to. It would also fail to deliver value to its shareholders if it didn't seek to maximize the return from what is, after all, its key product and the thing that makes Google Google. 

We don't "search" for stuff on the Web. We "Google" it.

As the FTC concluded, this incredibly powerful monopoly — so powerful that it's slipped into the vernacular or numerous languages as an everyday verb — can continue because it's almost purely meritocratic. The "barriers to entry" for getting into the search business are exceptionally low. The Times story on the FTC decision even refers to a search startup, Duck Duck Go, that I've written about before. 

The argument is that anybody with an algorithm and dream can get into search.

But of course, they can't, because search is Google. 

So the bottom line is that Google benefits from being both the definition of search, possessing a monopoly earned from delivering the best search results; and from having the perfect defense against accusations that it's a monopoly and can use that power to favor its own business.

It's a remarkable achievement and one that new tech startups will undoubtedly study. But given the way that the Wed has evolved, it now seems that there was one golden opportunity to monopolize search — and Google was in the right place at the right time to seize it.

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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