Monopolists of Data Like Google Are Threatening the Economy

Description: The White House recently released a report about the danger of big data in our lives. Its main focus was the same old topic of how it can hurt customer privacy.

Source: HBR.com

Date: March 2, 2015

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Federal government regulators must ask themselves: Should data that only one company owns, to the extent that it prevents others from entering the market, be considered a form of monopoly?

The search market is a perfect example of data as an unfair barrier-to-entry. Google revolutionized the search market in 1996 when it introduced a search-engine algorithm based on the concept of website importance — the famous PageRank algorithm. But search algorithms have significantly evolved since then, and today, most of the modern search engines are based on machine learning algorithms combining thousands of factors — only one of which is the PageRank of a website. Today, the most prominent factors are historical search query logs and their corresponding search result clicks. Studies show that the historical search improves search results up to 31%. In effect, today’s search engines cannot reach high-quality results without this historical user behavior.  Read the rest of the Story

Questions for discussion:

1.  Do monopolies  in the information markets hurt competition? yes or no   — explain.

2.  Do you see a lot of new entries into this marketspace in the future?  is that important?  explain

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117 thoughts on “Monopolists of Data Like Google Are Threatening the Economy

  1. stephen lunn

    1. Do monopolies in the information markets hurt competition? yes or no — explain.

    no. monopolies are defined as the only name in the game, and when it comes to information by the looks of things there are so many ways to get information that the cost to get the information cannot be very much at all. With the problem of Big data I don`t see there being a shortage of information, and with social media i don`t see a lot of secrets staying secret for long, so from my point of view if you have patience then you just have to wait for the information to come from one source or another. There may be monopolies in regards to some forms of information but if enough people see a need they will find a way into the market. if your business starts to suffer you will find out why and if it is a problem with information then how ever you found out that that is the problem that method will probably offer to help you solve the problem.

    2. Do you see a lot of new entries into this marketspace in the future? is that important? explain

    there will be a lot of new entries into the information marketplace in the future, and It is important, we are in an information age now, and as with every age those that don`t embrace the age will fall by the way side and perish, and as people see the value in the age people will conform.

    Reply
  2. Gray.yu

    1. Do monopolies in the information markets hurt competition? yes or no — explain.
    Yes, I think it will hurt competition, because the monopolies company will be strong enough to stop or block the new company to enter the area if the company can get a huge superiority in a long term, like the large consumers information of google. But I have a different opiniot, competition lead to progress. If a company always be a state without a good competition, the company will be progress slowly. If their progress speed slower than the speed of the need growth of consumers,there will be one day their product or service can’t meet the need of consumers. At that time, this will be a great chance for new companys to enter the area. So it will be a cyclical phenomenon I think.
    2. Do you see a lot of new entries into this marketspace in the future? is that important? explain
    I think there will be many new entries into this marketspace in the future. But not recent year. Because google is still a strong company, It will be very difficult for new company to compete with Google.
    Sure it is important, competition lead to progress. Maybe we dont need new product, but we must need a development of technology. If there is no new company to compete with Google, maybe the speed of technology progress will be slow.

    Reply
  3. Shelby Barrus

    1. Do monopolies in the information markets hurt competition? Yes or No — explain.
    Monopolies are often defined as the act of obtaining exclusive possession or control of the supply or trade in a commodity or service. Monopolies in any competitive market will likely negative affect competition within as it become harder for other players to compete on the same level. Although markets and competition are constantly changing and fluctuating as new entrants are coming up with the latest greatest pieces of technology so frequently. Companies like Apple, Samsung, Google and Microsoft, make it very hard for new entrants to grow within the market as these big name competitors have deep roots within the industry. Taking Google for example, it strong lead in the information market make it hard for its competitors like Bing and yahoo to compete with such a big name competitor. As a result, I do think monopolies hurt competition.
    2. Do you see a lot of new entries into this market space in the future? Is that important? Explain
    I think anything is possible and as we saw a few years ago with Blackberry changes happen fast in the technology industry and all moves and advances are achieved fast and efficiently, leaving little room for company error. On the other hand, even if a new entrant entered a competitive market with an even more superior product compared to what is on the market, their success may be small due to the lack of control and possession within the market. However, this does not mean it is not possible from the new entrant to make its way to top.

