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July 5, 2004
How Google Wrong-Foots Regulators
Good Tom Hazlett column in the FT on how Google's decision to launch Gmail with 1GB of storage wrong-foots regulators:
"By offering 2 GB for the price of 100 MB, the competitive rivalry now on display highlights the implausibility of administratively determined efficiency. The e-mail market looked perfectly functional and workably competitive to antitrust analysts prior to the recent seismic shifts. Innovation by decentralised entrepreneurs has revealed a new competitive equilibrium some orders of magnitude north."As Hazlett points out, the key implication from all of this is not, however, that market entrants can do wild things and transform markets. No, it is this:
"The remarkable aspect of this emerging war over e-mail service is that it is fought at the core of markets judged by many to be wracked by monopoly, resistant to change and immune to challenge."
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