There's new evidence today that Yahoo continues to stumble as Google continues to gain market share. Yahoo just announced meager 13% revenue growth for 4Q06, while Google announced at the end of the year that Google's revenue grew 86% during the same period. (That's over SIX times faster for those who care about those things!)
This is powerful additional confirmation that Google is quickly on path to reach 50% market share and beyond, a significant antitrust threshold of being considered "dominant" and warranting "stricter scrutiny" of its business practices for potential anticompetitive behavior. I explained the broader significance of this "dominant" threshold in my blog yesterday.
Another ominous development for competition in the search gatekeeper business, was a Merrill Lynch report discussed by Forbes which speculates about how Yahoo may have to merge with AOL in order to compete with Google.
Because of the obvious competitive separation Google is making from its competitors which are falling further and further behind, Merrill speculates about potential merger combinations in search among the big players, like Yahoo-AOL, Microsoft-Yahoo, Microsoft-AOL and even the preposterous possiblity of Google-Yahoo.
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First, let's not kid ourselves here -- with Google's market share 47% and rising rapidly, antitrust enforcers would consider this a "highly-concentrated market" and give any of these potential combinations a close look.
As a leading, high-profile antitrust analyst for the last fifteen years, it's my opinion that the only combination that would be a slam-dunk disapproval -- would be a #1+#2 combo of Google (47%) and Yahoo (28%) which would represent a quintessential monopolization through acquisition case. Merrill and others should know better than to even speculate about it -- it's a non-starter.
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While it would not be a slam dunk like Google-Yahoo, a #3 Microsoft (10.5% share) combo with #2 Yahoo (28.5% share), would likely be disapproved by antitrust authorities in my opinion. The search engine business is a lot less competitive and requires a lot more investment than most appreciate to gain significant market share.
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A Yahoo-AOL combo would likely be very doable, but it would be a very high profile transaction that would bring a tremendous amount of antitrust scutiny to the search engine business, attention that would not be welcome to Microsoft which is under DOJ supervision for monopolization and Google which will soon have "dominant" status.
The bottomline is that Google is increasingly dominating the gateway to all the nation's and the world's online content and applications.
