According to gs.statcounter.com, Google holds a 92% market share of the search industry worldwide. If we look at the digital advertising landscape, competition is heating up as existing, and new entrants are growing their digital advertising footprint (TikTok, Amazon, and Apple in particular).
- How do you assess a monopoly?
- Google monopolized the search industry but is the digital advertising industry monopolized?
- Google and Facebook: the duopoly of the digital advertising industry, still?
- Understanding market dominance can be a matter of perspectives
How do you assess a monopoly?
A monopoly is a situation in which one player controls the whole market in a particular industry.
That means the monopolist can prevent competition as it can charge high prices without losing market shares.
Or it can leverage its market dominance to prevent others from entering the market.
Assessing whether Google is a monopoly is a matter of perspective!
There are various methodologies to assess whether a company holds a monopoly in an industry.
That is represented by how much of the sales are controlled by the largest group.
In short, it looks at the concentration of revenues of a company in a market.
Today, companies start to have a few more options.
New players like TikTok, Apple, Amazon, and Linkedin too, are becoming good alternatives.
Profit-Rate as a Measure
The profit rate looks at how high are the profits of the monopolist.
High profits mean the ability of the monopolist to attract high profits without the risk of new entrants into the market.
The formula used in this case is (P-MC) / P.
Where MC is the marginal cost.
According to this view, in a situation of perfect competition, the price charges are equal or close to MC so that the result would be zero, thus no monopoly.
Where MC becomes 0, then the effect becomes 1. In this scenario, you have a monopoly.
For the sake of simplicity, we’ll look at the net market share of Google in the search industry and the market share in the industry that allows Google to pay the bills: the digital advertising industry.
Google monopolized the search industry but is the digital advertising industry monopolized?
It doesn’t matter from which perspective you look.
According to gs.statcounter.com, Google retains more than 92% of the worldwide search market share.
You should not be surprised, as Google has been keeping a dominant position for a long time.
So what about that?
Google and Facebook: the duopoly of the digital advertising industry, still?
Yet, this duopoly is quickly getting eroded by other players, which have enough resources to compete.
Understanding market dominance can be a matter of perspectives
- Successful Types of Business Models You Need to Know
- Business Strategy: Definition, Examples, And Case Studies
- What Is a Business Model Canvas?
- Blitzscaling Business Model Innovation Canvas
- What Is a Value Proposition?
- What Is a Lean Startup Canvas?
- What Is Market Segmentation?
- Marketing Strategy: Definition, Types, And Examples
Handpicked related business models: