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Google surpassing Yahoo as most visited US site; but Google-Yahoo don't really compete do they?

As Google and Yahoo continue to negotiate their search outsourcing pact, pesky competitive facts keep arising that suggest that such a deal is likely to eventually be found by antitrust officials to be illegal anti-competitive collusion.

  • Yahoo is running an AP story that says that Google has now surpassed Yahoo as the #1 "most popular website in the United States according to Comscore."
  • This is on top of Google and Yahoo being the #1 and #2 search providers in the U.S. and the leading competitors in the display advertising market, ad tools market and ad brokering market.

The operative question is not whether Google and Yahoo can craft an acceptable search advertising outsourcing pact that can pass antitrust muster, but whether the DOJ wants to encourage such intimate  and important business "cooperation" between Google, the dominant #1 in the market, and one of the only two companies that most consider to be Google's primary competition in multiple market segments.

   

How Googleopoly stacks up against Microsoft's Windows monopoly

A Silicon Insider post does a great job of building on Richard Waters FT point that Google's search business is increasingly rivaling the size of Microsoft's Windows monopoly.

It is getting harder and harder for Google to continue to pretend to be the little vulnerable upstart -- Google is now the dominant incumbent in search and increasingly the market power in online advertising.

The numbers in Silicon Insider's analysis are quite compelling.  

Must read: FT's "Google triumphant" -- it's an excellent analysis of why Google is dominating...

Kudos to Richard Waters of FT for his insightful analysis "Google triumphant."

Let me highlight some key takeaways:

  • The failure of the Microsoft/Yahoo merger eliminates the biggest short-term threat” to Google’s unrivalled position on the web, says David Yoffie, a professor at Harvard Business School. For now, its momentum “seems unstoppable”.

The article also provides excellent new detail to the thesis in my Googleopoly analysis and Senate testimony that Google's real dominance is as the dominant "market maker" for online advertising.

Has Google's dominance of search reached the tipping point asks American Consumer Institute

The American Consumer Intstitute just put out a good consumergram on: the DOJ investigation of the Google-Yahoo deal and asks if the search market has reached a tipping point.

  • The ACI consumergram is asking the right questions.
  • More entities should be, and will be, asking these types of questions going forward because the facts and Google's behavior will demand it.

As I explained in detail in my Googleopoly analysis, the search market has already tipped to Google and the Google-DoubleClick merger was a tipping point to enable Google to extend its market power in search advertising to display and online advertising as well.

As I explained the stakes of lax antitrust enforcement in my Senate Judiciary testimony:

"The Stakes of Lax Antitrust Enforcement: Will Google be enabled to become the:

“Online-advertising bottleneck provider” picking Internet content winners and losers?

More evidence of Google's conflict of interest in protecting its users from spammers & scammers

Found a smoking gun on how Google's conflict of interests actually hurts Google users, which I explain later in this post.

  • As I have blogged several times of late, here, here, here, here, and here, Google works for advertisers and publishers not users/consumers; and Google's undisclosed conflict of interest, lulls Google's users into a false sense of security that Google is looking out for users' best interests -- and safety -- when they clearly are not.
  • I have found specific evidence below that Google is not looking out for its users' best interests or safety. 

Google knows there are "potentially harmful sites that make Google users more vulnerable to spammers or scammers. I have suggested before that they could easily warn users of the danger from specific results with warnings on search result pages.

Why EU's concerned with a Google-Yahoo pact -- Google is close to monopoly share in Europe

A Yahoo-Google search outsourcing pact arguably faces even more problems with European antitrust authorities than the reported U.S. DOJ antitrust investigation, for two reasons:

Google's founders understood the conflict-of-interest in its business model from the beginning

A consistent theme in my ongoing analysis of Google, has been Google's corporate refusal to overtly disclose the fundamental financial conflict of interest inherent in their business model, i.e that Google does not work for users like they routinely claim, but for advertisers and publishers. 

  • The best example of the serious risks to users of this undisclosed conflict of interest has been how Google has reacted since early April to the dramatic increase in risk to its users of indentity theft and fraud by cyber-criminals exploiting security weaknesses in Google's search results.
  • I personally have seen the consumer devastation that undisclosed conflicts of interest can cause.
    • After the collapse of Enron, I was asked to testify in the Senate on how conflicts of interests were integral to Enron's fraud.
    • I was also asked to testify on the dangers of undisclosed conflicts of interest in the House during the tech meltdown.

Interestingly, it appears I am not the only one concerned that Google's advertising-based search model has a serious inherent conflict of interest.

Google wins as Yahoo allowed Google to paint Yahoo into a corner that hurts Yahoo shareholders

Dominant #1 Google, in calling #2 Yahoo to discuss a slow competitive search surrender by Yahoo to Google, in order to thwart a purchase of Yahoo by #3 Microsoft, apparently succeeded.

Yahoo-Google's search outsourcing pact: the fine line between collaboration and collusion

Interested observers in the Microsoft-Yahoo-Google-AOL-Ask.com-MySpace incestuous soap opera called search advertising, would be wise to bone up on the fine line between acceptable industry collaboration and illegal collusion, if recent reports prove true.

  • The Wall Street Journal reports that Yahoo may be days away from announcing "an agreement to carry search advertisements from Google.." and that Google feels "that the upside is much greater than the potential downside" from the arrangement."  
  • The Financial Times broke the story that the Department of Justice was investigating Google's interaction with Yahoo and that "the prosecution of collusion is a top priority."     

The fine line between collaboration and collusion. 

First, while many may be aware that a Google-Yahoo outsourcing deal "would likely attract intense antitrust scrutiny" there is precious little analysis on this linchpin issue -- hence the genesis of this piece.

I believe the pattern of Google becoming the outsourced search engine for most all of the Internet -- save for a few properties -- is one of the most important and least understood competitive Internet issues.  

Google's Schmidt talks about his non-neutral enterprise business plans... and double standard

CNBC's Maria Bartaromo had a rare in-depth TV interview with Google CEO Eric Schmidt.

The comments that have relevance to net neutrality were how Google's CEO, one of the biggest proponent for Net Neutrality legislation of broadband networks in the world, candidly admitted that all customers were not alike; that they have different needs; and that Google plans to charge those who want higher quality of service -- more money.

  • Bartiromo: "What about the corporate customer? I understand that there are tests going on right now. What are you hearing from that customer?"

    Schmidt: "We're working with the corporate customers to do the same thing inside their networks as we do with consumers. Now, corporate customers are
    not the same thing as consumer customers. Corporate customers have a much higher need for reliability, so we'll sign an agreement that guarantees a certain level of service. But then we charge for it.
    So that's a case where people are willing to pay for something which is free without the level of reliability. They also have other needs. They need greater security, for all the obvious reasons. And they also need better integration with all of the other services that their companies have. This is a long process. It's not a fast process. But it's very deeply valuable. And those customers we will have for 20 or 30 or 40 years as they build into our model. We like that model. It's an enterprise play. It's a business that I've been in for a long time, and one which will ultimately be very, very lucrative through Google." [Bold added]

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Q&A One Pager Debunking Net Neutrality Myths