Peter Thiel: Google Is A Monopoly (And It's A Good Thing)

In his new book "Zero to One," PayPal cofounder, billionaire tech investor, and suit-hater Peter Thiel argues that Google is a monopoly - and every company should want to be one, too.

Thiel says a monopoly is "a kind of company that's so good at what it does that no other firm can offer a close substitute," a company that's "10x" better at what it does than anybody else.

Google hasn't competed in search since the early 2000s, Thiel says, when it definitively leapt ahead of Microsoft and Yahoo.

And while Google doesn't claim to be a monopoly, Thiel argues that is most certainly is, though clever positioning obscures the fact. He provides the following stats:

Google owns about 67% of the global search market

Google owns less than 3% of the global advertising market

Google owns less than 0.24% of the global consumer tech market

Thiel says that Google frames itself as "just another tech company," which allows it to sidestep scrutiny. But he assures us it's a monopoly, since competitors Microsoft and Yahoo lag at 18% and 11% marketshare in search. And he says you can't expect "to Bing" to enter the Oxford English Dictionary like "to Google" has.

But such monopolization is a good thing, Thiel says, and it's what's enabled Google to become America's it company.

It's allowed for Google's Utopian HR policy, with perks that "aim to ensure that Googlers remain happy and healthy in all aspects of their lives."

The differences between monopoly and competition go further than just profits, Thiel argues.

In a super competitive market where you're not that different from your competitors, you have no choice but to ruthlessly "squeeze out every efficiency," he says, which is "why small restaurants put grandma at work at the register."

Then you have Google, which doesn't have to compete with anybody, thus giving Larry, Sergey, and the gang the elbow room to actually care about their workers and their effect in the world - don't expect to see Grandma Page manning the reception desk anytime soon.

Thiel goes further:

Google's motto - "Don't be evil" - is in part a branding play, but it's also characteristic of a kind of business that's successful enough to take ethics seriously without jeopardizing its own existence.

Monopolists can afford to think about things other than making money; non-monopolists can't. In perfect competition, a business is so focused on today's margins that it can't possibly plan for a long-term future. Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits.

Getting to a monopoly, then, is a matter of inventing something 10x better than any peer product, or discovering an entirely new category.

Society doesn't need to be scared of monopolies, Thiel says, since upstarts will always come along to dethrone them, as Apple's iOS did to Microsoft's decades-long operating system dominance, and as Microsoft did to IBM before them. In this way, Thiel says, "monopolies drive progress."

That's why, the investor continues, businesses are succesful to the extent that they do what others can't, that they "escape competition" with other companies, thus hamstringing the ability to make profits, take care of their employees, and plan for the future.

"Monopoly is therefore not a pathology or an exception," Thiel concludes. "Monopoly is the condition of every successful business."