The public doesn’t normally care all that much about monopoly power. This has always been a source of befuddlement among anti-corporate progressives, but there you are. At some level, people may understand that somebody owns too much of the country’s corn or soybeans, and that drives up food prices. And they know our electricity comes from coal controlled by a tiny corporate oligarchy, which rakes off as much as it can while driving underpaid miners to early graves.
But by and large people seem to regard the monopolists’ skim as a routine cost they bear as patriotic consumers, and move on to weightier things, like the latest Capitol Hill sex scandal.
In the media sphere, however, concentration arouses greater concern. Not because monopoly in that sector is more harmful than in energy or food, but because communications is society’s central nervous system and excessive corporate power there seems to make us uneasy, seems to– forgive the expression–touch a nerve.
That is good, because monopoly is in the DNA of the communications business, and somebody needs to take notice.
Media economics inherently spurs companies to produce ever greater volume to benefit from ever lower costs. Having another million people watch your TV program costs you not a nickel more. Big is good, bigger is better.
And control over one area of a media sector creates huge incentives to buy up the businesses you rely on. If you own the theaters that sell to the public, buy the studios that produce the movies that feed the theaters. If you own the TV networks that reach the viewers, take over program production. Control demand? Control supply too.
So traditionally, communications companies reach for monopoly, and regulators slap them back–early in the last century, from the destruction of the Edison Trust, which controlled the celluloid that movies were made with, to the birth of CBS when NBC was forced to give up one of its two radio networks, to the breakup of old Hollywood when the studios were ordered to sell their theater chains.
Later in the century, much the same regulatory logic led to the inconclusive action against IBM in 1969, the breakup of lumbering old AT&T in 1974—which made today’s digital revolution possible—and the 1998 antitrust suit against Microsoft for allegedly using its desktop supremacy to dictate the future of the Internet.
And now to Google. The Federal Trade Commission, the Wall Street Journal reports, is preparing to subpoena the spectacularly successful Internet company to determine whether Google has misused its worldwide dominance over online searches to channel traffic to informational services it owns.
Now Google, by any measure, is an extraordinary company. It’s barely 13 years old and in the first quarter of this year grossed $8.3 billion. Its core business remains search, and it gets roughly two-thirds of U.S. search traffic, some 80 percent of Europe’s and 90 percent of Latin America’s. You want to find something, you “google” it, even if the search engine you actually use is Yahoo or Bing.
But Google has diversified out of its core business, which consists of directing people to other sites, and increasingly offers a glittering array of services of its own, many of them in competition with others.
The company’s imagination, capabilities, and ambitions seem inexhaustible—from its e-mail, geo-mapping, mobile apps, credit-rating and ad networks, to its project to digitize the world’s books, voice recognition software and now, its Google+ social network meant to rival Facebook. It’s hard to come up with any Internet-borne media possibility where the company isn’t a contender.
Now, it would be surprising if more than one customer in a thousand actually knew how Google makes its money, the ways in which its business model is built on using information to get information, offering all manner of lures to sharpen, widen and deepen its reservoir of sophisticated intelligence about its millions of customers, so that they can be targeted with precision for advertising messages.
Any government move against Google will be denounced by the many customers who buy the notion that Google is giving them something for free. It’s unlikely that an antitrust effort will go much beyond the question of how fairly Google’s search engine is treating Google’s rivals, and whether it’s leveraging its search dominance to starve competitive services of traffic.
That’s a reasonable area of inquiry. But in the long term, it’s very likely that the scrutiny Google now undergoes will matter less than the scrutiny to which it subjects its own customers, and how long they put up with it.