Comment by roenxi | Hacker News Reader

Comment by roenxi | Hacker News Reader

There is a logical issue here, people are accusing Google with the line of attack that large scale gives them benefits. I've seen variants of this before:

> “It’s absolutely not true that scale is not important,” Manber wrote. “We make very good use of everything we get.”

I think that is true, but then the obvious conclusion - if one party doesn't have 90% of the market then the quality of search results will be lower. Successful anti-trust prosecutions against the party with 90% of the market will have a likely outcome of:

1) Reducing the quality of service for everyone.

2) Pushing the 90% market company to be one domiciled somewhere with more reasonable monopoly laws.

Successfully proving that more data -> more scale -> better results is actually implies that one company with 90% market share is desirable. Although I'm still not going to use Google search, I don't think that argument is correct. But the line of attack is not clever.

That’s called a natural monopoly which is a well studied phenomenon. Most commonly they are regulated as utilities with guaranteed low returns on capital and limited ability to set prices.

That isn't a natural monopoly, that is the quality of the service increasing with market share. The cost of competitors entering the market could be anything (it could easily be quite small, there are a lot of search engines, many small 1-man projects). The issue here is the quality of the product scales with market share.

With a natural monopoly, if you built 2 of them in defiance of the economics of the situation they'd have similar quality of service to the single operator.

I think you’re right on a narrow definition of price and quantity like what Wikipedia gives:

> A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming advantage over potential competitors. Specifically, an industry is a natural monopoly if the total cost of one firm, producing the total output, is lower than the total cost of two or more firms producing the entire production.

In theory pricing/output in economics is always “quality adjusted” (which is one of the hard things in inflation series)

Yes, traditionally a natural monopoly is one where if you split them, costs go up. With Google, GP is saying if you split them up quality goes down. Either way there’s “consumer harm”. (I guess very directly if the time to search goes up, the economic price of using Google goes up too)

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