MONTREAL, Sept. 25, 2012 /CNW Telbec/ - What has all the appearances of
a technological war is being transformed into a legal battle in the
case of Google in Europe and in the United States. The popular search engine must
defend itself against charges that it has abused its dominant market
position to the detriment of users, who spend 3.4% of their Internet
time using search engines. According to Marie-Josée Loiselle, associate
researcher at the Montreal Economic Institute (MEI), the case of Google and the upcoming nomination of a new Commissioner at the Competition
Bureau of Canada offer an opportunity to take stock of certain flaws in
In an Economic Note published today with the MEI, Ms. Loiselle explains that competition is
not reducible to a list of companies or their market shares. It is
rather the number of potential competitors that counts. In the highly coveted high tech sector, there
is no shortage of pretenders to the throne.
"The application of competition laws to the high tech sector is
particularly delicate, especially because of the speed at which the
sector evolves. A company can have a quasi-monopoly one moment, and a
few short years later be displaced by a new technology. That's what
happened to IBM with personal computers, and to Sony and its Walkman, and more recently to the MySpace networking site. I don't think we
should penalize a company because it revolutionizes the market and gets
consumers to flock to its new product," says the author.
Furthermore, cases of "regulatory capture" can occur when less efficient
industry players try to fight a dominant company using the legal system
instead of doing so by reducing their prices or offering better
products. This has the consequence of distracting the company from its
innovative activities since it must pay out large sums of money to
defend itself before the courts. At the end of the day, the real losers
from such a slowdown in innovation are consumers.
The Economic Note entitled Flawed Competition Laws: The Case of Google was prepared by Marie-Josée Loiselle, associate researcher at the MEI.
It can be consulted free of charge at iedm.org.
The Montreal Economic Institute is an independent, non-partisan,
not-for-profit research and educational organization. Through its
publications and conferences, the MEI stimulates debate on public
policies in Quebec and across Canada by proposing wealth-creating
reforms based on market mechanisms.
SOURCE: MONTREAL ECONOMIC INSTITUTE
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Ariane Gauthier, communications coordinator, Montreal Economic Institute
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