Market Model Patterns of Change

Google Monopoly

Technology and the internet have brought about many changes in nearly all facets of modern living. As a result, markets and financial systems also have felt the impacts of this massive revolution. Monopolistic trends have been witnessed in the past decade as those organizations who can capitalize on a market, or by creating a brand new market, dominate with product innovation and keen business practices

The purpose of this essays is to exaine Google as company who is exisiting and flourishing in a monopoly market. The serach engine market has produced billions of dollars of revenue for this internet company. This essay will describe the major factors that affect the degree of the competitiveness in this market that Google is currently dominating. The essay will also examine the competitive forces that are trying to vie for business share and competitive advantage in this particular market.

Signs of a Monopoly

In order to understand how a monopoly is created, the idea of competition must be understood. Perfect completion is the ideal state of the market according to many theorists where there is relative freedom of choice, entry and exit, and reasonable, but fair competition. A monopoly occurs when one single company or voice dominates and dictates a specific market.

According to a recent report, Goodwin (2013) wrote "Google is still hovering around 67% market share, while Bing has made some small gains at Yahoo's expense. Google's share of the U.S. search market held steady at 66.9% for the third straight month. Year-over-year, Google's search share remained unchanged as well, as it checked in with 66.9% search market share in October 2012. Does this percentage qualify for a monopoly? In most recent context it certainly appears to have some of the qualities of such an event.

The search engine market is a very lucrative business due to the amount of traffic and exposure these types of applications provide. Bort (2013) reported on the qualifications of Google's monopolistic stance. She wrote "Google does it. They have, dare I say, a monopoly. Microsoft is the only company on the planet still trying to compete with it." Google's reach is global. Crawford (2012) explained that "Google accounts for 80% of all Web searches in Europe. Whether or not the complaints against Google are valid, they may be looking backward. Increasingly, Google is not a search engine and is morphing into something larger."

Google's Strategic Outlook

One of the key decisions business leaders make is how to price the goods and services they offer to consumers. Prices that are too high will drive away customers, while prices that are too low make it difficult to turn a profit. The demand curve, which models consumer behavior, is one valuable tool businesses use to make pricing decisions.

Google uses ad revenue and investment capital to help fund its growing and evolving corporate framework. What makes Google unique, and most likely allows for its monopolistic stance with the search engine market, is that its product is knowledge. Demand for what the Google algorithms produce, dictate more than 2/3 the searches done globally. Google charges advertisers to promote their products during searches. The demand for Google's information is what drives the demand for advertising dollars.

Using the demand curve data, Google can choose the proper pricing strategy that aligns itself with the larger corporate strategy that is dictated by the corporate leadership. If the demand of this knowledge is inelastic, a pricing method that uses psychological pricing which takes in many of the emotional and faddish qualities of the market, to help determine what is the correct price for the ads.

Google has suffered slightly in recent years because of mobile phone technology. The growth of other Google products has helped keep the organization profitable by actually creating new technological markets such as products like Google Glass. It appears it is necessary due to the recent financial reports. Efrati (2013) reported "Search-ad prices have been declining since the fourth quarter of 2011. Analysts attribute the drop to the fact that prices for showing ads on sites that are accessed via mobile devices have long been lower than prices for ads viewed on PCs. Google executives have said repeatedly that they don't think mobile devices would hurt Google's business in the long-term."