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DOJ's Interest in Reviewing the Google-Twitter Agreement

What would be the DOJ's interest in having a formal investigation/review of the Google-Twitter agreement?

Google-Twitter search agreement delayed for DOJ antitrust review?

Microsoft publicly announced it has already launched a beta of bing Twitter that incorporates Twitter tweets into Microsoft's search results, while Google also announced an agreement with Twitter, but said in an announcement blog post that: "we look forward to having a product that showcases how tweets can make search better in the coming months."

The glaring question is why Google, which prides itself on speed and innovation, and which routinely launches new products and services in beta, will not offer a Twitter product for "months."

The most logical conclusion is what I blogged and tweeted about on October 9th: "Will Google seek DOJ approval of any Twitter agreement?"

Advertising Agencies Urge DOJ to Approve Microsoft-Yahoo Search Agreement

In stark contrast to their opposition to the Google-Yahoo ad agreement, the American Association of Advertising Agencies (the 4As) is now urging the DOJ to quickly approve the Microsoft-Yahoo search agreement because they "believe that Yahoo! and Microsoft's proposal to combine their technologies and search platforms is good for advertisers, marketing services agencies, web publishers, and consumers."

  • This letter is powerful evidence that the advertising industry remains deeply concerned about Google's dominance of search advertising, and welcomes the prospect of a more viable search advertising competitive alternative -- i.e. the proposed Microsoft-Yahoo's search agreement.

Will Google seek DOJ approval of any Twitter agreement?

Reuters reports that Twitter is in talks with Google and Microsoft about "licensing its data feed to the companies search engines."

If a Google-Twitter agreement materializes, surely the DOJ will want to review any proposed Google-Twitter agreement for antitrust issues.

Google: Antitrust's Pinocchio?

First, antitrust's modern day Pinocchio claimed that competition is just "one click away," now Google is claiming that the notion that scale is important to search competition is "bogus."

  • Google's Chief Economist, Hal Varian is pushing a preposterous, self-serving argument in CNET that scale is not important to search competition:
    • "...the scale arguments are pretty bogus in our view because it's not the quantity or quality of the ingredients that make a difference, it's the recipes. We think we're where we are today because we've got better recipes...  I also think we have a better kitchen..."

Why is Google's "bogus" claim bogus?

First, does Google think for a minute that antitrust enforcers' investigations have not assembled substantial evidence/quotes from Google itself about the importance of scale in search?

Where else will a viable competitive alternative to Google come from, if not from a Yahoo-Microsoft deal?

The core question at the heart of the DOJ's review of the proposed Yahoo-Microsoft search partnership is where else will competition to Google's increasing dominance come from, if not from the proposed Yahoo-Microsoft search partnership? 

The DOJ has deep and current expertise in this market given their investigation of the Google-Yahoo ad partnership last fall and DOJ's current investigation of the Google Book Settlement. The DOJ also appreciates the facts that:

Ironically Zittrain's "Lost in the Cloud" emphasizes three of my big concerns/themes

Jonathan Zittrain's NYTimes Op-ed today, "Lost in the Clouds" ironically captured three of my big concerns/themes about the Internet and its natural outgrowth -- cloud computing.

  • I recommend this op-ed because it pulls together a whole host of converging Internet issues that others generally treat separately.
  • The problem with writing about these issues separately is that much of the richness of how these inter-related issues interact -- is lost.  

    Zittrain: "The cloud, however, comes with real dangers."

    • I agree. That has been much of the point of my 13 part series since the first of the year:
      • "The Open Internet's Growing Security Problem"

    Zittrain: "Worse, data stored online has less privacy protection both in practice and under the law."

"Privacy is Over" -- Part VIII Privacy-Publicacy Fault-line Series

"All our information is being sucked into the cloud. Privacy is over." That was the bold declaration of Attorney Steve Masur at DCIA's P2P Media Summit per Washington Internet Daily.

  • Wow. As stark an assessment that that is, what really disturbs me is the thought process and tech ethic that underlies this view.
  • Mr. Masur is not alone, he is part of a growing publicacy mentality/movement that looks at privacy as:
    • A neandrethal expectation in the Internet Age,
    • Buzz-kill for Internet innovators, and
    • Road-kill for the cloud-computing bus speeding down the information super-highway.

My pushback here is the blind worship of technology or tech-determinism.

  • I define tech-determinism to be:
    • if technology or innovation can do it, it must be good; and
    • if something stands in the way of technology and innovation, like privacy, it is in the way and should be terminated. 

Did it ever occur to the tech determinists that if there is no privacy in the cloud, many won't go there?

  • Most users appreciate that technology should work for them, they don't work for technology.

Privacy isn't over. 

Looking into the Vortex of the Internet Economy

Google’s earnings remind us of the core competitive dynamic of the Internet content economy – the increasing market dominance of Google.

  • Google’s 18% revenue growth Q407-Q408 during this economic maelstrom is extraordinary, especially when its secondary search competitor, Microsoft, posted zero growth in online services and 2% revenue growth overall.
  • I expect Google’s growth to be even more impressive when compared to Google’s main competitor, Yahoo, which I expect to post ugly fourth quarter negative growth.
    • Yahoo has been in the corporate equivalent of a fetal position ever since the DOJ blocked its ad agreement with Google and it became obvious Yahoo had no “plan B.”
  • I was even more impressed with Google’s dominance when I calculated that Google grew revenues over 31% in 2008 off a large $16.6b 2007 base. The law of large numbers did not take as big a bite out of Google as many expected.

 

As strong as Google’s revenue growth was, the most interesting earnings development to me was the big peek Google gave us behind its infamous secrecy curtain – in disclosing it was re-pricing most of its employee stock options.

Yang's "open" legacy is being overlooked going forward

Most are missing the lasting implications and legacy of Yahoo CEO Jerry Yang's signature "Open" strategy, in all the media chatter about his demise and his successor. 

Yang set Yahoo on a new and different strategic trajectory philosophically and culturally -- i.e. that of the open source movement -- which is strategically Google-aligned and Microsoft-opposed.

  • As Yang said in a statement reported in the Washington Post, "it was important to re-envision the business for a different era to drive more effective growth. Having set Yahoo! on a new, more open path..." [bold added]
  • In the WSJ today was another example of Yang's open legacy and open source/wisdom of crowds philosophy and culture that his successor will inherit: "Mr. Yang's preference for letting employees reach consensus rather than make tough decisions himself..."

This means the cultural momentum and trajectory at Yahoo is to remain close to its "open source" philosophical ally Google regardless of the DOJ decision to oppose the Google-Yahoo ad partnership and despite its investor-correct public statements to the contrary about Microsoft.

Jerry Yang's legacy will not only be opposing shareholder interests in scuttling the Microsoft offer, but also the under-appreciated 'open strategy' he implemented that is designed to continue to thwart a Microsoft bid going forward. 

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