Google or Comcast Antitrust Investigation - Essay Example

Google or Comcast Antitrust Investigation GOOGLE OR COMCAST INVESTIGATION Introduction Google is an American company that was recently investigated for alleged antitrust behavior. Google is a leading technology company based in the United States of America. A few years ago, the business entity came under scrutiny for breaching the antitrust laws. Google was accused of competing unfairly by introducing applications that were only compatible with their products. Google was also accused of colluding with Internet Service Providers. Most providers were proving the search engine as the default application, something that was considered as favoritism. The accusations did not go well with some of the industry players who felt that Google was engaging in unfair competition. Critics argued that the move was to eliminate smaller firms that did not have sufficient resources. However, the stakeholders of the two companies refuted the claims by arguing that the two organizations were in a different line of operation. The anxiety ignited the need for US department Justice to start an investigation to investigate the company for antitrust behavior. The strategic alliance between Google and other software companies was considered to be a formation of a powerful monopoly. Consequently consumer feared that the companies will introduce monopoly pricing where they could control price fixing since they had the market power (The Guardian, 2015). Consequently, Google was summoned by the European Commission for behaving like a monopoly in the Android engine market. It was alleged that Google was taking advantage of the significant market share to isolate other application developers. The case of Google was not different from that of Microsoft that was once fined a considerable amount of money by incorporating Internet Explorer with its operating system. The move had blocked other companies from competing fairly. Consequently, Google was accused of engaging in an unfair completion playing ground. Precise, the allegation leveled against were three in number. The first was the installation of the application in Smartphone without following specific procedures. The second was designing a new application to counter the other substitute products in the market and lastly bundling their products together. Conversely, Google was behaving like a monopoly something that was against the antitrust laws (Lussier & Sherman, 2013). Cost of Antitrust Behavior Google’s antitrust behavior had pecuniary cost to the customers of the firm. The clients of the organization were denied access to detailed information something that could make them make uninformed decisions. The decision also barred competition that sometimes results in better services and products. The non-pecuniary cost was Google image was tarnished something that could, in the long run, affect its profitability. One of the laws that address the issue of antitrust is the Sherman Antitrust Act. The law forbids firms from conducting businesses that do not allow fair competition. In addition, the law requires the US department of justice to investigate companies that have been alleged to be engaging in unfair competition. Furthermore, Google and Apple were found to have violated the Clayton Act where the two were sharing the board members with an intention of culminating an unfair competition (The Guardian, 2015). Firms that are found culpable of practicing antitrust behaviors find themselves in a turbulent position. For instance, after the Google was reported to the European Commission for its antitrust action, the company’s reputation was severely damaged. The image of the company was denied as a result of the legal suit. Conversely, brand image is an imperative aspect that contributes to a corporation’s profitability. The way customers perceive an organization influences its ability to generate revenues. In addition, breaching antitrust laws can have severe implications for operation. For instance, Microsoft was fined dearly for violating the antitrust law. In a court ruling, the company was forced to pay a significant amount of money for incorporating operating system with internet explorer. The court ruled that Microsoft was engaging in an uncompetitive behavior hence had to pay a penalty for the breach (The Guardian, 2015). Monopolies and Oligopolies A monopoly market has several characteristics. They enjoy the protection of the law something that drives them into unfair business activities. Monopolies take advantage of their position to fix prices. The freedom enjoyed by monopolies in setting market prices encourages them to charge higher prices than is the case in a perfect competition market. In addition, it leads diseconomies of scale. Consumers do not benefit as a result of buying products in large quantities since rationing is most prevalent in the type of market (The Guardian, 2015). The primary aspect that drives the oligopoly market is innovation. Firms operating in an oligopoly use innovation as their main tool for competition. It is imperative for the government and other relevant authorities to promote oligopolistic markets since they promote the development of technology. Technological advancement is one of the key drivers of the developed economies globally (The Guardian, 2015). Example: How monopolies Help Society Although monopolies and oligopolies have their shortcomings, it is important for the government to promote their existence. There are a number of services that need to be provided by a single business entity. Some of the common monopolies that exist in many countries include electric companies. Electricity is an essential utility in most countries. The Federal government protects such companies because of the sensitivity of the products they sell. However, some oligopolies and monopolies engage in price fixing activities something that is illegal. Those who criticize monopolies and oligopolies argue that they take advantage of their market power to fix prices. In addition, since, there are numerous barriers to entry; they may end up providing substandard goods and services. An example of a monopoly company that revolutionized the American Society is the U.S steel company. The company managed to provide massive job employments to a majority of youths who were initially unemployed (The Guardian, 2015). Conclusion Monopolies and oligopolies enjoy relative government protection. Although monopolies are the only suppliers in the market, they have a downward sloping demand curve. However, they are the price setters hence influence a movement along the demand curve. However, sometimes monopolies and oligopolies are unable to achieve and equilibrium point, something that results in a deadweight loss. In addition, the marginal cost of producing an extra unit is usually passed to the customer that leads to increased marginal revenues (The Guardian, 2015). References Lussier, R. & Sherman, H. (2013). Business, Society, and Government Essentials Strategy and Applied Ethics. Hoboken: Taylor and Francis. The Guardian, (2015).Google and Comcast Lobbying Spending Soars in First Quarter of 2015. [14.5.2015]. < http://www.theguardian.com/technology/2015/apr/21/google-comcast- lobbying-soars> Read More