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Market dominance of Google, Amazon, etc.: are Internet companies dictating the rules?

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  • Justus Haucap
  • Christiane Kehder
  • Christian Kersting
  • Sebastian Dworschak
  • Alexander Skipis
  • Ralf Müller-Terpitz

Abstract

Do Internet companies have a dominant market position and a radius for action that is no longer subject to competition? According to Justus Haucap, Heinrich-Heine-University Dusseldorf, and Christiane Kehder, Helmut Schmidt University / University of the Federal Armed Forces Hamburg, Google’s high proportion of generic searches and its high market share for online advertising shows some degree of market power that is based on the amount of data that Google analyses and its combination of different data. The concessions that Google made this year to the European Commission point in the right direction, however. With regard to Amazon, the online company is indeed a major player in the German book trade, but it is far from being a monopolist. The problem for the stationary book trade lies in the structural change triggered by digitisation, which is only symbolised by Amazon. Christian Kersting and Sebastian Dworschak, Heinrich Heine University Dusseldorf, do not see Google in a dominant market position. The large number of competitors, the non-existence of direct network effects, the absence of switching costs for users as well as the high pressure for innovation are evidence to the contrary. For Alexander Skipis of the German Book Trade Association, it cannot be denied that Amazon is well on its way to dominating the world e-book market in the medium term and possibly also to assuming a dominant market position in the German book market. In the e-book sector in particular, the market power of Amazon vis-à-vis book publishers is already becoming devastating and is destroying structures that ensure cultural quality and diversity. In the opinion of Ralf Müller-Terpitz, University of Mannheim, Google, Amazon etc. are seeking to design the rules of the game to their liking. But even today they are encountering legal limits as well as enforcement practices that are marked by a growing awareness of the problem and by the will to adapt the laws accordingly. European and national legislatures must observe further developments carefully and critically, they must strive to keep markets open, to secure diversity of content and to better protect the privacy of citizens.

Suggested Citation

  • Justus Haucap & Christiane Kehder & Christian Kersting & Sebastian Dworschak & Alexander Skipis & Ralf Müller-Terpitz, 2014. "Market dominance of Google, Amazon, etc.: are Internet companies dictating the rules?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(16), pages 03-14, August.
    • Handle: RePEc:ces:ifosdt:v:67:y:2014:i:16:p:03-14
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    References listed on IDEAS

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    1. Haucap Justus & Wenzel Tobias, 2011. "Wettbewerb im Internet: Was ist online anders als offline?," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 60(2), pages 200-211, August.
    2. Robert H. Bork & J. Gregory Sidak, 2012. "What Does The Chicago School Teach About Internet Search And The Antitrust Treatment Of Google?," Journal of Competition Law and Economics, Oxford University Press, vol. 8(4), pages 663-700.
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