    Reply
  4. Ashley-Raye Miles

    Monopolies Hurting Competition

    I would say yes, of course monopolies hurt competition simply due the nature of what a monopoly is. If there is only 1 seller and there is so much market dominance that entry barriers for competitor are insurmountable it changes the industry and control completely. A monopoly could add-on complimentary mandatory supplemental services that users have to purchase. This strategy is used by many market-dominant companies. Think of Apple (not a monopoly but perhaps close) changing their charging cords every few years creating more revenue when everyone has to upgrade, or making old phones obsolete when the ios operating system is upgraded along with apps and music forcing users to upgrade their phones and be locked in with Apple or lose their App purchases.

    As it relates to google and data, the possibilities are endless with a lot of things still yet to be determined. The challenge in a free market is that those that expend great risk should reap great reward so if you penalize extremely successful companies, it may limit innovation and motivation to continue to push forward. I think innovative solutions will need ot be put inplace to as technology and data use evolves-perhaps every few years older data is released so it can be analyzed for the common good and not create such a gap between the googles and potential new entrants?

    Reply
  5. Brooke Reynolds

    Do monopolies in the information markets hurt competition? Yes or no? Explain.

    Yes, I strongly believe that monopolies in information markets truly do hurt competition. Data is a really important resource to companies now days. Large monopolies that have emerged and been successful, like Google, make it near impossible for other information systems and networks to succeed at the same scale. Once you start using Google and like the way it runs, you won’t go and change the way you search on the Internet. Personally I don’t even use any different search engine rather then Google, and this makes it hard for other competitors to emerge in this environment.

    Do you see a lot new entries into this marketplace in the future? Is that important? Explain.

    I think that there will be lots of people that are going to try to get into this marketplace but I doubt that anyone will be successful. Looking at Google and Yahoo it will be almost impossible to compete against them, considering their sites are so complex and perfected. Everyone is already comfortable using them and won’t change. This is a problem because there are a lot of people that won’t be successful because of dominance in the marketplace.

    Reply
  6. Kevin Phan

    1) Monopolies are unquestionably bad for the economy. Traditionally, monopolies have been seen in a bad light as they tend to be less efficient than companies who are forced to be so by the pressure of competition. Furthermore, companies that hold a monopoly also have less incentive to innovate, why invest in R&D to make new or better products if customers don’t have another options to your product?

    2) There could potentially be new players in this information marketplace. There will always be people with innovative ideas and better methods of doing something, and they want to put these ideas on the market or simply start their own companies. However, not a lot of new players are going to enter this type of markets since Google and Bing already doing a great job, unless these new players come up with something really innovative to attract users.

    Reply
  7. Bobby Hamilton

    Yes, monopolies in the information markets hurt competition. The definition of a monopoly is a market with many buyers and only one seller, resulting in very low competition. A company like Google is such a powerful and successful monopoly that it limits new companies from being able to integrate potentially useful ideas. I don’t overly feel that it causes a negative effect on the economy though. I myself, have trust in the information that Google provides. They are a monopoly for a reason. A monopoly is established as the main seller in the market. In order to be a seller, you must provide a product or service that people either want to buy or use. If people found that a different information company provided a service better than Google, they would use it. Google is such a powerful company that if there are new information companies that provide information that they do not have themselves, they are able to either partner their idea or buy it right out because Google will be able to offer a much greater deal than they would ever be able to create themselves while Google is still in the market. A monopoly such as Google feeds off of the companies underneath it, therefore hurting competition.

    Reply
  8. Miriam

    1. Do monopolies in the information markets hurt competition? yes or no — explain.
    Monopolies will always hurt the competition because they are much more powerful than the competition. I think that in the information market you need to be fierce in all aspects because there will be monopolies that will try to kick you out. You just need to stand your ground and you will be survive. Think of Google for example. They are so popular and commonly used that if anyone would try to invent a new search engine it would be extremely difficult to succeed because everyone uses google when they need information. If you don’t believe me, ask yourself if you have ever said “just google it” when you are in an argument with someone over a detail. I know I have!

