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Comment by ricardo81 | Hacker News Reader

The UK recently evaluated the online ad market and found that Google and Facebook commanded 70% of all online ad spend in the country [0].

Their large pool of advertisers also helps them command a higher return per search compared to other platforms, allowing them to outbid its peers to become the default search choice on devices, e.g. Apple products. Their lack of privacy sensitive policy also helps their ad targeting.

Generally to me it seems hard for new entrants to make any inroads for market share when there's a self-perpetuating cycle like that.

[0] https://www.gov.uk/government/news/cma-lifts-the-lid-on-digi...

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Fb could disrupt google because it had the impressions first, so that is the dimension to think about. Adspend and advertiser pool is a by product. Disclaimer: current fb, ex google employee.

Fb is also a problem, so relying on them isn't going to solve anything. A cartel or oligopoly is not a better situation than a monopoly. For there to be a healthy market, it needs to be possible for small business to compete. If that's not possible in a market, then it needs to be regulated like a public utility.

> If that's not possible in a market, then it needs to be regulated like a public utility.

What I don't understand here is does this not just hand Google the monopoly but now with government protection? Because they're already in place, so who's gonna offer this public utility?

We see similar situations with, e.g. cellular carriers in the states, where wherever you live, you only get not-even-a-handful of choices.

And how does a country regulate an international "utility"? For Google to maintain its global position, it needs to consider not just local regulations, but also those in international markets. Public utilities so far have always had a limited area of operation.

I could imagine ads being run like a utility from a purely technological pov. I'm not sure I like that image however, nor do I think it has any chance of happening as all major companies would sabotage it.

but back to the original idea of it being a utility: Ads are imo user hostile and harmful to a society. They do work, which make them invaluable in capitalism... But they're effectively mass manipulation. I don't think we will ever be rid of them, but a world in which this is considered a utility is extremely dark imo

Regulation like a utility doesn't mean their has to be only one gatekeeper. It could just more rules once one becomes so dominant they are a defacto gatekeeper.

Doubtful this would be done in the same way everywhere. Though big markets like the EU or US may regulate at the federal/union level to ease the burden on interstate commerce.

It really depends on what the regulation is. If it's something to the effect of making a siloed company for AdWords that needs to offer FRAND terms to everyone, plus Alphabet is bared from doing its own ads, and has to contract it out, then AdWords Inc could gather more of the market and become even more dominant. This would still be a win, because the new, more dominant, advertising platform would not have any other businesses to anticompetitively promote. Maybe you would get competitors offering different terms, but that's probably wishful thinking.

A company that operates in a jurisdiction is regulatable by that jurisdiction. In this case, if Google weren't physically present, you sanction advertisers and local sites that use the ad service. In cases where there's no economic connection, the option is to force ISPs not to carry that traffic (and all the cat and mouse that entails).

Also, a lot of mobile carriers are international companies. In each country, they follow the local regulations. They have some economies of scale that may make it easier to compete with a network that's only in one country, but it depends on the size of that country how big the effect is.

Facebook has the impressions because in many countries they have a de-facto monopoly in social networking, which has become a large part of all web trafic. Google will cover the rest of the net almost unchallenged. So it's not even a duopoly, it's a segmented monopoly.

I'd think that if someone has the intention to buy but doesn't have a site in mind, they'll usually use Google: like "best mortgage rates" or "american girl doll clothes". I can see FB ads being better for raising interest in a product to a targeted demographic, but I'd assume that the Google ads that are very close to the point of sale are much more valuable. What am I missing?

It's 2 different things to me. Buying an ad on Facebook is an attempt to get a specific ad campaign in front of specific users without the user specifically requesting it. Buying an ad on Google means getting your advertised item in front of a user as a result from a user's search. Either way, the user is now just one click away from getting to your advertised product, so I'm not seeing how Google is any closer than Facebook is. Facebook is passively placing your ad in front of a user, where Google's is active from the point of view of the user's actions. That's just for ad placement within the Google Search. I'm sure Google is doing the same passive ad placement in its other ad distribution arms.

Every company is a monopoly based on how you define the market. Why should we focus only on online ads ? Why not look at the entire ad spend and then see what % is controlled by Google ?

By some logic the coffee shop in my block has a monopoly on coffee if their market is the block. They are irrelevant if you look at the entire city.

That's too relativistic. If only AMZN, GOOG, and FB gain during coronavirus, this clearly means there's need for action considering the perspective of online-only advertising going forward. Especially if the success of TikTok as the only competitor in the space has resulted in government influence.

That sounds like an attempt to maintain "never my fault" consistency akin to stating we need to beat all people at traffic stops instead of admitting that beating people at traffic stops to look good on crime in the first place was criminally wrong.

Not sure if I understand what you're saying, but it's not about criminal law, whether anyone did something wrong, or punishment; rather it's about maintaining market access.

What I am saying is that Tiktok's treatment was clear capricious abuse of power and shouldn't be taken as a standard or baseline.

Which is why market definition requires you to look at substitution. If there is another coffee shop two blocks away and your coffee shop raised prices significantly, people would start going to the other one, because they're strong substitutes for one another. Whereas if the nearest coffee shop was twenty blocks away, likely they wouldn't, because that's too far to walk and it doesn't make sense to pay $2.75 to ride the subway to save $1.50 on a cup of coffee. So the block is too small but the whole city is too big.

> Why not look at the entire ad spend and then see what % is controlled by Google ?

Because they would be reaching different customers, such that if the advertiser moved a dollar from e.g. online to print, they would lose customers, because the print viewers have already seen their ad from the existing print advertising they do, and the online viewers (who are different people) haven't. Which means they aren't adequate substitutes for one another.

Being a monopoly is actually irrelevant. The anti-trust law in the US focuses on regulating anti-competitive business practices. You can implement anti-competitive business practices with any portion of the market, and you can have an outright monopoly without implementing any anti-competitive practices (and therefor without breaking the law).

But to successfully implement anti-competitive practices, you do usually need a significant portion of market share. Which is pretty much what’s being discussed here, even though it’s not a very accurate use of the word. You can also do it by acting as a cartel, which is another situation commonly (though not very accurately) described as a monopoly.

Bizarre that you are equivocating a local coffee shop to online advertising; the emergence of which gutted the magazine industry, severely damaged and forever changed print news, and was single-handedly responsible for pushing Alphabet and Facebook into the Fortune 50.

Even in that extreme hypothetical I’m not sure it would be considered a monopoly - is there a convenience store on the block? A grocery store? A bakery? The market for “coffee on a given block” isn’t limited to coffee shops.

The only way to have competition is if FB started a search engine or if google bought instagram

FB may already be backing their way into search:

https://www.engadget.com/facebook-test-adds-wikipedia-search...

backing into? They've had a search box for ages and they've consistently tried to make sure all content is on their platform (rather than hosted elsewhere).

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