Antitrust

In not disapproving the Google-AdMob deal as the FTC staff recommended, the FTC effectively is ceding at least most of the mobile ad market to a Google monopoly.

• In a clearly tortured, conflicted and political statement, the FTC justified their approval despite the evidence and their merger guidelines by saying: "The Commission has reason to believe that Apple will quickly become a strong mobile advertising network competitor." 

I.  The FTC's political judgment to bet on Apple rapidly becoming a substantial competitor to Google in a years time (and to disregard the evidence and the FTC's new horizontal merger guidelines) -- has the real world effect of ceding at least most of the mobile ad market to Google. Why?  

First, by the FTC's own admission, Apple was not an advertising competitor at all before it bought #3 mobile ad provider Quattro. Thus, implicit in this FTC decision is a very big, going-forward assumption that the new synergies of Apple-Quattro in the next year will more than offset the loss to competition of AdMob, the clear #1 mobile ad competitor and first-mover with about half of the market.

Goobris: (noun) Google's frequent total lack of self awareness when it says something publicly. 

In the Reuters article "Google to fight Government if AdMob deal blocked," Google CEO Eric Schmidt exhibited characteristic goobris in criticizing the FTC's review of the Google-AdMob acquisition.

First, Mr. Schmidt amazingly complains that the FTC's extended review of the acquisition left AdMob at a "significant disadvantage" competitively vs. Apple.

Many are missing the forest for the trees in jumping to the conclusion that the two-week extension in the FTC's review of Google-AdMob means the FTC is reconsidering the FTC's staff recommendation to block Google-AdMob as anti-competitive.

• Google is cleverly trying to misdirect the focus off Google being the actual #2 in-app mobile advertiser, which is buying the actual #1 AdMob market leader, by talking up the potential competitive advertising threat of a distant #3 player Quattro being bought by non-advertising company Apple. 

Whatever the Atlantic's national correspondent Mr. James Fallows calls his Atlantic cover story: "Google: Inside the company's daring plan to save the news (and itself)," it can't be journalism.

It was one of the most vacuous 12-page puff pieces I have ever read. Like Jeff Jarvis described: "It doesn’t break a single new nugget of news." It was the literary equivalent of a puppy jumping up incessantly to lick the face of the person in closest proximity. 

How ironic is it that a journalist, that made a point of telling the reader that he taught journalism for several years, wrote the functional equivalent of Google PR brochure extolling all the good Google has done for journalism/newspapers -- with no journalistic critical thinking or balance.   

It is hard to fathom that in twelve pages there were:

New evidence suggests Google blatantly misled public investors about its own assessment of the antitrust risk involved in Google acquiring AdMob.

On Google's webpage on the AdMob acquisition, in the Q&A section, Google said at the time of the acquisition:   

• Question: "Do you have any concerns about regulatory approval?"
  • Answer: "We don't see any regulatory concerns with this deal..."
• (At the time, Precursorblog posted that Google was clearly misleading people about the antitrust risk the deal faced.)

Now we learn from a Bloomberg/Business Week story:

• "Google CEO Eric Schmidt was so intent on buying AdMob that two people with knowledge of the deal say he agreed to pay a "kill fee" of around $700 million if the deal failed to close for some reason, such as an antitrust motion from the Justice Dept." 

It is important to put this $700m AdMob deal "kill fee" in perspective.

Google's core search advertising monopoly is understated substantially by many for several reasons.

1. Most cite second best source: Media reports tend to report the most frequent and publicized ComScore 65.1% retail market shares for Google in the U.S., not the more accurate and comprehensive Hitwise 70% retail market shares in the U.S. that the DOJ/FTC rely upon, (because Hitwise's sample size is much bigger than ComScore's.)

2.  Most don't cite total share: Media reports almost never use Google's total market share because they almost always miss or forget to add in Google's wholesale share of searches to its retail share of searches.

Given the FTC is very likely to disapprove Google's acquisition of AdMob soon, I have prepared a one-page chart that illustrates the core reason the deal is anti-competitive: it would create a substantial bottleneck for advertisers and publishers entering the in-application mobile advertising market.

• To help people get up to speed on the deal and the likely FTC disapproval coming up, I have also pulled together a 30-page Google-Admob backgrounder, which includes a one-page summary, charts, the top 10 reasons the deal is anti-competitive, why Google is a monopoly, how Google has abused its monopoly, and why Google's main antitrust defenses, like "competition is one click away," are specious.

Impact of New DOJ/FTC Horizontal Merger Guidelines On Deal:

Google's latest privacy-killing act of privacide is "Google's roving Street View spycam," which is not only taking pictures, but is also scanning to log WiFi network addresses and unique Media Access Control (Mac)addresses per Andrew Orlowski's excellent scoop at the Register.

The abrupt change, that Google's CEO Eric Schmidt will no longer be accountable to shareholders on Google's earnings calls, should prompt investors to ask why? 

• Google claimed that they wanted to put more focus on Google's strong financials, but they did not disclose any more than Google's usual barest of minimum of information to investors.  
• The most obvious reason for this abrupt change is the literal explosion of real franchise liabilities and risk overhangs to Google that reared their ugly heads this past quarter. 
  • Had CEO Schmidt been available to answer investor questions, Google's exploding liabilities could have dominated the Q&A and the investment narrative coming out of the earnings call.

What has changed, and what Google has been not been open about, is the very serious ripening of three different types of going-forward franchise risks (antitrust, privacy/security, and intellectual property) that cumulatively herald a de facto change in Google eras: from the roaring "Growth Decade" of 2000-2009, to the more unpredictable "Liability Decade" of 2010- 2019.

Google announced 4-9-10 that "we've decided to take speed into account in our search rankings" in a Google blog post by Amit Singhal and Matt Cutts entitled: "Using site speed in web search ranking." (Thanks to the Register's Cade Metz for flagging this issue.)