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Larks comments on Why economics is not a morality tale - Less Wrong
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Monopolies are bad because they can capture much more of the consumer surplus than they would otherwise, not just because they underproduce.
Which then becomes producer surplus. Producers are people too, and there's no god-given right to certain terms of trade.
Monopolies which efficiently reinvest their producer surplus in improving the product tend to be monopolies to which I object very little. E.g. Google.
Even if they don't, their shareholders and bondholders are still people whose welfare is valuable. True, there are some bad incentive effects, but the welfare transfer isn't intrinsically objectionable.
Sorry for the late comment, but I'm just running across this thread.
The question is not whether Google reinvests their producer surplus better than other monopolies. The question is whether Google reinvests their producer surplus more efficiently, i.e., for greater total benefit to society as a whole, than would all the consumers who would otherwise get that surplus as consumer surplus. That seems highly unlikely since the options for reinvestment open to even a large company like Google will cover a much smaller range of possibilities than the options open to the entire set of consumers who would otherwise receive the surplus.
(Admittedly, there is an effect here in the other direction: Google has much more leverage than the average consumer. But I don't think that outweighs the effect I referred to above, because Google is not being compared to the average consumer; they are being compared to the sum total of activities of all consumers--more precisely, all consumers who would otherwise receive the surplus Google is getting.)