
Google is not leveraging its search monopoly by giving away Android - apress
http://theorangeview.net/2011/08/google-is-not-leveraging/
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saurik
My comment is "awaiting moderation":

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I have a large farm where I grow carrots, and I have the best and largest land
for growing them. As the entire ecosystem I am in is built on horses eating
carrots, all growth eventually turns into me making even more money: I am
flush with cash and have the worlds largest silos and most interesting farm
equipment.

Given that I have so much cash, and pretty much all the worlds strongest
farmhands work for me, I decide to "have some fun": I build "ok" stuff an give
it away for free.

I mean, sure: there's some guy out there selling buggy whips, and they are
awesome, but I can just hand our buggy whips /constantly/: they fall apart,
but they work, and many (most?) people don't care.

You could say I'm "losing money" on the buggy whips, but the fact that people
were spending that money on buggy whips is just more money they weren't
spending on carrots, so I am not losing as much as you'd think.

However, my "competitors" (do I even bother to think of them as such?... they
are pretty much ants in comparison) find it harder an harder to operate in
this environment: they need to actually make money on those whips.

Even worse, customers don't even seem to realize anymore that buggy whips have
any underlying cost: or anything else, really. People who offer buggy whips
for money are seen as "greedy", and customers even start to question why they
are paying money for saddles... some even call for me to make those for free
too (and why not: consider it done).

This turn of events is awkward, and damaging on the entire economy: I am
simply going aroun messing with every market I consider smaller than me,
messing with the incentives.

Why? Partly fun, but it is certainly difficult to discount "power" as a
contributing factor: it is a wonderful feeling to see my bran on every
product, and make everyone super reliant on me for /everything/, not kist
their carrots. Hell: people even like me more, because I'm obviously so
"altruistic".

Now, how can I do this? It is not that I have some awesome "free or freemium
business model": it is only because I have a mear monopoly on carrots. If I
had any serious competitors on carrots, their prices would be lower, as they
wouldn't be wasting cash handing people free buggy whips (and free everything
else, even stuff totally unrelated to carrots).

This /is/ leveraging a monopoly. If you can do something that accumulates
power and assets that is only possible because you have a monopoly and you
choose to actually take advantage of it, that /is/ leveraging.

Of course, it is also important to ask "is it legal?", and the answer might
very well be "yes". Bundling, a specific form of leverage that Microsoft was
using, was considered illegal, but I am not a lawyer and have no clue how
comprehensive the laws were.

But seriously: you cannot imagine that it is an efficient use of our economic
resources to have Google buying up anyone who sells something awesome
(including Android: that was an acquisition) so they can give it away for free
instead.

~~~
scottmp10
There is a difference between leveraging a monopoly to create a new offering
in a different product area (increasing competition) and leveraging it to lock
users into another of your products (decreasing competition).

By locking users into IE, Microsoft was decreasing competition. Google, by
pumping resources into Android and Chrome, is increasing competition.

~~~
saurik
You are not increasing competition if you are subsidizing that product
offering and giving it away for free: you are messing with (and sometimes even
destroying) another market.

Example: when Google gives away Google Voice service, that is a horribly bad
thing for that market. There are tons of competitors in that space that have
fundamentally better service, but competing with /free/ is so serious of a
barrier to entry in the mind of a user that you have to be like mind-
blowingly-ultra-horribly better, which isn't even really possible. Google
Voice is an aberration in the market caused by an unrelated monopoly.

