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Significance of recent Google antitrust developments

A spate of recent Google antitrust developments indicate there is more here than meets the eye.

First, Google, just like it cleverly discriminates in its search results to its advantage, cleverly discriminated when it announced antitrust information material to Google investors -- not when it occurred but when the least number of people would see it, according to its web analytics calculations.

 

  • It is no coincidence that Google waited several weeks to announce -- at 4:13 EST Friday September 3rd, just before a long-three-day-weekend when the fewest people would be paying attention -- that the State of Texas Attorney General has opened a broad antitrust investigation against Google for anti-competitive search discrimination.
  • Just like Google knows how to maximize public perception to its benefit -- in placing its Google-owned content at the top of Google's search results, and lowering the opaque quality scores of competitors so they will have practically-invisible rankings -- Google knows how to manage public perception of Google in the media and on its leading Google News rankings of over 25,000 news sources.
  • When a company dominates search and news aggregation, the leading way people get news online, Google ensures that most people, and especially its biggest supporters who most use its services, are less likely to see information or news unfavorable to Google.
  • It is also noteworthy that Google obviously leaked the news first to Search Engine Land, which coincidentally posted just five minutes before Google did, and which coincidentally is the site Google can most count on for favorable coverage.

 

Second, the Wall Street Journal reported today: "Inquiry Zeroes in on Google Deal," about the DOJ investigation of Google's purchase of ITA Software, the leading airline reservation search platform.

 

  • The article in concluding that "many antirust experts believe regulators are unlikely to try and block the [ITA] transaction," highlights half of what is significant here.
  • This conclusion implicitly recognized that vertical transactions are what I have long called the "soft underbelly of antitrust enforcement."
  • Since there are no legal precedents for blocking a vertical deal like Google-ITA, antitrust authorities understand clever transactions like Google-ITA  and Google-MetaWeb exploit a seam weakness in antitrust enforcement.
  • Google has exploited that soft underbelly like probably no other in extending its monopoly dominance vertically with its over 75 transactions -- including the biggies: YouTube, DoubleClick and AdMob.
  • The significance of Google-ITA and Google's vertical acquisition blitzkrieg this year is that Google is forcing antitrust authorities, who have issues with particular behaviors or acquisitions, to have really only one weapon at their disposal -- the biggest one -- a broad monopolization case against Google.
  • Simply, Google's brilliant serial tactical execution of its acquisition blitzkrieg, has a strategic soft underbelly of its own -- it increases the probability of a broader monopolization case being pursued in the U.S. and/or in the EU in the month/years ahead.

 

Third, the significance of Google's repeated assertion that it will not be in the travel business itself, is clever misdirection because Google does not have to offer travel services directly to benefit anti-competitively and greatly from Google-ITA.

 

  • Antitrust authorities are more than aware of how Google can benefit to the extent they can steer or stimulate more traffic to:
    • Any one of the hundreds of top sites that are de facto "Google satellite" sites because they are financially dependent on Google for search monetization and increasingly display ad-serving; and
    • Any of the tens of thousands of "Google partner" sites which revenue share with Google.

 

 

In short, while Google may think the antitrust web around it is well under its control, it is ominous indeed that Google now faces formal antitrust investigations at all of the most relevant levels: in the courts (in the U.S. and EU), in the States (Texas, and don't be surprised if other states don't join in), and with antitrust authorities (U.S. DOJ and the EU.)

 

  • I continue to maintain that it is a matter of when, not if, antitrust authorities will bring formal monopolization cases against Google.

 





 

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