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Is The Google Platform A Two-Sided Market?

Author

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  • Giacomo Luchetta

Abstract

Probably not, is the short answer to that question. Unlike other platforms, such as operating systems, credit cards, or even nightclubs, where a single transaction is performed via the platform, two different transactions take place on Google. Users perform searches in exchange for personal data, while advertisers seek users' attention—to be matched with the “right” user. Whereas operating systems, credit cards, and nightclubs would cease to exist if either of the two sides were missing, search engines (rather like TV or newspapers) can exist under different market configurations. Indeed, in search engines, network externalities run only from the number of users to advertisers, not the other way around. Building upon this analysis, a non-bilateral construction of the relevant market where Google operates is proposed. Google operates as a retailer of users' personal information. In the upstream market, it buys users' personal information from large retailers and final consumers in exchange for search services, or upon monetary payment. It then uses the personal information collected to sell targeted advertising to advertisers in the downstream market. Based on this market construction, the allegations against Google are analyzed as alleged violations of competition law along this vertical chain.

Suggested Citation

  • Giacomo Luchetta, 2014. "Is The Google Platform A Two-Sided Market?," Journal of Competition Law and Economics, Oxford University Press, vol. 10(1), pages 185-207.
    • Handle: RePEc:oup:jcomle:v:10:y:2014:i:1:p:185-207.
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    File URL: http://hdl.handle.net/10.1093/joclec/nht026
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    Cited by:

    1. Jang, Sungha & Kim, Alex Jiyoung & Yoon, Jiho, 2022. "Multiple keywords management in sponsored search advertising with interrelated consumer clicks," Journal of Business Research, Elsevier, vol. 140(C), pages 459-470.
    2. Rabah Amir & Igor Evstigneev & Adriana Gama, 2021. "Oligopoly with network effects: firm-specific versus single network," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(3), pages 1203-1230, April.
    3. Cristiano Codagnone & Fabienne Abadie & Federico Biagi, 2016. "The Future of Work in the ‘Sharing Economy’. Market Efficiency and Equitable Opportunities or Unfair Precarisation?," JRC Research Reports JRC101280, Joint Research Centre.
    4. Justus Haucap & Torben Stühmeier, 2016. "Competition and antitrust in Internet markets," Chapters, in: Johannes M. Bauer & Michael Latzer (ed.), Handbook on the Economics of the Internet, chapter 9, pages 183-210, Edward Elgar Publishing.
    5. Laura Dorfer, 2016. "Datenzentrische Geschäftsmodelle als neuer Geschäftsmodelltypus in der Electronic-Business-Forschung: Konzeptionelle Bezugspunkte, Klassifikation und Geschäftsmodellarchitektur," Schmalenbach Journal of Business Research, Springer, vol. 68(3), pages 307-369, August.

    More about this item

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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