Antitrust

Just learned that the Senate Judiciary SubCommittee on Antitrust has scheduled a hearing on the Google-Yahoo agreement for Tuesday July 15th, at 10:30 am.

• "The Senate Committee on the Judiciary has scheduled a hearing before the Subcommittee on Antitrust, Competition Policy and Consumer Rights on “The Google-Yahoo Agreement and the Future of Internet Advertising” for Tuesday, July 15, 2008, at 10:30 a.m. in Room 226 of the Senate Dirksen Office Building. Chairman Kohl will preside. By order of the Chairman."

The House Judiciary Committee is expected to have a hearing that same afternoon on the Google-Yahoo deal, Internet competition and privacy.

Google unfairly represents that it competitively conducts 'auctions' for keywords in AdWords; Google even has an "auction policy." However, if you look up the definition of "auction" one finds it is the public sale of property to the highest bidder. 

• The big problem here is that Google's auction does not sell property to the highest bidder.

If Google were interested in fair representation and truth in advertising, Google would represent Adwords as Google's algorithmic secret selection process or GASSP.

• That's because Adwords is a really a mysterious 'Black Box' system, that is secret, non-neutral, non-transparent, non-auditable, and non-appealable.
• Google probably thinks its "unfair" to expect the world's leading Internet advertiser to respect fair representation and truth in advertising laws...

Drake Bennett of Boston Globe did a great job of highlighting some fresh new concerns about Google's extraordinary influence that I had not heard before -- see "Stopping Google."

• Here's the conclusion of the piece in order to encourage you to read the whole article:
  • "But there is a reason "Google" has become a verb: Google has so outpaced its rivals that it has begun to look like a monopoly, a necessity where users have only one real option. And the more we come to rely on Google, the more Google may have to listen to the rest of us."

In thinking about my recent post about how Google Adwords now formally discriminate against slower-loading sites by raising their minimum bidding price, I realized that small businesses and the "long tail" are probably most hurt the most by Google's new "quality score" policy.

• As I previously explained, Google has a subjective, non-transparent, non-auditable, or non-appealable "quality score" variable whose purpose is to maximize Google's revenue -- not to award the keyword to the highest bidder.

This new Google policy discriminates most heavily against small businesses because they:

Google AdWords announced a new net neutrality double-standard that may also be an anti-competitive practice, in that Google will start discriminating against slower-loading websites by charging them higher prices. 

Google took substantial market share from their Internet advertising competitors in 1Q08. Google's U.S. Internet advertising revenue grew ~7% sequentially from 4Q07 to 1Q08, while the Internet advertising revenues of Google's competitors fell ~8% during that same period, per newly released IAB figures and Google's 4Q08 figures.  

To the extent Google and Yahoo's new partnership in search and display advertising diminishes #2 Yahoo's viability to competitively discipline #1 Google's dominance of search and online advertising, online marketers and advertisers need Google-Yahoo to commit to respect a "Marketer Bill of Rights."

• Google-Yahoo jointly control:
  • 83% of U.S. search advertising share per eMarketer; and
  • 64% of all U.S. Internet advertising revenue per the IAB.
• Google's has ~1,000,000 advertisers in its network, compared to Yahoo's ~300,000 and Microsoft's ~75,000.

Marketer's Bill of Rights for the Google-Yahoo Cartel:

U.S. marketers do not currently enjoy, but should have the right to:

The new Google-Yahoo partnership to better converge the search and display markets is skating on thin antitrust ice that will only get thinner over time -- unless Microsoft or some unknown competitor somehow starts taking lots of market share from the new Goohoo. 

What are the important takeaways here? 

First, at core, the Google-Yahoo partnership is clearly about trying to snuff out Microsoft as a competitive force on the web. 

In two speeches this week, Google's CEO illuminated more about Google's master plan to "change the world" -- with minimal accountability.

To be fair, I am connecting two ideas from separate speeches by Google's CEO Eric Schmidt this week, that were shared separately but need to be connected to put them into better context. 

I couldn't help to notice yesterday that Google CEO Schmidt didn't take any questions from reporters who were in attendance or meet with the reporter pool afterwards, which is customary for speaking venues like Dr. Schmidt's speech Monday at the Economic Club of Washington.

What's Google got to hide in Washington?