Tuesday, July 28, 2009

Care for a Game of Monopoly?

I really am surprised at the consistent and naive idealism that consumers have in certain companies. Apple will always put out a better product than Microsoft because Apple is a company of artists and Microsoft is corporate greed. Millions of consumers would beg to differ, despite Apple's ridiculously snide "I'm a Mac" ad campaign. Those I know who do shell out for the perceived superior product have an almost religious devotion to it that has gone well past the phrase "annoying." This perception leads to what is called in economics: monopolistic competition. There can be any numbers of firms in a market place with free entry or exit, however the key difference is consumer's perception (true or not) of the product as unique. I honestly do not see the difference in a PC vs. a Mac, therefore I'm not paying a higher price. Others would disagree, and happily pay the higher price. Good for them. In this case then the firm (Apple) can behave much like a monopolist with regards to prices (it has market power to set a higher price than in a perfectly competitive situation). And of course, like all economic agents Apple will "exploit all opportunities to make themselves better off." In other words, they will lie, cheat, and steal to get the bottom line. Microsoft's competitors are indeed just as corporate, greedy, and "evil" as the company they rail against.

So now, moving away from Apple, we get to the deal with Google. Imagine my lack of surprise to hear the outcry over the beginnings of anti-trust investigations into Google from the Google devotees. Let me be up front first of all: I love googling. I love the product google puts out. My wife will tell you that I check G-mail obsessively, and part of that obsession is all the cool gadgets. I tried out Chrome, which I think can be great in a couple of years, but for now I prefer Firefox. I blog on google. So I am a Google consumer through and through. But I do not buy this "we do not do evil" crap they send out. Allowing the Chinese to censor your websites pretty much falls under that definition of "evil", especially when let's face it: you did it to increase your consumer base. The more users you have, the larger your revenue. You are just as greedy and profit maximizing as Microsoft. They make a product, they want to sell that product to as many as possible, and they do it well. To assume that Google will follow this "Trust us" idealism forever is just stupidity, and shame on Google for thinking that they can get away with that, especially when they're now actually boxing their weight.

So am I upset that Google is being investigated for antitrust? Nah. Welcome to the party, Google. It was not anti-trust lawsuits that broke Microsoft, but the consistent competition of innovative and aggressive firms like yourselves. And now that you're the top, guess what? You've got the target on your back. You already let the Chinese government meddle in your business practices, so you might as well prepare to deal with the US. At least with the US you can hire good lawyers and after a decade or two of legal battles with companies who are accusing you of being the next great Satan, and still come out with your product intact. Kudos. Plus when you deal with the US, you don't have that whole issue of your conscience bothering you about censoring Chinese dissidents for a corrupt and totalitarian regime. But I bet all that money does help you sleep at night.

Do I think Google should be investigated for antitrust? About as much as I think Microsoft should have been. Again, let me be clear: the government did not save us all from Microsoft. It was the innovation and hard work of Apple (as much as I just bad mouthed them, they really did do their part in helping consumers by competing), Google, Yahoo, and others. Netscape can kiss my butt, for their wussiness and running to big brother at the hint of blood in the water. Honestly it was a bad browser to begin with, and if they were doing so poorly how the heck did they manage to hire those attorneys? Google and Apple did it right: they brought out different and competitive products that cut into Microsoft's market share and profits in a fair way, which benefited the consumer. Maybe certain other American companies who cry foul (and protection) every time the Japanese make a better product should take note.

So bring the pain, US government. Google is just one more firm which provides a service, and is neither above nor below its competitors: they have to play by the same rules as the rest of the greedy capitalists. Do I think the US government will waste taxpayer money in a lawsuit that will come to nothing, especially when fifteen years down the line Google will be the aging giant facing off against another young upstart? Oh yeah. But at least I can enjoy the show of the fan boys squirming as the computer age increasingly disillusions us all to the idealism leftover from the 1990s.

Seriously though... do American consumers really buy this moral high ground that Google advertises? I guess if they bought the "What's good for GM is good for America" line, they would buy this too.

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