So when do we get it over with and declare Google a monopoly?

I did a double take recently after listening to Microsoft CFO Chris Liddell acknowledge that his company was ready to lose even more money in online services in the near term, if that's what it takes to catch Google. During the company's earnings call last week, Liddell indicated that Microsoft is pouring hundreds of millions of dollars into its online advertising business, an investment he allowed would be "a drag" on the rest of the company.

(Credit: CNET News)

Outside of the occasional fit of Monkeyboy inspiration, Microsoft's managers are a sober bunch. They don't decide things haphazardly and they don't rush in reaction to current events. But their willingness to dig deep into Microsoft's (enviably deep) pockets in pursuit of Google was a remarkably telling comment. Much like WordPerfect and Borland and Novell, which at one time sought unsuccessfully to play catch-up to Microsoft, the shoe's now on the other foot-- and it's irritating the hell out of Microsoft.

Just how far ahead of everyone is Google? Consider the following, courtesy of Efficient Frontier Insights: Google now enjoys more than a 77 percent share of the search ad market.

MIT Prof. Richard Schmalensee

(Credit: MIT Sloan School of Management)

Advertisers are putting all of their new search dollars into Google, and pulling money out of Yahoo Search and Microsoft Live Search.

That kind of information was seized upon by Microsoft's top lawyer, Brad Smith, during his recent testimony before Congress. Testifying on the proposed search advertising between Google and Yahoo, he said it was possibly "illegal under the antitrust laws." Monopoly anyone? Of course, there's nothing wrong with being a monopoly, per se. It all depends upon context and behavior. But considering Google's dominance and Microsoft's inability to significantly close the gap in the search business, I'm sure rivals would be thrilled if Uncle Sam finally declared Google a monopoly. That may be wishful thinking.

For an answer, I sought out the opinion of a renowned antitrust expert, Richard Schmalensee, of MIT's Sloan School of Management.

I chose Schmalensee because of his unique vantage point. During Microsoft's antitrust trial a decade ago, Schmalensee testified as an expert witness for the defense, spending hours on the stand sparring with lead government attorney David Boies about the precise definition of a monopolist.

"There are the standard numbers people throw around but I think most people would say you have to decide whether search ad is a market for antitrust proposes. If it is, that's a high enough share. But you also have to look at issues of entry and issues of fragility. How stable is that share and how intense is that market," Schmalensee said.

"There's no magic threshold but with high share levels, you get to be concerned," he continued. "On the other hand, monopolists are allowed to compete. The question is whether the arrangement would stifle competition."

There's the proverbial $64,000 question, isn't it?

[rucknrun]

I am sure the government will figure out some way to penalize them for being successful.

[devonh01]

What are you NUTS? It is about time someone competed against Microsoft. A little competition is good for consumers. Someone just needs to step up with products and services to compete with Google. Yes, they are the leader in search ad revenue. Because they have the audience! Advertisers go where the audience is. There is nothing stopping someone else from thinking out of the box and leapfrogging Google! Do you want parity for parity's sake or innovation?

[devonh01]

What are you NUTS? It is about time someone competed against Microsoft. A little competition is good for consumers. Someone just needs to step up with products and services to compete with Google. Yes, they are the leader in search ad revenue. Because they have the audience! Advertisers go where the audience is. There is nothing stopping someone else from thinking out of the box and leapfrogging Google! Do you want parity for parity's sake or innovation?

[Kwasiowusu]

Being a monoply in itself is not aginst the law. Its what you do with that monopolly that could prove problematic. Time and time agains, Google has ridden rough shop over friend and foe alike, engaged in unethical behaviour, and tried to use their position to steal other people's copyrighted property with impunity. The fight with Viacom, and plenty of news publications in Europe is just the tip of the iceburg. And this attempt by Google to neutralize and render yahoo an ineffective competitor, by signing this pact with yahoo, plainly just stinks. Eric Schmidt, who used to whine about Microsoft's "monopoly" every single day, when he was at Sun Microsystems, is now behaving a heck of a lot worse than Microsioft ever did.

[pjhenry1216]

Yea, darn that Google for being so unethical. I'm pretty sure you're in the minority opinion on that matter.

[Kev Orng]

Yeah, c'mon Google, hand over my Youtube user data to Viacom already! I'm sick of privacy, I wanna be infamous!

[The_Decider]

Wow you just described Microsoft!

[seth.levy]

I really hope the government does its job in making the playing field even by penalizing the successful. That is what they are supposed to do, right? If all businesses ignored these ridiculous laws, they would go away.

[NewsReader_]

Here is the problem. I did not believe that Microsoft is/was a monopoly and I also do not think Google is one either. IMHO having a large market share only equals monopoly only if there is no alternative choice for consumers.

In both Microsoft and Google's cases, consumer choice exists. They chose Microsoft for the desktop and Google for search. Why? Because they make the best products on the market, end of story. Consumers have no barriers to using Linux or Macs or Yahoo or Live Search. You cannot punish a company by slapping a "Monopoly" label on them because they make better products than their competitors and people actually buy it.

