4 ms·

Can you deign to explain why you think so, or is it so obvious that I should just be ashamed for not seeing it?

by jpttsn 9y ago

frgtpsswrdlame 9y ago
Perhaps obvious was not a good choice. Anyways: I would say Google is as close to a natural monopoly as the Bell System was in 1956. If you came to me and said “Hey, I want to start a company to compete with Google in search,” I would say you’re out of your mind and don’t waste your energy or your time or your money, there’s just no way. Classic economics would say that if there’s a business in which there are 35 percent net margins, that would attract a huge amount of new capital to capture some of that, and none of that has happened. That tells you there’s something wrong. From: https://promarket.org/google-close-natural-monopoly-bell-system-1956/ https://promarket.org/google-close-natural-monopoly-bell-sys... Water companies are a utility because there's a high cost to laying the pipes and the more pipes you lay, the more people you service, the more pipes you can afford to lay. It's near impossible for an upstart water company to come in and displace the incumbent. Search companies should be a utility because there's a high cost to gathering the data needed to drive good results and the more data you gather, the better results you give, the more data you gather. It's near impossible for an upstart search company to come in and displace the incumbent.
- philh 9y ago
  I feel like you're describing growth in general, not natural monopolies specifically. There's a high cost to building a store and the more stores you build, the more customers you serve, the more stores you can afford to build. There's a high cost to making a movie and the more movies you make, the more people pay to see your movies, the more movies you can afford to make.
  - frgtpsswrdlame 9y ago
    Sure, barriers are a gray area. In society we draw a sort of arbitrary line for when they're high enough to represent a natural monopoly. We've decided that electric and water companies for example represent high enough fixed costs to warrant being a utility. So the question then becomes how much do you think it would cost to build a search engine as good as Google? I'd say that number is probably ginormous, hence why it should be treated as a utility.
  - tripzilch 9y ago
    Sure, and growth in general is not always a good thing.
- lkbm 9y ago
  Crawling the web is easy now. Your point makes sense if the behavioral data they acquire from users makes a huge difference. Maybe it does, but I feel like someone can build a better mousetrap and be better than Google, even without behavioral data. Google, right now, is thought to have the best mousetrap, not simply one well-tuned to a large mouse behavior dataset. Maybe I'm wrong about that--I'm sure ML has become increasingly important in how Google ranks results, but I'm unconvinced that it's a severely anti-competitive factor. (That said, I do still use Google over DDG largely because of the personalization and the integration with their other services.)
  - frgtpsswrdlame 9y ago
    > I feel like someone can build a better mousetrap and be better than Google Where are the someones then? Look through Show HN and you'll see all sorts of cool projects and upstart companies. How many of them are search? We've got a huge flood of companies trying to take down the taxi industry, where's the flood to take out Google? It doesn't exist because everyone knows they can't win. Here's the Show HN for search: https://hn.algolia.com/?query=show%20search&sort=byPopularity&prefix&page=0&dateRange=pastYear&type=story https://hn.algolia.com/?query=show%20search&sort=byPopularit... Do you see any of these dethroning google? Almost none even bother to compete in general search, just in small specific areas.
  - baq 9y ago
    crawling the web is only easy if all you ever do is following hrefs... we're in the world of single-page turing-complete web apps and you're underestimating the amount of pure compute, ingress and egress bandwidth necessary to keep the index up to date. there's a reason google has designed and built their data centers, their server chassis and even power supply.
    - kinkrtyavimoodh 9y ago
      Mere difficulty of a problem does not make those who do solve it a natural monopoly. Of course these player may still be a practical (in effect) monopoly due to their being way better than the competition. Making a kickass image editing application like Adobe Photoshop is difficult too (as anyone who has had to suffer GIMP would attest), but that doesn't mean Photoshop forms a natural monopoly.
- jpttsn 9y ago
  What makes a natural monopoly different from a monopoly? How did Google displace previous search engines?
  - vkou 9y ago
    A natural monopoly has a positive feedback loop, where monopoly profits can be used to lock out competitors. This is typically due to network effects. Building roads is an example of a natural monopoly. Consumer internet is an example of a natural monopoly. Growing corn is not a natural monopoly.
    - dragonwriter 9y ago
      > Growing corn is not a natural monopoly. In the absence of a third-party with IP rights on seed, dominating corn growing means you dominate the seed supply and have the most variety to select from for improved traits (whether yield, hardiness to particular environmental stresses, etc.) Seems to have a pretty clear feedback loop where dominance breeds dominance in the same way as with network effects. Sure, the source of the feedback loop is different, but it's very much there.
crdoconnor 9y ago
Public utilities are public because of the vast expense of building and maintaining the infrastructure required to run them and because of how much people rely upon it. This applies 100% to Google. Even it's closest "startup competitor" hangs off bing's index.

