Trustbusters divided on next move on Google
That's the question facing lawyers from the U.S. Department of Justice investigating Google. Sources who have provided testimony to the government say a departmental debate revolves around whether antitrust regulators should challenge Google's proposed revenue-sharing deal with Yahoo, or go for the whole enchilada--and haul Google into court on broader charges related to its dominance in search advertising.
The latter tack would be the more ambitious--and fraught--choice. Ten years ago, the government prosecuted Microsoft for alleged antitrust violations, but ultimately settled the case in return for the company's agreement to make minor behavioral modifications.
"My sense is that they're considering something larger," said one source who met with DOJ lawyers. "They're finding that with the specifics of the Yahoo deal, it's difficult to create a set of proofs (around the case), such would satisfy a judge."
The source, who asked to remain unidentified, said investigators feel they have evidence to proceed, based upon received complaints from advertising executives regarding Google's influence.
"It's also control, from both an advertising and societal view," the source added. "There is growing concern about what happens if Google becomes the predominant gateway to information, if information passes through a single enterprise, characterized by a series of commercial algorithms that do what they do--and those algorithms are not subjected to outside review."
CEO Eric Schmidt: A court date in the offing?
That would come as a surprise to Google. Until now, the company says its conversations with government lawyers have focused strictly on the Yahoo ad deal. Yahoo expects that its 10-year Google ad search pact, signed in June, will raise revenue by $800 million in its first year and provide an extra $250 million to $450 million in incremental operating cash flow. The companies voluntarily agreed to postpone closing the deal until October to let the government complete its regulatory review.
So far, the sources say the government has not decided how--or whether--to proceed. A spokeswoman for the Justice Department declined to comment.
A Google spokesman declined to comment on the DOJ's possible next moves, but repeated the company's position that the Yahoo deal did not violate antitrust law.
Another source debriefed by antitrust lawyers said that a key question for the government is whether search should be considered a market unto itself, or a subset of the larger digital advertising space.
"They are definitely having a struggle around that issue," said the source, who similarly asked to remain unidentified. "If it is a subset of a market, then even if the search market would become unattractive, you could substitute another form of advertising. But if it is distinct, then you have a completely different issue.
"I've been clear in what I've said to them. My view is that anything that can be defined as a query is different from the rest of the advertising market--it's different from TV or direct mail, etc. There's something specific about someone typing a query in the search bar. The key issue is whether this partnership would allow Google to exercise undue influence over the search market. Would this further tip the balance toward creating monopolistic control over the search market?"
For its part, Congress is letting the DOJ carry the ball by itself. A staff member from the House Judiciary Committee said with just a few weeks left in this session, it's unlikely the committee will hold any further hearings on the matter.
Meanwhile, Sen. Arlen Specter (R-Pa.), minority leader on the Senate Judiciary Committee, similarly adopted a wait-and-see approach to the investigation.
"There is no doubt about the significant impact on the economy by an agreement between Google and Yahoo, the dominant companies in Internet advertising," he said. "This issue is being reviewed by both the Department of Justice and the Senate Judiciary Committee and it may be that the courts will have to decide whether there is a violation of antitrust laws."
Senator Orrin Hatch (R-Utah), the ranking member of the Senate's antitrust committee, said the question of whether the DOJ should intervene was a "moot point because Yahoo and Google submitted their proposal to the Department of Justice. I look forward, along with my colleagues on the Senate Antitrust Committee, to hearing the Justice Department's conclusions."
Stephanie Condon contributed to this story.
Charles Cooper has covered technology and business for more than 25 years. Before joining CNET News, he worked at the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie. 
Microsoft was faulted for twisting the distributor's arms so that they will distribute Internet Explorer as well... now with Google, the distributor is itself, so no arm-twisting required! They can do whatever they want since search (hence Google) is the most used Internet tool.
Regards,
Eric
Microsoft Live Search
Yahoo
Lycos
ask.com
etc...
