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  • When is a big company too big?

  • In July, the European Commission fined Google a record-breaking $5 billion for violating EU antitrust rules.

  • It said Google had abused its power in the mobile phone market with Android devices.

  • It wasn't the first time Google faced an antitrust fine, and it might not be the last.

  • Let's start by trying to understand what a monopoly is. The dictionary says it's:

  • "a company or group having exclusive control over a commodity or service."

  • In other words, it's the only seller in a market.

  • We've seen plenty of famous monopolies throughout history,

  • from Standard Oil in the 1890s to Microsoft in the 1980s.

  • There are a few common things that happen when there's a monopoly,

  • barriers to enter a market, a lack of competition, unfair advantages, control over prices and, often, regulation.

  • Here's what happened with Standard Oil Trust in the nineteenth century.

  • Around 1880, the company controlled roughly 90% of U.S. oil production.

  • It bought out smaller companies and had nearly total control over prices for consumers.

  • This worried regulators.

  • By 1911 the Supreme Court decided Standard Oil had to be broken up in a landmark antitrust ruling.

  • So is Google a modern-day monopoly like Standard Oil?

  • The European Commission thinks so, at least in certain parts of its business.

  • Here's where Google got in trouble with its Android operating system.

  • Android runs more than 80% of the world's mobile devices like smartphones today.

  • EU regulators said Google forced these device makers to pre-install Google apps like Search and Chrome,

  • making it more difficult for competing apps to gain traction.

  • The EU ordered Google to unbundle its apps from Android devices, which it recently agreed to do.

  • This wasn't the only time the EU hit Google for breaking antitrust rules.

  • In 2017, regulators fined the company $2.7 billion for abusing its dominance in the search market.

  • Google's search engine has around 90% of market share in Europe.

  • The European Commission said the company abused its dominance in the search market

  • by giving its comparison shopping service an illegal advantage over rivals.

  • Let's say I was looking for a new pair of headphones.

  • Google's comparison shopping service listed a bunch of options at the top of the page.

  • It was much more likely I'd click on those top results, generating revenue for Google

  • and not a rival comparison shopping service further down the page.

  • Yelp, for example, has complained to the EU that Google unfairly promotes its own search results,

  • making it less likely users will click on other listings and reviews.

  • The risk is that Google is stifling innovation and competition.

  • One thing to note is that it's not illegal just to be a monopoly here in the EU.

  • It's when monopolies abuse their power at the expense of consumers that they can start to get in trouble.

  • Here's where it gets tricky with Google.

  • It says it actually helps consumers by having a dominant position in the market.

  • CEO Sundar Pichai argues Android's operating system creates more choices for consumers at an affordable price.

  • This where Google's monopoly is a little bit different than historical examples like Standard Oil.

  • Unlike oil, the services that Google provides are mostly free.

  • It can be hard to see how Google's dominance is harming consumers

  • when many of us can't imagine life without Google Maps or Search, apps that are free.

  • So far the European Union has taken a lead when it comes to regulating big tech.

  • The full EU fines are still a small portion of Google's overall revenue.

  • But if more regulators start trust-busting, the bills could add up.

  • Hey everyone, Elizabeth here. Thanks so much for watching our video.

  • Let us know if you have any other ideas for CNBC Explains in the comment section.

  • And check out all of other videos over here. Talk to you later!

When is a big company too big?

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Googleは独占状態なのか?| Googleは独占状態なのか|CNBCが解説 (Is Google a monopoly? | CNBC Explains)

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    Jessieeee に公開 2021 年 01 月 14 日
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