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How Google is Disintermediating Brands By Design -- Why Chrome is an abuse of market power

The best evidence of market power is when a company utterly disregards its customers' best interests -- because they know their customers have no real competitive alternative. 

  • How Google designed its new Chrome browser, to tie its dominant search bar to the previously separate and neutral address bar, into one single 'Omnibox (see p.19),' is Exhibit I in how Google is anti-competitively leveraging its search dominance to its own advantage and to the serious detriment of its advertising customers.   

Advertisers/brand marketers who already are concerned that the Google-Yahoo ad partnership is anti-competitive, and that Google's auctions are anti-competitive because they are not in fact true auctions, should be triply troubled by the anti-competitive implications of Google's Chrome browser technology which efffectively disintermediates brands -- by design.

  • Given that Google's Chrome gained about 1% share or roughly 10 million Internet users in the first two weeks of introduction, advertisers should have this new fast-growing trend on their radar screen and concern list.   

What is in the best interests of Google's advertiser/brand marketers?

  • What's best for brands, is a standard, separate and neutral address bar, where users who know exactly where they want to go, i.e. to a brand name, can type that well-known brand URL in and go directly to the branded site that they seek -- with no interference from anyone or Google.
  • Brand owners have invested millions and sometimes billions on competitive advertising to create brand awareness and brand recognition among consumers so they can easily and directly find them on the web without the intermediation of a search engine.
  • The commercial benefit of that branding and a separate and neutral address bar, is that customers can quickly find the branded site they seek without being blocked and diverted away from where they specifically asked to go, to a way-station page of Google's search results -- which is bad for the brand and good for Google -- for three reasons.
    • First, Google proactively disintermediates the branded customer by anti-competitively inserting itself as an unnecessary, unwanted and self-dealing middleman broker -- so that Google can get paid a 'Omnibox toll' for letting the customer through the search page, while also getting paid by competitors who seek to divert these hot and direct Internet leads to their sites.  
    • Second, it diminishes the value and effect of all the millions or billions a brand marketer spends in offline advertising that Google does not benefit from -- forcing the brand marketer to buy yet more Google search advertising if it wants to keep the customer that it already had won off-line -- in Google's dominant online market. 
    • Third, it monetizes the address bar for the first time. Where before the address bar was a 'free' and 'open' gateway to the Internet, with the Chrome browser, the only way you can get to the Internet is by going through Google's monolithic Internet advertising tollbooth of unrequested search results.  

This is relevant to the Google-Yahoo investigation, because it is another glaring example of predatory behavior by Google that leverages its dominance in search to extract monopoly rents from customers

  • Look at this Omnibox toll booth/tying scheme, as a new sixth anti-competitive strategy in Google's predatory playbook.
  • You can see my catalogue of the first five strategies in my white paper  "Googleopoly II: Google's Predatory Playbook to Thwart Competition."  

Bottom line:

Advertisers concerned with the anti-competitive implications of the proposed Google-Yahoo partnership -- now have another anti-competitive concern -- having their hard-earned brand dollars wasted and thwarted in the online space because Google's tied-browser forces brands to go through Google's search-page-ad-toll-booth to gain access to customers that the branded company already paid for with their own off-line branding campaigns.

Advertisers should begin to calulate the customer loss to them of having their customers being diverted away from their website to a search page where their competitors get a second bite at the apple, if they are willing to pay Google's market power toll.

  • Given the enormity of Google's ~700 million user audience, the brand dilution/bleed, from Google's Omnibox-tying and brand disintermediation -- is significant and will only grow with time -- as more people come online and Google's Chrome browser share inexorably grows from being tied to Google's search engine.

Forewarned is forearmed.