What wondrous consistency from Ritchie

As in, what consistency from Ritchie?

The reality is that Google is a natural monopoly in the age of IT. That monopoly exists solely because of the state granted privilege endowed by patent law, in particular. These now permit it to collect the most phenomenal income in excess of any costs, with the income being determined by it pretty much at will since it is impossible to argue that market forces really operate within its advertising space. This monopoly pricing then creates what an economist would call a rent in the form of excess profits that it now intends to use to spread its tentacles where it will. No doubt its untaxed offshore funds will help it do just that: in fact they may drive the policy.

This is not benign.

Nor is it to be passively accepted.

This from the man who complains that companies aren’t investing in anything with their cash.

So, if you do go and do long term high risk research with your cash you’re spreading your tentacles and thus must be controlled. If you don’t, giving the cash back to shareholders or just sitting on it, then you’ve got to be taxed and controlled because you, umm, should be spreading your tentacles.

Maybe the consistency is just that every company should damn well do what Ritchie damn well tells them to?

BTW, Google doesn’t have a monopoly even on search advertising (55-60% of a market is not a monopoly), it’s also not patent protected, or rather the reason for their dominance (note, not monopoly) isn’t patent protection but network effects.

Corbynism is going to be fun, isn’t it?

26 thoughts on “What wondrous consistency from Ritchie”

  1. That monopoly exists solely because of the state granted privilege endowed by patent law, in particular.

    This sounds like bullshit. I understand that Google’s rise came about because its search algorithm was better than anybody else’s (they certainly weren’t the first to the party) and they also dispensed with the stupid portal thing that the likes of AltaVista thought was the way the internet ought to work. I doubt that Google’s algorithm is protected by patent law, rather that it is simply a corporate secret and is anyway constantly changing. There is nothing stopping another company coming up with its own algorithm and displacing Google.

  2. Depends on the country (0% in China, 50% in Czech, maybe 90% here and so on). But I said “search advertising” which is the revenue earner.

  3. All this talk of tentacles is discriminatory cephalopodophobia. Shame on Ritchie.

    @Tim, Maybe google used to have the best search algorithm. These days I do a silly dance every time it finds anything other than “seven things you didn’t know about” content farm shite.

  4. “These now permit it to collect the most phenomenal income in excess of any costs”

    Well, yesssss, any business to be sustainable should seek to collect income in excess of costs.

    And a quick search shows that Google has precious few granted patents in Europe claiming anything even remotely related to search advertising.

  5. Most of Google’s patents relate to its Android operating system, which it makes freely available so doesn’t directly make any money from it.

    They did this to counter Apple and its iPhone which is a closed operating system which only accepts Appley things.

    Once again, Murphy’s knowledge of the IT industry shows huge gaps.

  6. There seem to be an awful lot of “natural monopolies” out there at the moment. Maybe Richie wants to nationalise it. It would be amusing to see Richie in charge, bossing around lots of very bright computer programmers in that pompous, angry and entirely ignorant way of his.

  7. Making laws is really hard, as the last few generations of judges (yes, judges making laws, eh?) and politicians have found. The socialist (or facist, according to your view) way is far easier.

    Make your mind up on each individual case as it comes to your attention.

    Co-Op good, Barclays bad.

  8. If they’re a natural monopoly then they’re not very good at it, not having much more than half the market for which they are supposedly “monopolists”.

    Highly unnatural, if you ask me…

  9. AndrewC

    Excellent post – the beauty of the third line is you could insert almost any industry and it would be true – Food, construction, finance, retail, advertising……. (the list is almost endless) His ignorance is without limit.

  10. I’ll ask this question from my own position of ignorance on the search engine markets:

    – there is a choice of search engines available
    – each offers advertising
    – Google appears to achieve the most revenue from advertising

    Doesn’t this show that those buying the advertising are doing so where they think it will be most successful and will get the largest audience?

  11. @V_P

    I think Murphy operates a ‘closed operating system’ himself. Closed to most knowledge in general and any knowledge in particular that counters his pre-determined view of how the world works.

  12. Tim: Ritchie doesn’t have a clue about IT and thus has zero chance of understanding the modern world.
    So why not leave him barking in the night & find someone more interesting to rag on?

  13. @JeremyT

    Because Murphy is well and truly dangerous. He sells economic and tax ideas that have a wafer thin veneer of respectability to people who want to believe what he says because it fits their political prejudices. It would be a disaster for the UK if his policies ever came anywhere near reality.

