Blog
The economics of Google
6th April 2010
There is some really smart and interesting microeconomics in this super piece on the economics of google and the battle to create revenue and profit streams from buying the hardware and software to access the web and then monetising the content. A hat tip to Chris Anderson (of Long Tail and Freemium fame) for spotting this super piece
“Google Docs is an attempt to reduce the Microsoft tax. Android is an attempt to reduce the Apple tax. Google’s participation in the spectrum auction a couple years ago was an attempt to reduce phone carrier market power. Google Voice is the next iteration of that attempt. Ditto for selling phones without contracts. Google Buzz is an attempt to disrupt Facebook’s market power. Google’s recent plans to build a fiber network is an attempt to go after local ISP monopolies.”
“Google doesn’t have to dominate any of these industries to be successful, provided that they dominate content monetization. They merely have to make these industries more competitive, lowering the barriers to consuming a lot of content online.”
Reducing barriers to entry to lower the advantages and profit streams of businesses at the top of the web stream ..... a good example of making markets more contestable but with the aim of increasing the returns from monetising search content when consumers access the web through every kind of device.
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Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.