Monday, July 14, 2014

Danger, Will Robinson! Google a benevolent monopoly?

"Google is a private company, and its users aren't entitled to anything beyond Google honoring it's end of its user agreements and following the law."

Warning, Will Robinson! Warning! I thought we had already learned the lesson of the cost and benefits of monopolies. Google not a monopoly? Under whose definition? Under the law? Where did the law come from? There were some big companies that were not operating in the best interest of the United States.

Here's a newsflash: A system (like the economy) has rules (like laws) because the system was unable to keep from tending towards a sub-optimal solution. The solution is judged sub-optimal because of criteria that are used to measure success in another system (like religion, science, politics, country, community, family, ego, and even overlapping systems inside my head). Rules are the interface protocol where two systems interact.

I hope I am misunderstanding many of these comments saying that Google has the right to do what it wants because it is a private company. Funny how private companies have got us thinking that they have the right to act against the interests of my community, sometimes treating human beings as if we were just another resource to be efficiently allocated to maximize profits. Doesn't economics teach that private monopolies have a conflict of interest when it comes to choosing between maximizing utility and maximizing profit. And if economics doesn't teach that, hasn't history taught us? In a perfectly competitive economy, maximizing consumer utility and maximizing company profit tend to encourage decisions in the same direction. Since monopolies don't have the same checks and balances, they can tend to move in the direction of maximizing profit, to the detriment of the consumers. That is why we often decide, traditionally through a political process, that monopolies cannot have so much power.

Google's hold over the search engine business and being privately owned and controlled by a small number of people is like trusting a private company to own oxygen. Sure, if Google is benevolent, people might not be exploited and people might not have their goals and aspirations squeezed out of the decision-making process. But it is unlikely (see history) and it is very dangerous (see history). One of the important (often forgotten) roles of our political institutions is to provide a check and balance to economic forces driven by profit maximizing and monopoly power.

1 comment:

Daniel said...

the massive moral hazard scares me. coupled with the nerdy arrogance, we have an interesting recipe

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