Microsoft to senators: Google-DoubleClick deal is bad for America

Wednesday night, my colleague Anne Broache and I posted our article previewing the U.S. Senate hearing Thursday where Microsoft and Google will face off regarding the search company's attempt to purchase DoubleClick.

The hearing is about to start and can be watched via Webcast. Anne is there and will be writing about the hearing later Thursday.

Microsoft general counsel Brad Smith, during the company's antitrust trial in 2003

(Credit: Declan McCullagh/mccullagh.org)

That article previewed Google's arguments. Now we have a copy of Microsoft's prepared remarks by Brad Smith, the company's general counsel, and we're sharing this excerpt. Smith, no newcomer to antitrust fights, says the merger would be bad for publishers, advertisers and consumers--the "bad for America" argument:

I will be the first to admit that Microsoft is not disinterested in this issue; competitors never are. But I do think we're in a good position of identifying important questions. We know this market very well. And it is absolutely clear to us that this merger raises serious questions that deserve serious answers.

I would like to address two of those questions briefly:

First, what are the economic consequences of allowing the largest company in online advertising to acquire its most significant competitor?

While there are millions of Web sites and advertisers on the Internet, there are actually a very small number of "intermediaries" that provide the tools and services that connect them. These intermediaries play a gateway or middleman role if you will, much like the natural gas pipelines that connect refineries to distributors and to consumers in their homes. If you are a Web site and want to sell ad space on your site, or if you are an advertiser who wants to display your ads online, you have to work with them or one of their intermediaries.

Already Google is the dominant company for one of the two main types of online advertising--namely online search ads. Roughly 70 percent of global spending on search-based advertising today flows through Google's AdWords.

If Google is allowed to proceed with this merger, it will also obtain a dominant gateway position over the other main type of online advertising: non-search ads. Today Google and DoubleClick are the two largest competitors in this area. Combined, Google will account for nearly 80 percent of all spending on non-search ads.

If Google and DoubleClick are allowed to merge, Google will become the overwhelmingly dominant pipeline for all forms of online advertising.

This merger will almost certainly result in higher profits for the operator of the dominant advertising pipeline, but it will be bad for everyone else. It will be bad for publishers, bad for advertisers, and most importantly, bad for consumers.

[Darvus]

Pot vs. Kettle

Anyone else see the irony and humor in this? Maybe M$ is just scared that they'll have to pay their biggest rival just to get ad space...or perhaps there's some validity to this whole argument. I really don't know. Corporations that grow too fast often lose their perspective and start getting greedy...I guess we'll just have to wait and see...

[JCPayne]

Google-Doubleclick really is NO BIG DEAL.

Seeeesh even the Bush regime is spying on Americans with all kinds of illegal Wiretaps....<br /><br />Who cares about Google-Doubleclick merger??? Google want's DoubleClick for their advertisement reach not their user information. DoubleClick already knows gathers info about people whether you like it or not. Everyone might as well let Google have it....

[tom.cat]

Sheesh

And how is it a good thing for Google to have all of this data?

[Phillep_H]

Nope

Bush? Not yet. And the far worse lack witted idiocy of the financial tracking justified by the "war on drugs" predates him. <br /><br />But, something bad being common does not mean it is "no big deal" in my book. Nobody should be able to track people like Google, Yahoo, and DoubleClick do. <br /><br />However, MS saying that is a bit like Rosie or Imus saying someone is an ill mannered jerk.

[ppgreat]

Is this a Daily Show skit?

Jon Stewart couldn't make this up!<br /><br />Microsoft complaining about a monopoly? That's like the UN <br />representative in Darfur complaining about human rights violations <br />in Bangladesh.

[sal-magnone]

That's the point

What's fair is fair. If the Senate, and heck the EU, think monopolies are bad for consumers then they should apply any policies equally.

[wahoospa]

Google + DoubleClick

If Google does aquire DoubleClick they will not have the percentage of business that Microsoft enjoys with their desktop monopoly. Seems that this is a case of the pot(Microsoft) calling the kettle(Google) black.

[MacTel Man]

Microsoft is Right about Google!

More or less, I have been a Microsoft basher.... I passionately <br />hate most of their products, but sadly, I have to agree with <br />Microsoft, simply because, this time, they are correct about <br />Google.<br /><br />I have read a most chilling tail of just how EVIL 'the First-Do-<br />No-Evil' company is as reported below by worldnetdaily, the <br />largest news site on the internet!<br /><br />Basically, they go on to prove how Google can, have and will <br />steal advertising space from their competitors. <br /><br />I don't care who stands up to Google, just as long as someone <br />does - someone with clout, or they will make the Microsoft <br />monopoly case look trivial.<br /><br /><a class="jive-link-external" href="http://www.worldnetdaily.com/news/article.asp?" target="_newWindow">http://www.worldnetdaily.com/news/article.asp?</a><br />ARTICLE_ID=57274

[MacTel Man]

Wrong Link!

