When I think monopoly I think of companies like AT&T (resulting in the “baby bells”), Standard Oil (Exxon Mobil and Chevron were formed due to its breakup), and Microsoft.  These monopolies were created through control of resources, high barriers to entry, and their ability to price others out of the market.  All have faced litigation with 2 of them being broken up as a result.

There are several internet based companies that dwarf their competition in size and scale.  Most notably are Google (64% of search traffic in May 2010), Facebook (25% of web hits in November 2010), and Amazon ( 33% of e-commerce in April 2009).

Traditional offline monopolies are a lot different than potential online monopolies.

For starters offline monopolies were able to use economies of scale to become the only affordable option in essential areas (telephone, oil,gas, etc).  The situation for online companies is different. Participation is free (unless you make a purchase on amazon) and optional.

Even with that in mind problems still persist.  As Amazon grows in power and reach (let’s say they get to 50% of online purchases) they will be able to offer prices that many retailers simply can’t compete with.  Facebook is so ubiquitous that it will likely never have real competition.

Google has a direct impact on the incomes of virtually every online business.  One stroke of the keyboard at google can shut a business down.

What can be done to protect against internet monopolies?

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