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Oops! Googleopolist's wife talks out of school on pending merger

Investors Business Daily and Pete Barlas had a super antitrust scoop today embedded in its article "Video, Cell, Display Ads get More Google Focus".

The article quoted "Google product manager" Susan Wojcicki, (who also just recently married Google co-founder Sergey Brin), candidly defining the online ad market to reporters.

  • Her blunt public market defintion must have Google's antitrust lawyers absolutely cringing and muttering expletive deleteds.

During a meeting with reporters, IBD quoted Ms. Wojcicki saying:

  • ""We are focused on the branding market" she said. "The online ad market is search and display -- and there isn't a lot after that.""

Oops!

  • That is NOT the market definition that Google's lawyers are explaining to the FTC and EC. 
  • Google is reportedly defining the market very narrowly so that they can argue that the search and display businesses do not compete with each other.
  • It seems like Ms. Wojcicki did not "get the memo" and was candidly and guilelessly blurting out the true market perspective and competitive plans of the most senior levels of Google management.

Why is this is serious and noteworthy?

  • First, one of any antitrust investigator's pet peeves is for a company to say different "legal" messages in different forums.
    • There is a fancy legal term for this offense, but the layman's term is "having different 'stories' for different audiences." 
    • That may not be a problem in marketing circles, but it surely is a problem in a highly-charged legal proceeding where Google is attempting to inspire trust with FTC investigators.   
  • Second, and more importantly, Ms. Wojcicki's market definition, if it is really how Google's senior managment view the market (and that can be checked through review of Google's senior management emails), this merger is highly anti-competitive.
    • If Ms. Wjcicki is speaking factually and knowlegably, (which I believe she is because she is so well-respected and obviously intelligent), when she says: the online ad market is "search and display -- and there isn't alot after that," this is a merger of the dominant search provider with the dominant display provider.
      • This market defiition yields a level of market concentration much greater than the market definition being shopped at the FTC and EC by Google lawyers. 
    • Charitably, I can see the Google lawyers muttering to themselves "not very helpful Mam."

Ms. Wojcicki added to Google's problem with antitrust investigators by further "talking out of school."

IBD then reported that: "Wojcicki says Google's move into display ads likely will be slow until the acquisition is complete."

Let me explain how this apparently guileless candor by a very senior Google executive is a competitive problem during a antitrust review of a merger.

  • Google's lawyers are currently trying to argue that Google does not technically do display and thus DoubleClick is not a competitor to Google.
    • By admitting "Google's move into display ads will be slow until the acqusition is complete" suggests strongly that Google already views itself internally as a display competitor today.
  • Equally problematic, is that Ms Wojcicki is suggesting that Google is not fully competing in this market, assuming this acquisition will be approved, behavior which the antitrust officials view dimly as "gun jumping" at best and possible market collusion at worst.
    • Unfortunately for Google, during their announcement call for the merger on April 13th, Google and DoubleClick executives were candid about their close relationship.
      • Antitust officials will have to determine if the merger negotiation and proposal have already had an anti-competitive effect by chilling competition among two potential rivals in an extremely concentrated market.

Lastly, it will be most amusing to see how Google contorts itself to "square this circle."

  • Will the lawyers try and trash and discredit Ms. Wojcicki/Mrs. Sergey Brin as a low level person who doesn't know what she is talking about?
  • Will Google change the story it is telling the FTC and apologize for telling different stories?
  • Will Google go to war with the reporters in the room and claim that Ms. Wojcicki was misquoted or never said such things?
  • Or will Google use its superior intelligence, acumen, savvy, rectitude, and savoir faire to explain to lesser beings that their is no contradiction whatsoever?
    • My bet is on the latter.    
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