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Antitrust Practices and Market Power
The modern business environment is increasingly characterized by the proliferation of emerging monopolies in various industries. One of the industries that have experienced an increase in budding monopolies is Information Technology, particularly with the growth and development of social media and networks. Technology companies have rapidly developed into monopolies because of the connection between attractive business opportunities. The growth of leading technology companies into monopolies has also been fueled by their efforts to gain and maintain market power. However, some of these companies such as Google, AT&T, Standard Oil, Microsoft, and Facebook have been investigated for antitrust behavior.
Similar to Google, Facebook is company whose growth and development is partly attributed to the failure by Microsoft to strangle it like it did to Netscape a decade before. Facebook's business and operations are entirely built on focusing on developing network effects since the firm's value for users is dependent on the presence of other users. The company developed into a monopoly because of the increase in the costs of switching to another network. Even though it has not been the target of considerable antitrust attention, Facebook was recently investigated for antitrust behavior. The company agreed...
Google's antitrust investigations were fueled by allegations that the firm was abusing its dominant market position or market power in Internet searches (European Commission, 2014). The company was accused of unfair treatment of its services in unpaid and sponsored search results as well as preferential placement of its own services.
The antitrust investigations on Google and Facebook were fueled by alleged violation of some antitrust laws like the Sherman Act and Clayton Act. Generally, antitrust laws are enacted to prohibit illegal and unfair business practices and help in limiting the presence of monopolies for any industry or sector. Google's antitrust investigations were fueled by violation of European Union regulations i.e. Article 102 TFEU in some of its operations (European Commission, 2014). Facebook and Google were also investigation for violation of the Sherman Act and Clayton Act, which prohibit attempts by any firm to monopolize and efforts to stifle competition respectively.
The antitrust behavior i.e. firms having power in the market is associated with some pecuniary and non-pecuniary costs. The pecuniary costs are mainly associated with the penalties the company…
References
European Commission (2014, October 24). Antitrust: Commission Probes Allegations of Antitrust Violations by Google. Retrieved November 13, 2014, from http://europa.eu/rapid/press-release_IP-10-1624_en.htm
Fox, J. (2013, January). The Web's New Monopolies. Atlantic Monthly, 30-34.
Windrum, P. (n.d.). Back from the Brink: Microsoft and the Strategic Use of Standards in the Browser Wars. Retrieved November 13, 2014, from http://arno.unimaas.nl/show.cgi?fid=292
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