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Can antitrusters keep up with Google? Google now at 65.3% share

Submitted by Scott Cleland on Thu, 2007-05-10 10:34

USA Today reported today that "Google accounted for 65.3% of all U.S. online searches for the four weeks ended April 28, up from 58.6% in April 2006, according to web tracker Hitwise."

Hitwise has:

  • Google at      65.3%
  • Yahoo at       20.7%
  • Microsoft at    8.5%
  • Ask.com  at     3.7%

To be fair, Hitwise has Google a little higher than ComScore or Neilsen NetRatings in absolute terms, but all three consistently record the same inexorable fact: Google is increasing its dominance of Internet search.

If you want to understand why it is quite clear that Google is on path to strongly dominate the online text ad business (search) please see pages 5 and 6 of my 10 page antitrust analysis of the proposed Google-DoubleClick merger.

  •  In a nutshell, Google has already built an insurmountable first-mover lead on the two key competitive components of search: reach and speed. Google is also much more aggressively buying search traffic share through deals with AOL, Dell, Myspace and YouTube with the tacit "approval" of antitrust enforcers.

It appears from the DOJ's cursory review and approval of the Google-YouTube merger, that the DOJ did not:

  • Understand Google's business was not "search" but online advertising;
  • Grasp the remarkably powerful audience aggregation "network effects" fueling Google's increasing online ad dominance; 
  • Comprehend that YouTube was just one acquisition in a much grander Google acquisition strategy to dominate online advertising through systematic acquisition of complementary online audience or traffic share; or  
  • Grasp that in online advertising, adjacent markets can be both complements and substitutes, making it much harder to cleanly define these markets as vertical or horizontal -- in reality they are both.

Current antitrust thinking and knowledge of Internet markets may not be up to the task of dealing with the extraordinary speed and sophistication of this brilliantly conceived and executed Google acquisition grand plan.

  • While antitrust often operates in "dog year" legal time, Google is operating on "web-time," where the adage  is "there are four web years in every earth year."
  • It is unclear whether antitrust enforcers grasp the importance of the velocity of this market.
  • It's a race to aggregate audience or web traffic. 
    • Google has already locked up huge chunks of traffic and audience through its deals with AOL, Dell, MySpace, YouTube and now DoubleClick.
    • These dots are pretty easy to connect -- IF antitrusters can figure out the game in time.  

With the YouTube and pending Doubleclick acquisition, Google is making stunning progress in aggregating share from adjacent and naturally integratable market segments -- in order to dominate online advertising.

  • I must admit I am impressed with the speed and acumen of Google's strategy to corner the online advertising market.
    • By the time Google's competitors awake from their slumber and antitrust experts figure out the sheer brilliance of Google's competitive foreclosure strategy, it could be "game over."  
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