Sorry, I posted the wrong link, it should be:<br /><br /><a class="jive-link-external" href="http://www.worldnetdaily.com/news/article.asp?" target="_newWindow">http://www.worldnetdaily.com/news/article.asp?</a><br />ARTICLE_ID=57274

[imacpwr]

Google-DoubleClick deal is bad for America..?!?!

As if Microsoft's domination of the PC OS market isn't..???

[rcrusoe]

America to Senators

If Microsoft is against it, it can't be all bad.

[nouser]

Microsoft to senators: Google-DoubleClick deal is bad for America

Consumers to Brad Smith, HA, HA, HA. Your such a kidder. You <br />don't like monopolies unless they are owned by Microsoft. Your <br />comments are so sad. No matter how hard you tried to out-<br />Google Google you failed, so now you turn your attack dogs <br />loose on the senate. <br /><br />Oh, protect us from this nasty Google monopoly that we couldn't <br />beat at their own game. Stick it to them so we can reap the <br />monopoly statues here too. We are the good guys so we can be <br />a monopoly. We know what is good for our consumers. and <br />everyone knows whatever we do is only dome for our consumers <br />better interests.<br /><br />Nice try Brad, but it looks to me like you haven't been taking <br />your meds lately.

[tom.cat]

This deal *is* BAD for America

Look, it's pretty obvious when an organization acquires too much power -- to the point where there is no alternative, costs rise, quality suffers, etc -- then it's bad for customers and, by extension, America. Allow me to explain. When you buy any product or service, a certain amount of your purchase price is covering the cost of advertising &#38; marketing. When you have a company such as Google that not only controls the bulk of online advertising and thus has the power to set rates higher than the market would ordinarily support if there had been competition, then you and I are paying more than we should. <br /><br />It doesn't matter whether you agree or disagree with Microsoft regarding its own products. In this case, Microsoft is actually RIGHT. Some of you seem to be so caught up in hatred for Microsoft that you don't recognize when you're on the SAME SIDE. I'm supporting Microsoft on this because I'd rather see more competition than less in the online advertising market. It's difficult to fathom how anyone here could possibly be against greater competition, lower prices, and better service.

[Phillep_H]

yeahbut

MS is only griping because Google beat them out. MS and Double Click would be even worse than Google and Double Click.

[t8]

The prob with your argument is...

The problem with your argument is that suppressing Google's ability to compete, gives Microsoft a leg up in that market.<br /><br />We all know about Microsoft's past and current abuses against the consumer and technology in general, so do we really want to open the door for Microsoft to take this market for themselves? After all they just purchased their own advertising company for 6 billion.<br /><br />I think not. I would rather Google be the monopoly than Microsoft.<br /><br />It seems downright unfair to not allow Google to compete when Microsoft is allowed to abuse consumers with it's monopoly and then using their inertia to move into Google's main business.

[Kelekolio]

Time for a Win-Win Scenario ....

Let's use Microsoft's argument to the logical conclusion about <br />the bottleneck of intermediate/middleware software and <br />companies where innovation and the free market get rigged in <br />ways that are invisible to the public.<br /><br />Let's give MS the opportunity to show us how they do it and hold <br />Google and they to the same standards.<br /><br />MS may be correct, but they are like Stalin telling Roosevelt that <br />the Nazi's are bad .... yeah, so ....

[t8]

Two trick pony

Ballmer said that Google was a 1 trick pony and Microsoft was a 2 trick pony. So Google responded and purchasing DoubleClick means they will be a 2 trick pony too.<br /><br />I guess Ballmer can't handle 2 x 2 trick ponies.<br /><br />Nay.

[t8]

Microsoft's 2 tricks

Microsoft's 2 (revenue) tricks are Desktop and Server.<br /><br />Google's 1 (revenue) trick is text ads. But now they want banners too.<br /><br />A bit hypocritical of Microsoft isn't it?<br /><br />I hope the Senators see this for what it is. If Google can't purchase DoubleClick, then Microsoft should also be split into two, i.e., Desktop and Server.<br /><br />Otherwise there is no consistency and we have a double standard.

[Carion]

Micro$oft complaining about Google monopoly ???

Sorry, this cannot be true, I must have been dreaming. Excuse me....

[Phillep_H]

No

I don't think any one could dream of this. Who can stay asleep when they are roaring with laughter?

[jtjt145]

Microsoft - downhill from now ...

When the biggest monopolist in the country complains about another party succeed where they self didn't, you know things are bad for them.<br />I hope my fellow Americans won't fall for their infantile whimpering.<br /><br />Looking at their latest performance, they are not doing too well out there:<br /><br />- Vista - their latest and greatest: Its a looser according to PC makers who are offering down-grades to Windows XP.<br />- their shareprice, (allegedly) artificially held up, by them selves (pardon me, their agents) buying their shares.<br />- all over the world the FOSS initiative is getting growing momentum. Governments deciding to use alternatives to MicroSofts software.<br />- their attempt to force their data format OOXML on the international community has been recognized at what it is - an unworkable format for anyone who does not use their proprietary software.<br /><br />Poor, old Microsoft, a fading software giant...<br /><br />Ron McCallum<br />CIO