    Pointing out his endless examples of ignorance is doing public good.

    He’s also an angry fat pompous buffoon.

  14. “That monopoly exists solely because of the state granted privilege endowed by patent law, in particular”

    A few moments research shows how far wide of the truth that remark is. Up until 2007 Google had a grand total of 38 patents. 38. IBM at the time was registering over 3,000 patents every year.

    As mentioned above, Google started registering patents in number only with its development of Android which isn’t a big money spinner.

    So it’s a total mis-statement of the facts to claim Google got its position on search engines due to patents or that it relies on patents to make most of its money.

    Man’s a fucking idiot. And charities are giving him money for this level of research!!

  15. “It would be amusing to see Richie in charge, bossing around lots of very bright computer programmers in that pompous, angry and entirely ignorant way of his”

    Isn’t that what the Dilbert cartoons are about?

  16. Anyway, the man has stated in the past that the primary purpose of patents is tax avoidance.

    This would very much be news and a surprise my clients, who use them primarily for protecting their innovation. Who’d have thought it, eh? Something being used for exactly what it’s supposed to be used for……….

  17. “Isn’t that what the Dilbert cartoons are about?”

    The pointy haired boss is far too affable to be Murphy. Only on outstanding ignorance is there a parallel.

  18. Bloke not in Cymru

    Unless I’m missing the point isn’t a patent a state granted monopoly that exists to protect investors allowing innovation, so basically he thinks patents shouldn’t exist.
    While there are some issues with the current patent system, especially in U.S. I thought in economic terms it was generally seen as as a short term trade off of monopoly rights vs progress that benefits society as a whole so a good thing

  19. @BniC – that’s about right. It’s primarily to allow people to monopolise an invention for a time (otherwise why innovate if some bugger will just copy you and undercut you since he’s not sunk the same kind of R&D costs) in exchange for publishing it to the world.

    It’s also amazing how much innovation is directed towards getting around other people’s patents, or improving on them to try to obtain a cross-license to use the earlier patent. So the system drives innovation, too.

    Yes, abused (sometimes horribly, particularly in the US),,,blah blah blah, but in general the system works as intended.

  20. Bloke in Costa Rica

    This doesn’t require a great deal of exegesis beyond the standard “Murphy has seen a big chunk of money and thinks he and his fellow tax leeches should have it (the big fat cunt)”.

  21. Quite spectacular to claim in one sentence that something is a natural monopoly and in the very next to imply that it is only maintained by patents.

    These statements cannot both be true, although it is quite possible (in fact very likely) that both are false.

  22. Tim Newman,

    Google do have one big patent, the one that covers the method of using hyperlinks to determine which pages get ranked higher, known as Page Rank. They registered it and then tried to sell it to the likes of Excite and Altavista for about a million dollars. They also have some odd stuff, like the Google Image game, some stuff related to their large scale storage architecture, most of which gets patented as a matter of course (“hey, that’s cool and novel, make a patent”) but which has little value.

    But what they do now is just lock up changes to the algorithm. It’s protected by trade secrets like the Colonel’s secret recipe or the one for Pimm’s.

    If Google had stopped with just their patented tech, they’d have been fucked years ago. Google were getting gamed by link farmers at one point and changed how things work to stop link farmers. How? Dunno. There’s nothing patented about it.

  23. It’s primarily to allow people to monopolise an invention for a time (otherwise why innovate if some bugger will just copy you and undercut you since he’s not sunk the same kind of R&D costs) in exchange for publishing it to the world.

    You innovate to make money. If your competitors can trivially copy your stuff, it’s probably not really very innovative. For the rare exceptions, yes, there might be an argument for patents, but they’re massively overused today.

    In the company I used to work which registered lots of patents, as far as I could see, we did so in order to keep newer, more efficient, more innovative competitors out of the market, because they couldn’t operate without the extensive library of basic patents we’d cross-licensed with our existing competitors. It seemed entirely done to keep the cozy codependency going, since they were rapidly cross-licensed in order to gain access to our competitors’ new patents, and many of them consisted of ‘doing stuff that’s routine in some other industry, but doing it in ours’.

    Otherwise, I don’t think any of my employers ever bothered with patents. They were irrelevant when the profitable lifespan of their product was six months to a year.

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