Antitrust laws exists to protect consumers, not businesses. You want to decrease Google's market share, make a better product and convince people to use it. Same for Vista/XP. Don't go crying to the government to help you. That is the sad tactic that Microsoft's competitors used in the US and EU. "MS is kicking our behinds in the market... Please make them stop so we can make some money too. I want my mommy." That is not saying the MS was angelic in its business practices. It certain was not. I bet Google is no saint either. But being branded a monopolist as a result is not fair IMO.

It would be an entirely different story if people who use XP/Vista or Google search started complaining that they were suffering because Microsoft or Google somehow prevented them from using a product they felt was better. That is not the case.

[The_Decider]

You do not "believe"?

Monopoly is a legal definition, it is not something you need to or not believe in.

MS was found legally to be a monopoly and have been legally found repeatedly to abuse that position.

In the markets where MS actually makes money, they control the market through strong-arm tactics. I guarantee you that hardly anyone chose Microsoft. They wanted a computer and had little option when shopping at Best Buy for one. Microsoft does not make better products. What a hoot!

There are tens of thousands of documents that prove that your belief is naivety at best, or delusion at worst.

[tripwilliams]

I love Google, and so does everyone else. This isn't the usual huge company. Google is the best, and in this case, that is why no one else can even come close to there service. The other guys product just isn't as good. Firefox and Google forever!!!

[jackdaniels08]

Microsoft market share: 90% OS, 95% Productivity Software, 85% Browswer. Of course this author is obviously biased toward Microsoft as he fails to mention such facts and that the real monopoly here is Microsoft. The real threat is Microsoft and how they could leverage the starting point on the desktop (as they have in the past) to just blatantly dominate everything because Mr. Cooper is either ignorant or perhaps has some financial interest or gain in Microsoft.

[johnnydfred]

You mean "get over it" or "get on with it"? It's getting so bad that the reader can't tell if it's a typo, or some ill-trained journalist's blocked flow.

[StoneRyno]

Microsoft is a monopoly. Consumers have no choice to use alternative OSes because application developers DO NOT put their titles on other OSes. As long as that remains fact the monopoly remains. Governments other than the US agree and have been bringing case against MS. Problem is MS doesn't care they just see the losses to fines as part of their business expenses and persist in their monopoly.

Governments including the US need to be harsher and force microsoft and 3rd party developers to cross platform all of their applications and games. MS needs to be forced to license DX to other OSes so that games can be played on them.

Now in the case of google. The articles claim is that they are monopolizing in advertisements. I don't know if I can agree that it is a monopoly on the basis advertisers have tons of alternative agencies to advertise with for web advertisement. Should the government force advertisers to more even spread between advertisement agencies. Its not like with MS they aren't forced to advertise with google because no other advertiser can run their adds where as no other OS can run practically ever app in existence.

[StoneRyno]

Microsoft is a monopoly. Consumers have no choice to use alternative OSes because application developers DO NOT put their titles on other OSes. As long as that remains fact the monopoly remains. Governments other than the US agree and have been bringing case against MS. Problem is MS doesn't care they just see the losses to fines as part of their business expenses and persist in their monopoly.

Governments including the US need to be harsher and force microsoft and 3rd party developers to cross platform all of their applications and games. MS needs to be forced to license DX to other OSes so that games can be played on them.

Now in the case of google. The articles claim is that they are monopolizing in advertisements. I don't know if I can agree that it is a monopoly on the basis advertisers have tons of alternative agencies to advertise with for web advertisement. Should the government force advertisers to more even spread between advertisement agencies. Its not like with MS they aren't forced to advertise with google because no other advertiser can run their adds where as no other OS can run practically ever app in existence.

[zm0k3]

Several of you are referring to the Microsoft monopoly as being about the OS only. This is wrong. The antitrust case was around the fact that Microsoft was 'blocking' other vendors (like Netscape for browsers, by bundling IE with Windows) by using the fact that they own the OS. Yes, you can argue that users had the choice to download Netscape and install it. But if you go back then, Internet connections were not that fast so downloading Netscape was a pain. Furthermore, this was an extra step that the average Joe would not make hence why we ended up with IE dominance that we have today.

That being said, I wholeheartedly agree that you should not punish a corporation for being successful. When I think of Google, I think of their search engine that gives search results that are excellent and unequaled by other search engines. When I think of Google, I think of Gmail where they came up with the concept of labels instead of folders for categorizing emails (*all* the other WebMail providers like Hotmail and Yahoo never innovated in that way; they just followed the wave of giving away WebMail accounts though this wave was started by Hotmail...).

Nonetheless, our governments still need to keep an eye on Google to ensure that they don't make the wrong use of the *enormous* amount of data that they are gathering. To me, all this data that they have is what's really frightening. And if you used to be a die hard fan of the X-Files, you might wonder if the government is not in bed with Google over the control of that data :-)

[The_Decider]

Windows was the tool to stifle competition in many areas.

But Windows itself is a monopoly. It is a weakened one, but do you really think that they never illegally coerced OEM's?

[The_Decider]

I am not a Google fan and would never be stupid enough to use spyware like google desktop and gmail, but the fact that they do not exert undue pressure on the market to stifle competition(ala MS) is enough to keep them from the illegal monopoly label.