Following on the previous post ‘How Increased Monopolies Could Explain Low Interest Rates‘, this post by Seth Godin about Google ‘The Google tax‘ provides another interesting perspective.
Seth Godin notes that usage of Google creates a double whammy taxation for people and companies that try to sell through this portal (that is, anyone who tries to have an internet presence). First, companies will have to pay for adds to be more visible than actual search results, increasing their visibility. Second, and much less visible, search results are prioritized according to a certain algorithm that constantly changes. Staying on top of SEO (Search Engine Optimisation) costs a lot of money, having to go through specialists to permanently update one’s website to keep it visible to the world.
The point Seth Godin makes is that on the internet there is so much difference between being listed first and listed second that it is worth paying the money to remain first. And Google – and more generally all those portals that live off advertising like Facebook or Twitter – are geared to get a lot of that investment. This in effect amounts to a tax on the economy that is conveniently captured by those service providers which are in monopolistic positions thanks to the same rule: the number one gets most of the value and traffic!
Contrary to monopolies in the industrial age, which were backed by large assets, it won’t be easy to dismantle those. However it is worth doing in the long term – at some stage, this global tax will not be accepted anymore by the world.
