Earlier this week the European Parliament voted to break up Google after an ongoing investigation by the antitrust commission into the tech giant’s monopoly on internet searches in Europe. Of course, the European Parliament lacks the power to break up the US-based company, but Google could face fines up to $5 billion if it’s determined Google uses its position to maintain dominance (hurt competitors) and hurt consumers. You may be wondering how the dominance in the search engine industry could be viewed as a typical monopoly, but search engines are by the far the most valuable form of web-based advertising available.
As shown above, Google receives 55% of the world’s digital advertising revenue, and a significant factor is its control of the European market. Surprisingly, Yahoo and Bing actually account for approximately 30% of the search market in the US, leaving Google less than 70%. However, in Europe Google controls over 90% of the industry, which gives it dominance in online advertising.
There are many ways a firm can become a monopolist, and in the case of search engines Google has been better managed and outmaneuvered its competitors, often being on the forefront of innovation. Google has chosen not to remain only in the search engine industry and to expand its base. Google’s expansion means that breaking it up is extremely difficult, and the European Parliament also lacks the authority to break up an American company. Finally, breaking up the tech giant could hurt consumers by lowering the quality of the search engine (assuming Google chooses to break up its assets from Europe).