FTC antitrust concerns over "inter-locking-directorates" reportedly have forced Kleiner-Perkins' John Doerr, to step down from Amazon's board, because he is also on the board of Amazon, a major book and cloud-computing competitor of Google -- per Miguel Helft's and Brad Stone's scoop at the New York Times Bits post.
This is the third (Amazon, Apple, Yahoo) too-cozy-for-antitrust-authorities, Keiretsu-like, Google business relationship that either the DOJ or FTC apparently have broken up.
- (I will elaborate on each of these problematic Keiretsu-like relationships (Amazon, Apple and Yahoo) later in the post.)
Three different interventions by antitrust authorities involving Google's ties with three different Fortune 500 companies in eighteen months constitutes a pattern and underscores the depth and breadth of antitrust concerns that U.S. antitrust authorities have about Google.
- It is unusual for a Fortune 500 company to have one brush with antitrust authorities warranting formal or informal intervention, thus it is extremely rare, maybe unprecedented, for one Fortune 500 company to raise serious antitrust concerns in three completely separate businesses that are also different from the target company's core business.
- This is on top of DOJ's serious, detailed, and well -publicized, antitrust concerns with the Google Book Settlement (here, here), and this is on top of the FTC's reported collection of signed declarations from competitors as a likely precursor to filing a case in court to block Google's proposed acquisition of AdMob.
- In addition, these Keiretsu relationships are also on top of the five private antitrust lawsuits pending against Google: Trade Comet and MyTriggers in the U.S., and Foundem, ejustice.Fr and Ciao in the EU., which all allege yet another form of anti-competitive behavior by Google, i.e. predatorily punishing potential search competitors with un-findable Google search rankings.
Now, let's get back to Google's Silicon Valley Keiretsu relationships with Amazon, Apple and Yahoo.
1. Google-Amazon: Like Google CEO Eric Schmidt was forced by the FTC to resign from Apple's board, FTC pressure apparently has forced John Doerr of Kleiner Perkins to resign from Amazon's Board... even though another Kleiner-Perkins Partner of Doerr's, Bing Gordon, will remain on Amazon's Board.
- What the NYT Bits post did not include in its story is that Jeff Bezos, Founder and CEO of Amazon, was one of the very first original angel investors in Google, (i.e. he was part of the very first million dollars raised by Google), and that investment came at the behest of Amazon's then VP for Business Development, Ram Shriram, who is now on, and will remain on, Google's Board. (Source: The Search by John Battelle, p. 86-87)
- So even after Mr. Doerr leaves the Google board later this year, the deep Google-Amazon Keiretsu relationships will remain largely intact because Google made Kleiner-Perkins and Mr. Bezos literally billions of dollars.
2. Google-Apple: While Google's CEO Eric Schmidt was forced by the FTC to resign from the Apple Board last summer, and Apple Director, Arthur Levinson, resigned from Google's board last fall under FTC pressure, Apple Director Al Gore remains a Senior Advisor to Google.
3. Google-Yahoo: The ties between Google's founders and Yahoo's founders, all Stanford alums, are longstanding and deep as most all the books on Google document. The Keiretsu relationship was so strong in fact, that when Yahoo founder Jerry Yang wanted to thwart a buyout offer from Microsoft in the spring of 2008, Yahoo arranged for Google to swoop in as a "white knight" and offer an alternative to Microsoft in the form of an Ad Agreement between the #1 and #2 search advertising competitors.
- After a thorough investigation, DOJ blocked that proposed ad agreement 11-5-09 as anti-competitive and collusive.
- DOJ's special counsel for the case, Sandy Litvack, indicated to AmLawDaily that the DOJ was prepared to file a Sherman Section 1 & 2 monopolization case if Google did not withdraw.
- The DOJ was concerned that if Google and Yahoo partnered they would dominate over 90% of the search advertising and search advertising syndication markets.
In sum, Google's deep and ongoing Keiretsu-like relationships remain problematic for antitrust authorities. I predict even more Google Keiretsu relationships will be of concern to antitrust authorities going forward.
Moreover, all this cumulative, augmentative, and serious antitrust investigation by multiple antitrust authorities suggests an increased liklihood that:
- The FTC will block Google's acquisiton of AdMob;
- The Court will reject the Google Book Settlement unless Google agrees to a consent decree subjecting Google to permanent and close DOJ antitrust and copyright supervision;
- The EU eventually will launch a formal antitrust investigation of Google; and/or
- The DOJ or FTC eventually will launch a Sherman Section 1 & 2 monopolization case against Google in the months or years ahead.
