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Antitrust

Why FTC review of GoogleDoubleClick is significant

Both the New York Times and the Wall Street Journal are reporting that the Federal Trade Commission (FTC) will substantively investigate the proposed Google-DoubleClick merger.

  • This comes on the heels of an AP report that "an Independent European Union panel has launched an investigation into whether Google Inc.'s Internet search engine abides by European Union privacy rules." Google's search share in Europe is reportedly 75% and 90% in Germany, so we should all expect the EU to also play a formal and significant role in the review of Google-Doubleclick.

Why is the FTC review development significant?

Senate Chairman Kohl urges DOJ block XM-Sirius merger

Senate Antitrust Subcommittee Chairman Kohl (D-WI) wrote the DOJ urging them to block the XM-Sirius merger.

It is an exceptionally persuasive and compelling letter that effectively eviscerates XM-Sirius' contention that satellite radio is not a separate market.

  • The Senate antitrust experts have concluded it is a separate market, making this a classic attempt to merge to monopoly.

I believe this letter is a good "precursor" for what the DOJ will think and do.

This letter also reached the same conclusion I reached shortly after the merger was announced and which I blogged on in my previous post "XM-Sirius: The emperor has no clothes" 3-31-07.

The building blocks of Google's market power/search dominance

The NY Times unearthed a fascinating and extremely important piece of antitrust-relevant information in its great article today: "Firefox and the anxiety of growing pains." 

  • The NYT obviously wrote the article because it exposes a comical and ironic juxtaposition of an Open Source company like Mozilla, which is passionate about transparency, having cut a secret and lucrative royalty deal with Google, which is passionate about the "secrecy of its arrangement and agreements."

However, why this article is such a gem and is so important, is that it provides missing link evidence of why Google has become such a dominant search engine so fast, and why that domination is destined to increase. 

Microsoft-Aquantive increases Google-Doubleclick antitrust focus

I believe Microsoft's purchase of Aquantive will have the effect of increasing antitrust scrutiny of Google-DoubleClick.

  • Listen to this quote in today's Investor's Business daily in an article by Patrick Seitz "In ads, Microsoft chooses a $6 Bil Buy-in":
    • "Microsoft believes consolidation in the ad sector will continue and that there ultimately will be only two meaningful companies in online advertising, says Matt Rossoff, an analyst at independent research firm Directions on Microsoft."

Let me count the ways that quote gives antitrust authorities the willies:

  • First it is their job to not allow industries to become duopolies or acquire market power through acquisition. If that occurs naturally, it is not a problem, but "acquiring" market power is illegal.
  • Second, Microsoft, an expert in market power, is reportedly the one that sees this market trending to two players.
  • Third, to the extent that most all of the business model of the Internet is being driven by the advertising model and Google's spectacular success at that model, Microsoft is indicating that the Internet business is destined to be controlled by two entities that the Government allowed to consolidate.

I can hear the Antitrust authorities sharpening their pencils and flexing their mouse clicking fingers now.

Dismantling Google's reasons why NN should not apply to them

I was able to ask the only question from the audience of the Educause net neutrality panel today.

  • After introducing myself and disclosing that NetCompetition.org is funded by broadband companies, I asked Rick Whit of Google the following very important questions:
    • "If non-discrimination is an important principle of the Internet, why should it not apply to all Internet access technologies in a neutral way?
    • And why shouldn't net neutrality apply to all internet access technologies that have the potential to block content like:
      • Microsoft's ~90% share of the browser market; or
      • Google's 65% share of the search market in the US and Google's 75% market share in Europe? 

Mr. Whit's first weak line of defense was that the term is really "network" neutrality implying it was not about "Internet" neutrality.

  • Oops! Seems Mr. Whit is so new to Google that he hasn't had the time to read Google's very own brief: 
    •  "Guide to Net Neutrality for Google Users

      "Net neutrality" is an issue that will shape the future of the Internet.

      What is Net Neutrality?

      Network neutrality is the principle that Internet users should be in control of what content they view and what applications they use on the Internet. The Internet has operated according to this neutrality principle since its earliest days."

Can antitrusters keep up with Google? Google now at 65.3% share

USA Today reported today that "Google accounted for 65.3% of all U.S. online searches for the four weeks ended April 28, up from 58.6% in April 2006, according to web tracker Hitwise."

Hitwise has:

  • Google at      65.3%
  • Yahoo at       20.7%
  • Microsoft at    8.5%
  • Ask.com  at     3.7%

To be fair, Hitwise has Google a little higher than ComScore or Neilsen NetRatings in absolute terms, but all three consistently record the same inexorable fact: Google is increasing its dominance of Internet search.

Good ClickZ article on pros & cons of Google-DoubleClick

Harry Gold on ClickZ gives a good and balanced review of the "Pros and cons of Google and Doubleclick."

  • As an industry insider, he gives a sophisticated analysis that is worth the read.  
  • This was the most interesting factoid to me:
    • Doubleclick's "DART does have a hold on over 70 percent of the ad-serving marketing, according to a March 2007 CIMA/William Blair study. Also on the paranoia side of the equation: the data Google and DART collectively have on the population at large are already rather Big Brotherish, never mind Google extending its cookies' reach onto DART's network of sites.

Google sued yet again for "rampant" copyright infringement

eGoogle-YouTube was sued yet again for rampant copyright infringement in U.S. District Court in New York.

Plaintiffs, including the English Football Association Premier League and others said in their court filing that Google-YouTube is "pursuing a deliberate strategy of engaging in, permitting, encouraging, and facilitating massive copyright infringement" in order to increase the value of Google by generating more traffic which it could monetize without having to pay for.

Why is this British suit particularly interesting? Remember the fact that Google already has 75% share of the search market in the UK?

Microsoft Ballmer's insights into Google-DoubleClick merger

I always take time to read interviews with CEOs because I always learn something.

What did he say that was relevant to the Google-DoubleClick?

First, he made the case why the Google-DoubleClick merger is a big deal:

  • "I do think that it would be worth the regulators taking time to understand this market, much the way they took the time to understand other parts of the technology business, because the whole future of the media and advertising will move to the Internet. "
  • "What we think of television today, what we think of newspapers, magazines, you name it -- all of these things are going to move to the Internet and be funded by advertising. And so we are talking about a pretty important part of ... people's basic lives." 
    • What this means is that Google-Doubleclick is about the evolution and the future of advertising. 

In response to a question about being third in search -- Ballmer said:

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Q&A One Pager Debunking Net Neutrality Myths