    2. Do you see a lot of new entries into this marketspace in the future? is that important? explain
    No I do not see a lot of new entires into this marketspace because of the highly competitive environment. It will be extremely difficult for anyone to break into this market. With that said, if there is a change in the market that allows more freedom and leeway, then there would be more potential for entrants.

    Reply
  9. Andrea Stronks

    I have the understanding that the very definition of monopoly is that there is little competition, so I have to answer yes to the first question. When large companies like Google in the above article have most of the market share, it makes it nearly impossible for other firms to grow and introduce new ideas. It is hard to say whether or not this is a negative thing however, simply judging from the innovation and excellence that Google brings to the market. I cant picture a company successfully competing with Google, but that may be because I am so used to the monopoly that is in place. In the future, of course there is always the chance that this will change, and as I see it, competitors will only drive Google to be bigger, better and more innovative, but time will tell!

    Reply
  10. Maryam

    Monopoly is the exclusive possession or control of the supply or trade in a commodity or service.
    Monopolies create a massive entry barrier that proscribes many competitors from participating. Monopoly power can harm society by making output lower, prices higher, and innovation less than would be the case in a competitive market. A monopoly’s potential to raise prices indefinitely is its most critical detriment to consumers. Because it has no industry competition, a monopoly’s price is the market price and demand is market demand. Even at high prices, customers will not be able to substitute the good or service with a more affordable alternative. As the sole supplier, a monopoly can also refuse to serve customers.
    Considering Monopolies in the information industry, I think the existence of such firm with such prodigious control has hurt opponents and will continue to in the foreseeable future due to the fact that they are curbing information from other companies, restricting their rivalry’s capacity to evolve at the same pace.
    Another more definitive example is in the health industry, if a company withholds information for a new vaccine or treatment, they receive all of the profits and benefits for developing it. Nonetheless, the people in desperate need of this treatment would have to pay a higher because with no competition, so therefore the company can petition any price they want.

    Reply
  11. Julian Atkinson

    2. Do you see a lot of new entries into this marketspace in the future? is that important? Explain
    I can foresee potential new entries into the marketspace in the future, but I do not think they will come in great numbers. If there isn’t any form of regulation or legislation in place to consistenly monitor these monopolies, i feel like the idea could flop. It will be initially difficult for these new entrants to get data because of lack of access, so they will have to strongly differentiate themselves in order to progress into the future successfully. They will have to put up a serious battle in order to get going, at a more than likely high cost. It is already tough as it is to compete with internet powerhouses such as Google and Facebook, both have which have single handedly eliminated other platforms due to their own success and rising popularity. The only way I see it working is if either one of those companies for example were to provide data to new companies in order to get started, but I think that is unlikely.

    Reply
  12. Tom Urbin-Choffray

    Do you see a lot of new entries into this marketplace in the future? is that important? explain
    I do not see a lot of new entrants into the marketplace in the future. I do not project that the federal government will eliminate monopolies in the future. These monopolies achieve economies of scale and are efficient. It would take a new entrant into this marketplace many years to develop a reasonably competitive product and brand to the major companies in the industry. If a new company did become large enough to be competitive, they would most likely be acquired by the major companies. Even if the new company did not want to sell out, they could still be acquired by a major corporation by the use of a “hostile takeover” where the major corporation buys enough shares to have controlling power.
    Do monopolies in the information markets hurt competition? yes or no — explain.
    Yes,I definitely think that monopolies do hurt competition. There are significant barriers to entry for new entrants into the industry due to the historical data required to maintain competitive against the major companies such a Google. This means that even if a new entrant has a superior product, they may not be successful simply because they do not possess enough user data. However I do believe that if the federal government does a proper job of regulating the monopolies that it would be okay. Major companies such as Google achieve success such partly due to their economies of scale.

