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We already have a framework to define markets, called hypothetical monopolist test. It's conceptually simple; given a market definition, can a hypothetical mono

We already have a framework to define markets, called hypothetical monopolist test. It's conceptually simple; given a market definition, can a hypothetical monopolist impose significant increases in price without customers turning away? If not, it means there's competitors so it's not monopoly. In this definition, Google's not going to be a monopolist as advertisers can easily reallocate their budget to alternative options (FB, Amazon, etc) to improve their ROI if Google decides to increase their fee significantly. Publishers don't have much options other than AdSense to sell their ad slots so it's monopsony(=single buyer controls the market). Not sure if the US antitrust law can handle this situation. If so, then this is going to be a landmark case.

hn_throwaway_99 6y ago
> In this definition, Google's not going to be a monopolist as advertisers can easily reallocate their budget to alternative options (FB, Amazon, etc) to improve their ROI if Google decides to increase their fee significantly. That is the point I 100% absolutely disagree with. Ask any digital marketer, most of them see FB and Amazon as serving different purposes than what targeted search ads do. If you put 'Bing' or 'DuckDuckGo' I would agree with you, but in that case you'll find that the way Adwords bidding work that Google pretty much already takes a huge portion of potential margin - in many areas with deep-pocketed investors who think they'll eventually turn profitable Google actually takes more than 100% of potential margin.
- summerlight 6y ago
  > Ask any digital marketer, most of them see FB and Amazon as serving different purposes than what targeted search ads do. I'm very well aware of this, but this doesn't necessarily mean that budget planning will be done completely independent across multiple different channels. We already have observed a significant fraction of search advertisements budget has been moved from Google to Amazon as Amazon becomes a more effective ads platform. In fact, nowaway this becomes a much more attractive option since Amazon now owns literally everything from advertisements, auction, optimization and measurements in a single platform. > in many areas with deep-pocketed investors who think they'll eventually turn profitable Google actually takes more than 100% of potential margin. Most of the Google's largest advertisers are big, conventional companies with a strong cash flow, not those burning the money from investors. They really care about incrementality, efficacy, measurement and performance. Sure, you can probably burn a few million dollars without a good reason but you cannot spend x100 like that.

hn_throwaway_99 6y ago

> In this definition, Google's not going to be a monopolist as advertisers can easily reallocate their budget to alternative options (FB, Amazon, etc) to improve their ROI if Google decides to increase their fee significantly. That is the point I 100% absolutely disagree with. Ask any digital marketer, most of them see FB and Amazon as serving different purposes than what targeted search ads do. If you put 'Bing' or 'DuckDuckGo' I would agree with you, but in that case you'll find that the way Adwords bidding work that Google pretty much already takes a huge portion of potential margin - in many areas with deep-pocketed investors who think they'll eventually turn profitable Google actually takes more than 100% of potential margin.

summerlight 6y ago
> Ask any digital marketer, most of them see FB and Amazon as serving different purposes than what targeted search ads do. I'm very well aware of this, but this doesn't necessarily mean that budget planning will be done completely independent across multiple different channels. We already have observed a significant fraction of search advertisements budget has been moved from Google to Amazon as Amazon becomes a more effective ads platform. In fact, nowaway this becomes a much more attractive option since Amazon now owns literally everything from advertisements, auction, optimization and measurements in a single platform. > in many areas with deep-pocketed investors who think they'll eventually turn profitable Google actually takes more than 100% of potential margin. Most of the Google's largest advertisers are big, conventional companies with a strong cash flow, not those burning the money from investors. They really care about incrementality, efficacy, measurement and performance. Sure, you can probably burn a few million dollars without a good reason but you cannot spend x100 like that.