Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“Wise men talk because they have something to say; fools, because they have to say something.”     Plato

April 23, 2007

Is Google Getting Too Big ?

by Doug Mataconis

In the Washington Post, Steven Pearlstein writes about Google’s continued expansion:

Google is the quintessential business success story. Two bright young guys started with an idea, built a company around it and grew it into a $150 billion juggernaut that now dominates the Internet. It nudged aside rival Yahoo, challenged traditional media giants and frustrated the Web strategy of the once-invincible Microsoft. And it did it all fair and square.

First-quarter reports show how much Google has pulled ahead of the pack: a 69 percent increase in profit on a 63 percent increase in sales. The news came just days after Yahoo acknowledged that its profit had fallen 11 percent, sending its already-lagging stock down 12 percent. Reports from big newspaper chains were even more dismal.

Good news for Google, it’s shareholders, and those of us who make daily use of the content that it provides, right ? Not according to Pearlstein:

But now, precisely because of its success, it’s fair to ask if Google should be barred from furthering its dominance through acquisitions or collaborations. At issue are the recent purchases of YouTube, the leader in online video sharing, and DoubleClick, the leading broker of online advertising; in both instances Google used its gusher of profits to outbid rivals. There are also new joint ventures with Clear Channel, the giant radio broadcaster, and EchoStar, the satellite television operator.

There’s no assertion by Pearlstein that Google has obtained any thing approaching monopoly power, and there’s no evidence to support it. So why is it that Pearstein is advocating the idea of putting controls on how big Google can grow ? What is it precisely that Google has done wrong that warrants limiting it’s growth ? And, more importantly, just how does Pearstein aim to fathom the point at which Google, or any company, becomes “too big” ?

As I’ve noted before, the only type of monopoly that is harmful to consumers is a legal monopoly, one that is created by the state and whose position is protected by the state. The best example o this today is the United States Postal Service. If if you wanted to use another provider to deliver regular first-class mail, you can’t do it because the law forbids it. Google, on the other hand, is simply providing a product. You don’t have to use it if you don’t want to, and many people choose not to.

The day that Google becomes a problem isn’t the day it becomes “too big” it’s the day that it uses the power of the state to restrain competition.


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