    Reply
  13. Brian Kemp

    1. YES! Monopolies in the information markets can definitely hurt competition. Specifically these data monopolies provide the controlling corporation with an edge over the competition. In this day and age data is almost everything, and having this data advantage can be the difference between success and failure in today’s extremely tight market. Knowing exactly where to promote a product can lead to either reduced advertising costs or/and an increase in market penetration. This advantage alone can create an imbalance in the marketplace and put even superior products or technologies at a disadvantage. Of course this has happened in the past without the intervention of data technologies, but shouldn’t we try to better the system rather than impede progress with data advantages?
    2. No, I do not see there being any real entries into this marketplace in the future. This is important because it leads me to believe that this is a data monopoly and not only is it bad for competition we have become accustomed to it and accepted its control over this extremely important business. Any new upstart would be crushed by the overwhelming power that google holds. Even Bing (being the biggest competitor) while being support by the might of the Microsoft Corporation is essentially on its knees compared to google. Although this is just one example it goes to show that the information markets monopoly is here to stay without extreme intervention.

    Reply
  14. Mia Cartwright

    1. Do monopolies in the information markets hurt competition? Yes or no — explain.
    Monopolies in the information markets do hurt competition as it makes it harder to “enter the market and compete with the established players, with their deep records of previous user behavior”. Large companies like Google and Microsoft have such a head start in the market it will be nearly impossible for new entrants to come in and gain a competitive edge in the business. They may get into the practice but they will only have a small share of the business.
    2. Do you see a lot of new entries into this market space in the future? Is that important? Explain
    I believe that there is a chance of new entrants into this market space in the future but with they will have to have a large competitive edge. It is very important that businesses do try to enter into the markets though because with the same monopolies in the markets, things get repetitive, and competition continues the way it is now. Smaller firms do have the ability to come into the market place and take over the market, it is just about trying to take that chance.

    Reply
  15. Jason Ferrie

    In any industry a monopoly is not good for competition. The definition of a monopoly is to have exclusive rights or possession within your industry and limits the ability for others to enter the market. The big player in this case is Google. Because of Googles history of establishing an effective search algorithm this allowed for them to keep large amounts of data history to better serve users. Google is by far the most popular and probably the most used. Its competitors like Yahoo and Bing may not have the market share of internet use, but are by no means small players. So for there to be a true monopoly in this area could be difficult, but the fact that there is questions being raised must have some legitimacy.
    There could defiantly be new entrants. The role of these entrants might not be like the big boys but there is always a need for the smaller companies. Sometimes these are the ones that are more adaptable to changes in the market place. Which then gives them the advantage over the big players.

    Reply
  16. Kirstie

    1. Do monopolies in the information markets hurt competition? yes or no
    A monopoly is an enterprise that is the only seller of a good or service. In the absence of government intervention, a monopoly is free to set any price it chooses and will usually set the price that yields the largest possible profit. Just being a monopoly need not make an enterprise more profitable than other enterprises that face competition: the market may be so small that it barely supports one enterprise. But if the monopoly is in fact more profitable than competitive enterprises, economists expect that other entrepreneurs will enter the business to capture some of the higher returns. If enough rivals enter, their competition will drive prices down and eliminate monopoly power. Monopoly power can harm society by making output lower, prices higher, and innovation less than would be the case in a competitive market. The possession of monopoly power is an element of the monopolization offense, and the dangerous probability of obtaining monopoly power is an element of the attempted monopolization offense.

    2. Do you see a lot of new entries into this market space in the future? is that important? explain
    I do not see a lot of new entrants into this market space in the future because i think Google has already done that. Monopoly power can be maintained by barriers to entry, including economies of large scale production if the costs of production fall as the scale of the business increases and output is produced in greater volume, existing firms will be larger and have a cost advantage over potential entrants – this deters new entrants. Another one is predatory pricing that involves dropping price very low in a ‘demonstration’ of power and to put pressure on existing or potential rivals. In addition, perpetual ownership of a scarce resource firms which are early entrants into a market may ‘tie-up’ the existing scarce resources making it difficult for new entrants to exploit these resources. This is often the case with ‘natural’ monopolies, which own the infrastructure. Another one is high set-up costs if the set-up costs are very high then it is harder for new entrants. One is high ‘sunk’ costs that those which cannot be recovered if the firm goes out of business, such as advertising costs – the greater the sunk costs the greater the barrier. Another one is advertising- heavy expenditure on advertising by existing firms can deter entry as in order to compete effectively firms will have to try to match the spending of the incumbent firm.

    Reply

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