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Will Google seek DOJ approval of any Twitter agreement?

Reuters reports that Twitter is in talks with Google and Microsoft about "licensing its data feed to the companies search engines."

If a Google-Twitter agreement materializes, surely the DOJ will want to review any proposed Google-Twitter agreement for antitrust issues.

  • First, a Microsoft-Twitter agreement certainly would be reviewed by the DOJ as part of the DOJ's current review of the proposed Microsoft-Yahoo search agreement.
  • Second, per Hitwise, Microsoft currently only has 9% share of U.S. searches, Yahoo 16% and Google 71%.
  • Third and probably most importantly, the DOJ would be interested in whether any Google-Twitter agreement, would be a de facto agreement that Twitter would not compete against Google, given that Google would undoubtedly generate the lion's share of Twitter's early revenues. 
    • Given Google's search advertising dominance, a Google-Twitter search-licensing agreement would have the obvious potential of compromising Twitter's interest in becoming a competitor to Google, because Twitter could become dependent on Google for most of its initial revenue stream.
      • (This was the thesis of my Googleopoly III analysis, which argued the Google-Yahoo ad agreement would make Yahoo dependent on Google. The DOJ apparently agreed in that they blocked the Google-Yahoo ad agreement.)   
  • Fourth, in antitrust parlance, Twitter represents a classic potential category changer, that if it remains independent of Google's monopoly orbit, could potentially become a possible competitive platform to better compete against Google eventually. 
    • This is not theory, this idea was a major reason why DOJ sued Microsoft because Netscape was viewed as a potential category changer that was not allowed to become a competitive platform to Microsoft at the time.
  • Fifth, DOJ now realizes now that Google has already bought two companies that represented potential competitive building blocks necessary to compete against Google -- that now will never be competitive threats to Google.
    • The FTC's 4-1 approval of Google's DoubleClick acquisition allowed Google to acquire the only missing pieces in its global advertising business, i.e. access to most all of the Global Fortune 1000 client relationships that Google did not have, but that DoubleClick did; and access to the ~quarter of websites/global audience that DoubleClick had that Google did not. 
    • DOJ approval of YouTube (without even a second request) was another major gift to Google's acquisition of market power and tipping to monopoly. That's because YouTube is now the second largest generator of searches worldwide -- over a fourth of all of Google's market search share.
      • In other words with YouTube, Google has 71% market share per Hitwise, without YouTube they would have about 50% market share of search. 
      • Moreover, Google's CEO Eric Schmidt recently admitted that Google paid ~$1b more than Google thought YouTube was worth, with the implication being that Google bought it to keep it from being a category-changing potential competitive platform that could compete against Google.  
    • To the DOJ's credit, the DOJ did step in and prevent Google from cartelizing the search outsourcing/syndication market by blocking the proposed Google-Yahoo ad agreement.

In short, Twitter may be the single most interesting potential category changer and competitive disruptive force in the Internet sector today.

  • It would be very surprising if the DOJ did not want, at least, to take a hard look in a review process, at any potential anti-competitive issues raised by a potential Google-Twitter agreement, given the history here, and all that is at stake.