Answer to Question #124652 in Microeconomics for mamoona

Question

Note: Refer to case "Search Engines In Search of Fair Play" to answer the following questions.
1. Can Google be characterized as a monopoly? Justify your answer by specifying and comparing the characteristics of a monopoly with those of Google. [2]
2. Why it is not against competition law to have a monopoly? [2]
3. In your view, is Google pursuing anti - competitive (monopoly) practices, why ? [3]
4. What are the possible outcomes if Google's anti-competitive (monopoly) practices are not curbed? [3]

Answer 1

Question 1

Google is not a monopoly. This is because;

Google has no significant barriers to entry, while monopoly firms have a high barrier entry.

Google has competitors offering the same services, ie. Microsoft, Amazon, while monopoly it's only a single seller.

Question 2

Competition laws help consumers to benefit and not competitors. Competition law protects consumers from predatory business practices. The law is only against monopolies when they stop another firm entering the market for competition.

Question 3

Yes, Google had a practice of displaying results from its specialized services. Google is using scraping materials such as product ratings to improve its search results.

Question 4

Anti-competitive practices create dominant or monopoly situations that reduce or eliminate competition in the market. It reinforces monopoly power of Google. if the anti-competitive practices of Google are not curbed, it will generate a significant social cost to the competing firms and consumers. This forces the competitors out the market and are likely to close down.