by Kent Davidson

Created on: January 31, 2009

A monopoly is a company which, according to dictionary.com, has "exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices."

First, one must understand that Google made $5.7 billion dollars in net revenue in the fourth quarter of 2008, and $6.63 billion in profit for the entire year. Their primary business, for those uninitiated, is charging "per click" for those links on the right hand side of a search under the heading "Sponsored Links." Advertisers pay between $0.10 to $20 or more for a single "click" which represents a qualified web site visitor.

Compare this with its closest competitor, Yahoo!, which made $1.38 billion in net revenue in Q4 2008, and suffered a $303 million dollar loss in gross revenues. (Annual gross revenues are still to be announced at writing.)

Consider this: Google receives 72% of all Internet searches, compared to 17.8% for Yahoo, and 5.5% for Microsoft. And, Google shows ads for almost half of Internet searches performed on its site.

Is Google a monopoly? Of course not. Is Microsoft a monopoly? Of course not. But they both are near-monopolies.

A monopoly has relevance when it pertains to a few things for consumers and businesses alike:

- The lack of any choice in choosing a vendor for a particular service
- The consolidation of power into the hands of a single entity with whom we must trust

So, given the above, where does Google stand?

For example, say I am a small business owner who wishes to attract customers to my web store. I would consider doing pay-per-click marketing and have a choice of Google AdWords, Yahoo! Search Marketing, or Microsoft Advertising AdCenter (a.k.a. MSN AdCenter), and some smaller players.

Given a limited budget and limited time to manage my advertising, which one would you choose? 72% of the market? Or 17%?

Now, let's change the scenario and we're a large company which wants to attract more customers: Would you NOT advertise on Google?

I think the "choices" above (or lack thereof) shows that Google is a near monopoly. In short, you have to advertise on Google to play in their space, because they are the dominant player in the market. You have no choice.

Now consider the volume of online traffic that Google "sees" through its servers:

- Google sees 72% of internet searches out there
- Any site which uses AdSense (which are those "Ads by Google"), including this site
- Any site which uses their free analytics (formerly Urchin, now Google Analytics)
- Any

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