Business Economics

Presentation
Monopoly

The Group Members are

Umer

Khalid
Mohib Ullah Chohan
Syed Muhammad Raza
Saad Shafique Shami
Syed Muhammad Abbas Kirmani

Umer Khalid
Paper Title to be Presented

Self Regulating Public Servant, Profitable Internet Innovator or

Rapacious Monopoly by Eric K Clemons, Steve Barnett, Rajiv Gokal,
Karl Hu and Nehal Madhani Published in Proceedings of the 43rd
Hawaii International Conference
Refrences

Brunger, B., Clemons, E. K., and Young, D. J.Fighting back with the Long Tail: Linking Product and Distribution Strategies in
the Travel Industry, Cutter IT Journal, Vol. 20, No. 4, April 2007.
Steel, E. "Google Search Ads Rile Its Big Customers", The Wall Street Journal, June 3, 2008; p. B1
Brunger, B., Clemons, E. K., and Young, D. J. Fighting back with the Long Tail: Linking Product and Distribution Strategies
in the Travel Industry, Cutter IT Journal, Vol. 20, No. 4, April 2007.
Clemons, E. K., What an Anti-Trust Case Against Google Might Look Like, TechCrunch.com, March 1, 2009,
www.techcrunch.com/2009/03/01/what-an-antitrustcase-against-google-might-look-like/.

Google as A Company

60% market share and 80% profits

Top internet Giant

Part of a company now called Alphabet

Biggest business is search engine and ads distribution

Over 24 other products than its core business which is search and advertisment

Three Question Arises ??

How Popular is Google ?
Is Google a Monopoly ?
Is Google abusing monopoly power and consumers are harmed by it ?

How Popular is Google ?

In 2009 Google earned 4th spot in Fortune's list of most admired companies

In 2007 Google was on spot no. 1 as best companies to work for

Clearly by any measure Google is popular company and believes that this
may help deter or soften antitrust (against monopoly) action.

Is Google Abusing Monopoly Power and are consumers

Harmed ?

Corporations have been overcharged for Googles services due to its sponsor
advertisement resulting in higher price paid by consumer.

Consumers have been confused by sponsored search and have purchased

inferior goods

Consumers confused by sponsor ads have bought goods through a channel

that adds extra cost

Cross subsidies may blocked entry in a range of markets which withheld

innovation and consumer choice, ultimately enabling additional monopolies
going forward.

Is Google a Monopoly ?
In electronic distribution it is not necessary to be a monopoly to have monopoly
power.
Google brilliantly choose to misrepresent itself as advertising company while it is
a distribution company
For example in 1980 American Airlines Sabre and United Airlines Apollo
computerized reservation system dominated market for airline ticket booking.
While they had only 43% and 27 % airline market share they were the ones who
booked all other airline tickets. So any airline company they kicked out of their
system went bankrupt overnight.
At one time American airline due to Apollo was earning more profits from Delta
reservation then was Delta earning from operating flights
As a advertisement distribution company Google is a Monopoly
Google earns its major revenue from targeted ads and subsidize its other products
so it can charge monopoly prices when no competitors are left in the market

Conclusion

The meaning of Monopoly markets have changed in this era of internet and
technology

This is the era of distribution company and what these companies give
visibility to is top brand.

Google sponsored search can have a serious effect on sales of corporations

In this era of fast rise internet companies cross subsidizes have to be

thwarted or this will stifle innovation and consumer choice. (Sherman Act)

Google has caused consumer to pay higher fees for good terming it
advertisement.

As Google has huge piles of liquid cash it can at any time outset small
innovative companies or buy them to create a monopoly in a niche it sees fit.

Google has caused high cost of business and barriers of entry due to cross
subsidies which are identity of monopolist market.

