A bit of a contradiction: We encourage people to create their businesses, we say: "Hey, this guy has a great idea, why don´t we encourage so that he could create jobs?". So, this clever guy sets up a new business, and it becomes larger and larger, eventually, a whale (Microsoft, google...) . He achieved because PEOPLE trust his product, he is not to blame (if there is someone to blame here for becoming a whale), but the people. I mean: If I set up a business, it will be successful as long as people buy things , I am not forcing anyone to buy me, that is why it is called "free market", I guess. The thing is that when this business, thanks to a smart idea and a lot of effort, becomes really giant, then this company, through all its profits, begins to buy other smaller companies. These smaller companies are free to be bought or not by the bigger one, I mean, the bigger is not forcing , not putting a gun, not threatening the smaller one to give in. So, we have new a whale, a huge company (google...) which is capable of buying any smaller business (google bought youtube). Now it is the time for complaints: "Hey, google has the monopoly, that is not good for the economy, because competition no longer exits and therefore, google can set the prices as it pleases, now it is the time for complaining that the business (that we encouraged) has become too big...Isn´t it a bit of a contradiction?
There is only one significant defence for monopoly power: creative destruction (with those future supernormal profits driving 'risky' innovative behaviour). However, you've referred to something different: i.e. creation of further market power through takeovers. Typically its argued that there is a n shape relationship between firm market power and R&D. Thus, in highly competitive industries there is insufficient profit to re-invest. However, in highly non-competitive industries there is insufficient drive to invest. Want to maximise innovation? You need somewhere in between (which ultimately leads to continued contempt for deadweight loss creating monopoly)
Google started up in what appeared to be a mature market - search engines. It got big because it solved the problem others couldn't (gaming the search engine), and gets you the information you (really) want, usually in one of the top 3 entries of the first page. Add Google maps, Google Earth, G-mail, Google calander, Google Translate, etc., etc. As innovative as Google is, it is is losing "business" as people spend time on Facebook, not using Google. In some cases, big corporations buy up small competitors they see as a threat (usually for a price that can't be refused). Sometimes, the small company innovations are used, other time they are shelved. In other situations, the purchase is synergistic. Ebay buying PayPal as an example. I see Googles buying YouTube as synergistic. Of the other 120 aquisitions, they look to be incorporated, not shelved: http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Google But, to your point, good companies grow because they provide services people want at a price their are willing to pay. As much as Microsoft is the company to hate, their products are purchased because they offer the best value (even with the far cheaper StarOffice / OpenOffice). Is Microsoft a defacto monompoly - pretty much. Have they done what a monompoly is supposed to do, increase prices signficantly - no. Put out an inferior product (that you can't live without) - no more than any other software. Has Microsoft made a lot of money - yes, and it made 3 billionaires, and 12,000 millionaires.
That's a basic error. Dynamic analysis into monopoly expect short term reductions in price (given network benefits, where increases in current consumption of product increases future demand), but with long term costs
And facebook is using that time wisely http://www.computerworld.com/s/article/9235930/Facebook_s_search_tool_could_be_big_money_maker - - - Updated - - - How many decades before this long term cost thingie kicks in?
There's no single conclusion; sometimes we can refer to positive overall effects from monopoly, sometimes we can refer to substantial negative effects. What's clear, however, is that your "Have they done what a monopoly is supposed to do, increase prices signficantly?" comment was merely a misinterpretation of monopoly analysis
