Competition, Innovation, and Dynamic Change in the Internet Information Search Industry

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R. Shyam Khemani, Aug 22, 2014

At the core of the widely acknowledged economic and social benefits accruing from the internet are the internet search engines such as Bing, Google, and Yahoo!, among several others. These search engines act as intermediaries by providing timely and relevant information sought by internet users, and connect those users to suppliers of various products and services.

In the development and evolution of the internet information search industry, there have been marked increases in the number of search engines as well as churning, i.e., entry-exit and changes in their respective ranks. This is to be expected in new, dynamic, fast-changing and innovative industries, especially as the internet and related service providers are generally viewed as still being in the “infancy” stage of development. Without this dynamic competitive process (which the Austrian economist, Joseph Schumpeter termed “creative destruction”), there would be less or no technological change and progress. During any given time period, some firm(s) are likely to emerge as leader(s), while others may decline in their market position or exit. This process is especially characteristic of the internet search engine industry.

Google has emerged as a leading internet search engine in several countries. Various allegations of anticompetitive practices have prompted investigations by different competition auth…

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