Wednesday, May 9, 2012

Google and Search Engine Market Power

Patterson, Mark R., Google and Search Engine Market Power (April 27, 2012). Fordham Law Legal Studies Research Paper No. 2047047.

From the abstract: “A significant and growing body of commentary considers whether possible manipulation of search results by Google could give rise to antitrust liability. Surprisingly, though, little serious attention has been paid to whether Google has market power. Those who favor antitrust scrutiny of Google generally cite its large market share, from which they infer or assume its dominance. Those who are skeptical of competition law’s role in regulating search, on the other hand, usually cite Google’s 'competition is only a click away' mantra to suggest that Google’s market position is precarious. In fact, the issue of Google’s power is more complicated and interesting than either of these approaches suggests.

The commentary on Google has not focused on information as a product and generally has not considered the ways in which it differs from other products. A key feature of information is described by Arrow’s paradox regarding information: 'its value for the purchaser is not known until he knows the information, but then he has in effect acquired it without cost.' As a result, in many instances of search, a consumer will be seeking information only in circumstances in which she will be unable to evaluate the quality of the information she receives. As will be discussed in more detail below, this lack of transparency in quality can give an information provider market power, just as can an absence of transparency in price for other products.” Read more