In fact here's a link to dozens of the darn things:
http://www.internettutorials.net/engines.html
Google is by no means a monopoly.
That said, there is nothing wrong or illegal with being a monopoly. It is when you abuse that position by applying pressure in illegal ways that anti-trust comes into play.
And I just haven't seen Google doing that.
Your completely missing the big picture. This issue is not how many search engines there are, rather how much control the largest one has by virtue of users. We have been told time and time again that once a company approached 90% market share, then there are just some things that the government won't allow them to do to increase that dominance. They can grow naturally with no problems, but they can't buy or make deals that will instantly increase their market share significantly, hence their control of an industry.
So much for becoming a successful company in the US. I am still waiting to hear how Google has prevented any company from entering the search or advertising business through monopolistic practices. I think the DOJ realizes that they don't really have a case here, and are just trying to make Google sweat. I would be suprised if anything really came out of this.
On that line of thought - let's split up Apple because the iPod is the most successful in its industry. Coke has to go, too.
Again though - show me where they squeezed out players in a malicious way (IE: not because other companies folded because they couldn't compete) and I'm on board.
here is how they dominate their marketspace:
1) they control the ad space
2) they can "out-monetize" any "internet service" by using their superior ad inventory
3) "internet service" does not include retail/commerce product-related sites
4) they can therefore out-compete any up and coming web service
5) The money they make 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.
and Google pays "portal" companies CPM rates 15-20 times over fair market value to show their search results and ads to their users. Thus starving out any google competitors using a stack of cash.
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.
imho, they really should be broken up into 3 pieces:
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.
So by your reasoning, there is really NO incentive for a company to better than mediocre in the US corporate landscape. Isn't what you just described 'Business 101'? Build a product, continue to invest in your product to make it better than your competitors, make money.
Google paying 'portal' companies 15-20 times 'fair market value' is irrelevant. Who is setting fair market value? Apparently Google feels the 'fair market value' is bigger than other 'internet services' do, so they pay for it. Isnt that the way Capitlaism works? If someone is willing to pay X amount of dollarsfor a product or service, that is the fair market value?
It is a shame that this is the way the people of this country think. It makes me scared that my children will grow up in a country where our competitive edge has been whittled away to nothing becuase we are so afraid of being successful.
if google is divided, i certainly hope you don't lose your job there.
but "cash dumping" (i.e. overpaying or giving something away to hurt your competitors) is typically considered anti-competitive.
and my basic point was that, he/she who controls the ads on the internet, controls the internet, and all the services it offers. that is the primary reason google needs to be split up, to give all other start-ups a fighting chance.
IFSA the monopoly info portal issue to which Sen. Specter refers, it's already happened in the past tense. The old game has been blown away by the new game due strictly to competitive forces. The new game is the giver of info - unless the user opts out by using a block like customizegogle or an aliasing metaportal like Ixquick.
Again, I don't see Google having broken any laws.
But they're getting awful close with the BETA Chrome as GOOG moves strategically backwards into delivering the Linux-based proprietary o/s for desk and laptops that they've been threatening to deliver for years. This could wind them back into the Microsoft DOJ duke-out scenario of a decade ago.
- by aintnorainbowdorothy September 14, 2008 6:53 AM PDT
- Google, all things to all people? Don't think so. I use Vista Ultimate, and have done so since launch, highly stable. Google Chrome? Beta. Google anything? Beta. My computers are built by Alienware, have the right hardware, can be upgraded. Nothing on any of them are Beta (with the exception of some Windows Live) and I like Microsoft. Can't stand Google. If they partner with Yahoo, that's 90+ percent of search and advertisemarket. Sounds like it should be an anti-trust issue. Google wants to be everything in the world, can't, or won't , get their crap out of Beta. At least Yahoo, Microsoft and several others have most of their offerings out of Beta. What's the matter with Google. Simple, don't copy us, we own the world and don't forget it.
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