You say it “had to buy out YouTube,” which makes me think I need to add an eighth reason: the ability and propensity of the dominant search engine to buy up competitors. I think the AltSearchEngine blog has documented that process.

You make lists of factors that might explain why Google’s search success is illegitimate, phrase them in unfalsifiable ways, and conclude that it’s “extremely difficult” for any competitor to dislodge Google. So it is, as the last decade has shown, but you haven’t given a good reason to budge from the default hypothesis that Google is beating its competitors because it offers better search.

In the case of Google, it provides a platform for general search. The platform is used by two groups, eyeballs and advertisers. Currently, Google absorbs all the costs for the eyeballs and charges the advertisers to use the platform. That works great for Google as long as general search is the only game in town. That is the case today.

But what about market fragmentation and substitution effects? Is general search the be all and end all for the rest of human history? I doubt it. Is Google going to fragment the market itself, personalized search not withstanding. I doubt it. People will seek out and the market will provide other types of search. The market for general search won’t disappear but it will shrink. What happens to Google if they control one hundred percent of a shrinking two sided market. The cost per eyeball increases. At the same time, the value of Google to advertisers decreases. So Google will find itself in a position where its cost per unit(eyeballs) increase as its revenue(ads) decreases; a very bad position to be in.

This situation does not require a killer app to happen. It just requires the market to become more fragmented and for eyeballs to spend more time in the fragments and less time in general search.

This is not unprecedented. ABC, NBC, and CBS owned all the television eyeballs once and they sufferred horribly with the market fragmentation which Cable TV created.

I still concur that Google will never be bested in the general search market. I think it will matter less and less as the market for general search matters less and less.

If Google keeps trade secrets in lieu of patents; that’s a weakness. As employees leave to start their own companies or work for others, those secrets leave with them. Businesses that keep a process secret do so, mostly, to hide the fact that they stole the secret in the first place; oftentimes from a competitor’s former employees.

Again, I would be very interested in knowing the name of any business that openly prefers trade secrets to patent protected processes or products.

I didn’t address two sided markets. I said that all market participants in any market face hurdles and all will ultimately fail. This is historically/empirically true. It is also empirically true that all industries and markets tend toward monopoly over time and then stay that way. My statement gave merely the what, not the why.

I think two sided market theory explains why, in certain markets, monopolists or oligopolists stay monopolists or oligopolists. But, it doesn’t really say how they got to be monopolies or oligopolies in the first place. How do you get to the critical mass where the network effects work to your benefit?

Very few markets start off two sided unless the government sets them up that way, like telephone or broadcasting. The network effects don’t happen until after hegemony over a market has been achieved. What happens between the birth of a market and that hegemony has never been explained to my satisfaction. My own theory is that luck and pluck plays the largest role. Of course, in academia, chalking causality up to chance is never an adequate explanation unless you are an evolutionary biologist or cosmologist.

Also, you say “Everyone, everywhere files for a patent if they can.” This flies in the face of virtually everything on trade secrecy I’ve read. There are many industries where a TS is preferred to a patent because of its potentially indefinite duration.

A market starts with several participants or competitors. Markets, functionally, do only one thing; which is to discipline competitors. By discipline, I mean drive the competitors out of business. Markets, left unchecked, drive all competitors out; save one – a monopoly, or a few – oligopoly. Monopoly and oligopoly are always and everywhere the eventual outcome, as well as the mark of a mature industry. Eventually, the industry and the remaining competitors disappear altogether because they or the industry become economically irrelevant Deductively, one can argue this point but it is empirically true. All businesses either die/go bankrupt, or are consumed/acquired by other businesses. Take a look at the Dow Index companies for each decade since 1900 and see what I mean.

The reason that Google will not face competition in the general search market is because market discipline has driven all of the competitors out of the business of general search. General Search is now a mature industry. After a mere decade, you can put a fork in it, it’s completely done. No mature market has ever seen new entrants successfully compete without government intervention(Take Airbus as an example in the civil aircraft industry).

Going forward Google will become increasingly irrelevant, unless Google can effectively provide products for a search market that becomes more segmented and more diversified. I don’t know how long it will take, but it will happen. The diversification of search is already happening.

Presently, Google is hamstrung by a mentality and a desire to dominate general search. There is nothing left to dominate. Personally, I believe, Google is too big and too institutionally calcified to shift gears and do anything else efficiently or effectively.

On a side note, I find the assertion that trade secrets are an effective way to stifle your competitors silly. It is both inductively and deductively untrue. No company, anywhere, would prefer keeping a trade secret to a patent. Everyone, everywhere files for a patent if they can. I would be very interested in knowing the name of one company that prefers a trade secret to a patent. Furthermore, trade secrets, make no sense since they are impossible to keep. Trade secrets can be lost or stolen and since they lack the protection of a patent, you have no legal recourse to get them back.