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Google's U.S. revenue share increases to 93.8% in 2Q10 -- Google's EU revenue share is even higher

Google now has 93.8% of U.S. revenue share of search advertising as Google has taken ~20% of the search advertising revenue share that they did not have a year ago.  Google continues to relentlessly gobble up massive search advertising revenue share from its only two significant competitors, Yahoo and Microsoft, in part because:

  • Google's relevant revenues are 20x bigger than Yahoo's and 57x bigger that Microsoft's; and
  • Google is growing its huge base so much faster -- +24% to Yahoo's -8% and Microsoft's +13%. 

Given that these revenue share calculations are relatively easy to do (explained in detail below), and that the key revenue numbers are publicly available, it is amazing how no one in the press that reports on Google antitrust issues discuss revenue market share, which is what really matters in antitrust investigations trying to prove monopoly power.  

  • Rather than reporting monthy/quarterly search "horse race" results of search share changes from Comscore, that are trivial, it would seem more informative to put it in perspective, i.e.  that even when Yahoo and Microsoft combine their search operations later this year, Google's U.S. search advertising revenues still will be 15x larger than Bing/Yahoo's...
    • and even larger than that relatively in the EU, given that Google's search unit shares are much higher in the EU -- ~85-90% versus ~70-75% in the U.S. per Comscore and Hitwise.
  • If the rest of world's search advertising revenues were incorporated into the analysis, Google would also dominate more than 90% of the entire world's search advertising revenues.  

The takeaway from Google's rapid and unrelenting market share gains of search advertising revenues combined with increasing complaints of anti-competitive discrimination in Google's search rankings, increases the likelihood of the EU, and possibly the DOJ, launching formal monopoly investigations of Google.    


How was Google's 93.8% U.S. revenue share  calculated? 

  • Google's 2Q10 $6.82b dominant share of search advertising revenues increased $1.30b or +24% (2Q10/2Q09).
  • Yahoo's 2Q10 $331m share of search advertising revenues decreased $28m or -8% (2Q10/2Q09).
  • Microsoft's 2Q10 search advertising revenues are much smaller, roughly half of Yahoo's. Microsoft's online advertising revenues, (of which search is only a portion) were $565m in 2Q10 and increased $64m or +13% (2Q10/2Q09) from $501m in 2Q09.
    • For comparative purposes, if we assume Microsoft's search share of its online business is the same as Yahoo's search share is of its business -- ~21%, this rough proxy of Microsoft's search advertising business would mean Microsoft's search advertising revenue proxy increased $14m or +13% from $105m in 2Q09 to $119m in 2Q10.
    • All other publicly traded entities search advertising is provided by Google on an outsourced or syndicated basis, so this revenue share analysis for all intents and purposes involves three companies: Google, Yahoo and Microsoft.
  • Putting all this together:
    • 2Q09 search advertising revenues of Google $5,520m, Yahoo $359m and Microsoft ~$105m equal ~$5,984m.
    • 2Q10 search advertising revenues of Google $6,820m, Yahoo $331m and Microsoft ~119m equal ~7,270m.
    • 2Q09 Google's search advertising revenue share was 5,520/5,984 = 92.2% revenue market share.
    • 2Q10 Google's search advertising share is 6,820/7,270 = 93.8% revenue market share. 
  • In sum, the best metric for gauging Google's true monopoly position and market dominance is search advertising revenue market share, which is ~93.8% according to the calculations and assumptions openly presented above.
    • This also means that in the last year Google has continued to take massive revenue share, i.e. Google has taken ~20% of the search advertising revenue market share that they did not have the year before -- per company reports.
      • (+1.6% increase in Google U.S. revenue market share 2Q09 to 2Q10 divided by 7.8% the market share still held by Google competitors in 2Q09 equals ~20%.)