Is Google A Monopoly?

If we solely look at the search space, Google (Alphabet) is a monopoly that controls most of the search market. However, if we look at the wider digital marketing space, Google looks more like an oligopoly that competes against other tech giants like Amazon, Facebook, Apple, Netflix, and more from various markets developed due to the web.

market-types — A market type is a way a given group of consumers and producers interact, based on the context determined by the readiness of consumers to understand the product, the complexity of the product; how big is the existing market and how much it can potentially expand in the future.

Analyzing a market to understand the competitive landscape is not as straightforward as it seems. Indeed, things might be connected in unexpected ways in the business world, and that is even truer for competition on the web. Boundaries are much more blurred, and markets that didn’t exist a few years ago just developed. As they consolidate, it becomes easier to establish their boundaries. But given the current landscape, many markets are now overlapping.

For that reason, when we look at a company like Google (Alphabet), we know it operates within the boundary of the search industry, which is its core business and what it still provides most of its revenues. Yet, it also operates outside of it.

how-does-google-make-money — Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2023, Alphabet generated over $175B from Google search, $31.51B billion from the Network members (Adsense and AdMob), $31.31B billion from YouTube Ads, $33B from Google Cloud, and $34.69B billion from other sources (Google Play, Hardware devices, and other services). And $1.53B from its other bets.

That is why if we look at the competitive landscape for Google we also find it pretty diversified.

google-competitors — While Google (now Alphabet) has been born as a search engine, it is now a diversified company, even though its core business remains search, as most of its revenues still come from Google, the search engine, and YouTube, the “video engine.” However, as a tech giant, which business is primarily based on advertising, the company does compete with Facebook, Twitter, Microsoft (with Bing), and Amazon (with e-commerce search and its advertising machine).

google-organizational-structure — Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Google’s main business is about data and how this is used to improve its products and enable its business model still primarily based on advertising (which turned out to be the killer revenue model for the web).

data-supply-chain — In a data supply chain the closer the data to the customer the more we’re moving downstream. For instance, when Google produced its own physical devices. While it moved upstream the physical supply chain (it became a manufacturer) it moved downstream the data supply chain as it got closer to consumers using those devices, so it could gather data directly from the market, without intermediaries.

Thus, by looking at the search market along, no doubt Google looks like a monopoly, with its over 90% market share worldwide and its control over the Android operating system and Google Chrome browser.

If we instead look from the other perspectives, like voice search, digital advertising, and media, Google looks more like an oligopoly, fighting to gain control over these various markets.

Table of Contents

Key Highlights:

Google’s Market Dominance: Google, under its parent company Alphabet, is a dominant force in the search market, with over 90% market share globally. Its core business still revolves around search, generating significant revenues.
Digital Marketing Oligopoly: In the broader digital marketing space, Google competes as part of an oligopoly, alongside tech giants like Amazon, Facebook, Apple, and Netflix. These companies have diversified into various markets developed due to the web.
Understanding Market Types: Market types are defined by how consumers and producers interact, influenced by factors like product complexity, market size, and growth potential.
Blurred Market Boundaries: Analyzing the competitive landscape in the web-driven business world can be complex, as markets often overlap and new markets continually emerge, making it challenging to establish clear boundaries.
Diversified Revenue Streams: Alphabet’s revenue comes from various sources, including Google Search, Network members (Adsense and AdMob), YouTube Ads, Cloud services, and other sources like Google Play and hardware devices. This diversification reflects Google’s expansion beyond its core search business.
Competition in Advertising: Google, primarily an advertising-based company, competes with other tech giants such as Facebook, Twitter, Microsoft (Bing), and Amazon, particularly in the digital advertising space.
Organizational Structure: Google (Alphabet) employs a cross-functional organizational structure with some degree of flatness. Over time, it has become more centralized as the company scaled.
Data as a Core Asset: Google’s main business revolves around data and its utilization to enhance products and sustain its advertising-driven revenue model.
Data Supply Chain: Google’s data supply chain involves gathering data from consumers using its devices and services, moving closer to the market and reducing intermediaries, thus gaining direct access to valuable customer data.
Monopoly vs. Oligopoly Perspective: Depending on the perspective, Google can be seen as a monopoly in the search market, where it has overwhelming dominance. However, in areas like voice search, digital advertising, and media, it competes as part of an oligopoly, striving for control over these diverse markets.

Monopoly and Antitrust

Microsoft’s Antitrust Case (2001): Microsoft faced a significant antitrust case in the late 1990s and early 2000s. The U.S. Department of Justice accused Microsoft of using its dominant position in the operating system market to stifle competition. Microsoft ultimately settled the case, agreeing to change its business practices.
IBM’s Historic Antitrust Case (1982): IBM, once a tech giant, faced a massive antitrust lawsuit in the early 1980s. The U.S. Department of Justice accused IBM of monopolizing the computer industry. The case was eventually dropped in 1982.
Google’s EU Antitrust Investigations (Ongoing): Google has faced multiple antitrust investigations by the European Union. These investigations have focused on Google’s dominance in online search, digital advertising, and Android’s market position. Google has been fined billions of euros for antitrust violations.
Facebook’s Acquisition Strategy: Facebook’s acquisition of companies like Instagram and WhatsApp has raised concerns about its potential monopoly in the social media and messaging space. Regulatory authorities are scrutinizing these acquisitions.
Amazon’s Online Retail Dominance: Amazon’s position as the largest online retailer has led to questions about its potential monopoly status in e-commerce. Its influence on the online retail market has attracted regulatory attention.
Apple’s App Store Policies: Apple’s control over the App Store and its policies have raised concerns about monopolistic behavior. App developers have accused Apple of anti-competitive practices, leading to legal battles and regulatory investigations.
Intel’s Market Dominance (2009): Intel faced antitrust allegations related to its market dominance in microprocessors. The company was accused of anti-competitive practices. Intel eventually settled with the U.S. Federal Trade Commission.
AT&T’s Historic Monopoly (20th Century): AT&T held a monopoly in the U.S. telecommunications industry for much of the 20th century. The government took legal action to break up the monopoly in 1984, leading to the divestiture of the “Baby Bells.”