Can you deign to explain why you think so, or is it so obvious that I should just be ashamed for not seeing it?

by jpttsn 9y ago

Can you deign to explain why you think so, or is it so obvious that I should just be ashamed for not seeing it?

Perhaps obvious was not a good choice. Anyways: I would say Google is as close to a natural monopoly as the Bell System was in 1956. If you came to me and said “Hey, I want to start a company to compete with Google in search,” I would say you’re out of your mind and don’t waste your energy or your time or your money, there’s just no way. Classic economics would say that if there’s a business in which there are 35 percent net margins, that would attract a huge amount of new capital to capture some of that, and none of that has happened. That tells you there’s something wrong. From: https://promarket.org/google-close-natural-monopoly-bell-system-1956/ https://promarket.org/google-close-natural-monopoly-bell-sys... Water companies are a utility because there's a high cost to laying the pipes and the more pipes you lay, the more people you service, the more pipes you can afford to lay. It's near impossible for an upstart water company to come in and displace the incumbent. Search companies should be a utility because there's a high cost to gathering the data needed to drive good results and the more data you gather, the better results you give, the more data you gather. It's near impossible for an upstart search company to come in and displace the incumbent.

philh 9y ago
I feel like you're describing growth in general, not natural monopolies specifically. There's a high cost to building a store and the more stores you build, the more customers you serve, the more stores you can afford to build. There's a high cost to making a movie and the more movies you make, the more people pay to see your movies, the more movies you can afford to make.
- frgtpsswrdlame 9y ago
  Sure, barriers are a gray area. In society we draw a sort of arbitrary line for when they're high enough to represent a natural monopoly. We've decided that electric and water companies for example represent high enough fixed costs to warrant being a utility. So the question then becomes how much do you think it would cost to build a search engine as good as Google? I'd say that number is probably ginormous, hence why it should be treated as a utility.
- tripzilch 9y ago
  Sure, and growth in general is not always a good thing.
lkbm 9y ago
Crawling the web is easy now. Your point makes sense if the behavioral data they acquire from users makes a huge difference. Maybe it does, but I feel like someone can build a better mousetrap and be better than Google, even without behavioral data. Google, right now, is thought to have the best mousetrap, not simply one well-tuned to a large mouse behavior dataset. Maybe I'm wrong about that--I'm sure ML has become increasingly important in how Google ranks results, but I'm unconvinced that it's a severely anti-competitive factor. (That said, I do still use Google over DDG largely because of the personalization and the integration with their other services.)
- frgtpsswrdlame 9y ago
  > I feel like someone can build a better mousetrap and be better than Google Where are the someones then? Look through Show HN and you'll see all sorts of cool projects and upstart companies. How many of them are search? We've got a huge flood of companies trying to take down the taxi industry, where's the flood to take out Google? It doesn't exist because everyone knows they can't win. Here's the Show HN for search: https://hn.algolia.com/?query=show%20search&sort=byPopularity&prefix&page=0&dateRange=pastYear&type=story https://hn.algolia.com/?query=show%20search&sort=byPopularit... Do you see any of these dethroning google? Almost none even bother to compete in general search, just in small specific areas.
- baq 9y ago
  crawling the web is only easy if all you ever do is following hrefs... we're in the world of single-page turing-complete web apps and you're underestimating the amount of pure compute, ingress and egress bandwidth necessary to keep the index up to date. there's a reason google has designed and built their data centers, their server chassis and even power supply.
  - kinkrtyavimoodh 9y ago
    Mere difficulty of a problem does not make those who do solve it a natural monopoly. Of course these player may still be a practical (in effect) monopoly due to their being way better than the competition. Making a kickass image editing application like Adobe Photoshop is difficult too (as anyone who has had to suffer GIMP would attest), but that doesn't mean Photoshop forms a natural monopoly.
jpttsn 9y ago
What makes a natural monopoly different from a monopoly? How did Google displace previous search engines?
- vkou 9y ago
  A natural monopoly has a positive feedback loop, where monopoly profits can be used to lock out competitors. This is typically due to network effects. Building roads is an example of a natural monopoly. Consumer internet is an example of a natural monopoly. Growing corn is not a natural monopoly.
  - dragonwriter 9y ago
    > Growing corn is not a natural monopoly. In the absence of a third-party with IP rights on seed, dominating corn growing means you dominate the seed supply and have the most variety to select from for improved traits (whether yield, hardiness to particular environmental stresses, etc.) Seems to have a pretty clear feedback loop where dominance breeds dominance in the same way as with network effects. Sure, the source of the feedback loop is different, but it's very much there.

crdoconnor 9y ago

Public utilities are public because of the vast expense of building and maintaining the infrastructure required to run them and because of how much people rely upon it. This applies 100% to Google. Even it's closest "startup competitor" hangs off bing's index.