Google explains: We're not a monopoly, not by a long shot
Barring some unlikely bolt of inspiration at Microsoft, Google should continue to pad its already formidable lead in search advertising. And now that Google CEO Eric Schmidt says the company intends to turn its attention to display ads, who of sane mind would bet against its chances?
We're still quite a way from the point where regulators conclude that Google is too big for its britches, but just for fun, I typed the question, "Is Google a monopoly?" into my search engine. (Wanna guess which search engine I use?) My query brought back 461,000 responses. Clearly, people have debated this question for quite some time, even as the company continues to grow ever larger.
But Google obviously doesn't agree that size and market dominance pose even remote antitrust parallels with IBM in the 1960s or Microsoft in the 1990s. The chief reason: the markets in question are very different. Earlier Friday, Google's general counsel, Kent Walker, and Dana Wagner, the U.S. competition counsel, got on the phone to explain why.
Kent Walker, VP and General Counsel
(Credit: Google)"The nature of the Internet is just a fundamentally different world from the sale of packaged software or the bundling of software with OEMs (original equipment manufacturers)," said Walker, "The standard line we have is that competition is just one click away,"
Walker offered what he called both a "structural" answer as well as the "behavioral" answer.
I agreed with much of his argument. The parallels with Microsoft are off. In Microsoft's case, the company got into trouble because it used its desktop monopoly to force companies to adopt Internet Explorer. Still, is there not a point --call it 70 percent market share or 90 percent market share, or somewhere in between--where Google opens itself to the title of monopolist, even if it got there by virtue of building a better mousetrap? Wagner took a crack at that question, countering that the magic number fascination "was a little bit of a red herring."
Google does acknowledge its role as a "disruptive company," but Walker suggests that the real battle is between desktop-based computing, including operating systems and productivity applications, and cloud-based computing. To the degree the latter trend emerges, he said, that spells trouble for Microsoft. "In a sense that's the real market, if you will," he said. "It's how do people use technology to do what they need to do. That can be search to find things more broadly on the Internet. But more broadly, it's to use the Internet, to use the network to share information to create new goods, tools and services."
But will advertisers see their rates go up as a result of the Yahoo-Google search deal? There have been reports suggesting as much. And of course, one of the filters regulators use for antitrust review is to what extent it hurts customers, or, in this case, advertisers. Not surprisingly, Wagner argues that advertisers' costs will head in the opposite direction.
Since antitrust decisions get decided in Washington, it's not surprising, then, to learn that lobbyists for Google and its rivals are shadowing each other in the corridors of power. Google's Walker suggests that most of the noise around competition issues is being generated by competitors like Microsoft--but also the cable and phone companies who don't like Google's position regarding Net neutrality.
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Great Deals on Gateway innovations!
9knowing for sure Yahoo wouldn?t dare undercut them, because yahoo would be making up to $800 million a year from Google). Consumers are just going to suffer
1) Google controls the ad space
2) Google can "out monetize" any "internet service" by using their superior ad inventory
3) "internet service" does not include retail/commerce product-related sites
4) Google can therefore out-compete any up and coming web service
5) The money Google makes from the ads goes back into improving the service
6) The ads strengthen their other services, and the services strengthen their ads
7) The more services that display their ads, the more advertisers they get, and the more they can monetize services
8) Their strength grows unbounded in a feedback loop
9) The monopoly of the network is quite different and arguably superior to monopolies of lore, notably desktop/software monopolies
Examples:
Take the search space. Their ad dominance gives the funds to improve their search relevance, which grows in popularity and thus feedback into the ads.
Now they are seeking to beat wikipedia using knol, and their ad market dominance.
In my opinion, and I am no expert, this is potentially a monopoly like no other monopoly.
Google gets the users primarily because it is a verb. If Microsoft comes up with a verb for their search then their fortunes will change.
Netscape, Borland, Lotus, Wordperfect, Novell, on and on...companies who have been stomped on and vanquished by Microsoft...now Google is in their cross hairs....I guess they BOUGHT all you guys too.
and, yes, they do have a better mousetrap, inarguably, but it is very difficult for anyone to compete against them because of the amount of cash their ad monopoly generates, because a lot of that cash goes back into making the mousetrap better and better.
it is not clear if they are all about branding. they continue to for-the-most-part dominate in the three primary search engine metrics, and have never been definitively unseated in any one, much less all 3 (although yahoo's index is slightly larger, some argue it has less quality pages)
It will be a matter of years before they get their rears handed to them as microsoft did.
IMHO Google is becausing the Microsoft 2.0.
1) the ad group. the ads should be made equally available to all companies, so everyone can monetize their web services at the same rate. this will help level the landscape.
2) the search group. their search is already very powerful, and, like ads, can also significantly enhance the value of other web services. so it should be carved out.
3) all the other services. news. maps. groups. orkut. etc.
i can make up my own definition of why an automobile is actually a plane, but it wont really jive with what the true definition of what an automobile is. So your reasonoing of why google is a monopoly is moot.
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by maverick_nick
July 28, 2008 12:48 AM PDT
- I don't get it. Monopolizing the market would be exclusively controlling a product or service and preventing others from competing with you. Google has competitors, but there not good enough to appeal to the majority of consumers. So why are people blaming Google for being better than the rest. The same damn thing happens with Microsoft. I think that everybody needs to get out of this hippie mindset and realize that it's a dog eat dog world and if you're not good enough to compete then too bad for you. Cry me a river why don't you.
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