Syed Muhammad Abbas Kirmani

Case Study to be Presented

Forever: De Beers and U.S Antitrust Law by Debora Spar by Harvard

Business Review September 2002

 History

Scarce sources of diamond only in riverbeds of India and jungles of Brazil

diamonds were rare

Accidental discovery of diamonds in South Africa in 1866

Formation of De Beers Mining Company by Cecil Rhodes in 1880 (by 1887 he had
bought all the major mines)

Rhodes wanted to control the production and distribution

Diamond Syndicate was formed in 1890 (all members pledged to buy from Rhodes,
sell at specific quantities and prices). Cartel was in place.

Evolution of the Cartel

Ernest Oppenheimer of Anglo-American forged permanent links between

producers and distributors.

Other diamond-producing states sold rough diamonds only to De Beers

at De Beers price (stable prices, guaranteed purchase for those
companies)

Central Selling Organization (CSO) in London was the main distribution

point for the world diamond trade. De Beers Sightholder Sales were held
with elite merchants (no cherry-picking of stones)

Stockpiling, Oppenheimer empire and the US Antitrust Law.

Threats from Zaire (small industrial grade stones) and Russia ($1 billion loan to
Gorbachev govt. for stockpile)

1997 Asian crisis (Japan sales fell from 33% to 18% of the total world market)

Relative importance of the US market grew from 30% to 46% of retail diamond sales

Depressed De Beerss sales and a reduced share price (start of 1998 De Beers was selling
down 45% from a high just six months ago)

A new wave of value investors from the US saw an opportunity for financial gain

80% of worlds rough production of diamonds fell to 60% in 100 years with a $4.8
billion stockpile (end of 1998)

The power of the brand shift in strategy towards branding, high-end fashion
accessories and the reduction of stockpile.

Speech by Nicky Oppenheimer in 1999 at Harvard Business School

A review of the US Antitrust Laws and the Department of Justice

Economic development of South Africa by discovery of diamonds

Namibia: 40% of countrys foreign exchange earnings are through diamonds

Botswana as Africas success story. After the startup of the Orapa mine the economy
grew at an average rate of 14.5% per annum.

75% of the diamonds come from Africa and 46% of the worlds diamonds are sold in the
US, where De Beers cannot do direct business.

America wants a strong South Africa. America needs a strong South Africa. President
Clinton.

De Beers, a truly African company, should be part of any effort involving by the USA to
use diamonds to help the renaissance of Africa. Nicky Oppemheimer

Saad Shafique Shami

Paper Title to be Presented

Has Apple Finally Become a Monopoly Like Microsoft? By James

R. Stoup

Refrences
http://www.applematters.com/article/has_apple_finally_become_a_monopoly_lik
e_microsoft/

Is Microsoft a Monopoly?

A situation in which a single company owns all or nearly

all of the market for a given type of product or service

Microsoft had, and continues to maintain, a monopoly in

the operating system mark

However, this doesnt automatically mean that they are

doing anything illegal (and before you say they are doing
something wrong remember, wrong and illegal are two
different things)

Microsoft

While it is legal to be a monopoly it is illegal to use

that monopoly to ensure your position in the market,
force smaller companies out of business or otherwise
stifle competition

They create a product that does notmaximize the

social welfare

Monopolies always stifle innovation and they always

produce an inferior product compared to what a
normal market would produce.

Apple. Are they a monopoly?

In

the area of digital music players and digital

content deliver, Yes they are

Their

80+% market-share makes them a

monopolist in this sector. Apple has reached this
position through innovation (quite unlike
Microsoft) doesnt change the fact that both
companies are monopolies.

Apple

Apple hasnt done anything illegal to maintain

their dominance. So far Apple has played by the
rules.

So far, other than producing superior products,

they have yet to do anything that would harm their
competition

They

dominate for the simple reason that they

produce the highest quality experience for the
lowest total cost.

Conclusion
Two

main differences between the Microsoft and Apple

monopolies.

Business

practices and quality of product

Microsoft

has repeatedly engaged in unlawful business

practices over the years as it fights to maintain its
dominance so far, Apple has not broken the law.

Likewise the quality of Microsofts products has fallen

as time goes on while Apple has continued to innovate
rigorously