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Yahoo-Google's search outsourcing pact: the fine line between collaboration and collusion

Interested observers in the Microsoft-Yahoo-Google-AOL-Ask.com-MySpace incestuous soap opera called search advertising, would be wise to bone up on the fine line between acceptable industry collaboration and illegal collusion, if recent reports prove true.

  • The Wall Street Journal reports that Yahoo may be days away from announcing "an agreement to carry search advertisements from Google.." and that Google feels "that the upside is much greater than the potential downside" from the arrangement."  
  • The Financial Times broke the story that the Department of Justice was investigating Google's interaction with Yahoo and that "the prosecution of collusion is a top priority."     

The fine line between collaboration and collusion. 

First, while many may be aware that a Google-Yahoo outsourcing deal "would likely attract intense antitrust scrutiny" there is precious little analysis on this linchpin issue -- hence the genesis of this piece.

I believe the pattern of Google becoming the outsourced search engine for most all of the Internet -- save for a few properties -- is one of the most important and least understood competitive Internet issues.  

Why "White Spaces" is just corporate welfare innovation

The Hill has a good article highlighting the growing "battle" over "White Spaces", or the potential for use of the buffer spectrum bands in-between TV channels to ensure that there is no interference with TV signals.

Google-Yahoo ad deal would also be a trial balloon testing FTC's antitrust mettle

The Wall Street Journal's scoop that Yahoo is considering a two week trial of outsourcing search to Google -- is also a trial balloon testing the FTC's antitrust mettle.

If you don't remember, the last sentence of the FTC's Majority opinion approving the Google-DoubleClick merger was a clear warning to Google:

  • "We want to be clear, however, that we will closely watch these markets and, should Google engage in unlawful tying or other anticompetitive conduct, the Commission intends to act quickly."

Let's also put this into context.

Yahoo-Google "dis" Microsoft in OpenSocial hug -- the real reason for the new alliance

Apparently, Yahoo is trying to douse itself with some "Microsoft-repellant" in joining Google's OpenSocial allance and forming a non-profit OpenSocial Foundation with Google and MySpace.

While Yahoo's OpenSocial press release never mentioned Microsoft, the impetus for this change of heart by Yahoo was clearly a way to "dis" Microsoft and make Yahoo marginally less attractive to Microsoft.

Surprise! Google is concerned a Microsoft-Yahoo merger would hurt the Internet

Google's CEO Eric Schmidt must have an extremely dry sense of humor.

 

Google's growing undisclosed "conflicts of interest" are bearing their teeth

New evidence exposes that Google has much more serious financial conflicts of interest and is much less of an "honest broker" of online advertising than most appreciate. 

Calling Yahoo's Bluff -- How real is the Google outsourcing option? Not!

In reading most all the major press reports on the Microsoft-Yahoo bid, there has been plenty of reporting on the personalities, the price and the process, but precious little analysis of the core assumption whether Yahoo truly has a credible alternative strategic option -- in outsourcing its search to Google. 

  • One can't get a true handle on the likely endgame of this transaction without a more rigorous testing of this outsourcing pillar assumption:
    • Is outsourcing Yahoo's search function to Google a viable and real strategic option given recent antitrust concerns?
  • No. Upon close examination of the facts, this alternative is a weak bluff by Yahoo at best -- designed to buy time and create the perception that Yahoo has more maneuvering room than Yahoo really does.

Would antitrust officials allow Yahoo to outsource its search function to Google? Highly unlikely. 

Great Wash Post article: "Some businesses at mercy of Google see hope in bid"

Kudos to Kim Hart's dead-on insights in her Washington Post article: "Some Businesses at Mercy of Google See Hope in Bid." 

  • Forester research analyst Shar VanBoskirk: "There does seem to be an attitudinal shift," she said. "Two years ago, Google was everyone's salvation," because it enabled small Web site owners to easily make money by selling ads, she said. "Now people feel like it has too much control. They may prefer to work with a player that doesn't have as much power in the market."

  • "Google has the edge right now. Its unmatched reach on the Web, both through its dominant search engine as well as its large base of advertisers and publishers, has allowed it to wield so much power that it can shape markets, anoint winners and declare losers, and set prices for advertising, leaving customers like Davies feeling they're at Google's mercy."

 Well said. Enough said.

Bursting its own stock bubble: Why Google is its own worst enemy

Since the beginning of the year, Google's stock has fallen over 25% -- about 2-3 times the fall of the relevant indexes.

  • The good news for Google shareholders is that most all of Google's stock price problems are self-inflicted, so they could fix them -- if they wanted to.
  • The bad news for Google shareholders is that Google is unlikely to change its problematic bahavior -- because "leopards don't change their spots."

Why is Google its own worst enemy?

First, Google routinely alienates its friends and allies.

Google leaps before it looks again on Microsoft-Yahoo -- more shareholder-unfriendly behavior

Google must have been caught off guard last week by the Microsoft-Yahoo bid because they are reacting quite rashly and arguably in a way that is not in the best interests of their shareholders...

First, is it wise for Google to be proactively and angrily  "kicking the antitrust bee hive" in the U.S. and in Europe when their DoubleClick acquisition is still pending with EU regulators?

  • Did it ever occur to Google that they could take the close call in the EU over their pending merger -- that previously was trending in their favor -- and give opponents of the deal in the EU -- more ammunition that this market is too concentrated and that antitrust officials should be more concerned about this market?
    • Has Google forgotten that they have 90% search share in Gemany/Spain and 75% share in France/UK? 

Second, in leading the charge against Microsoft-Yahoo in Washington, has it occurred to any adult in Mountain View that this will only accelerate Washington interest and attention to adopt the FTC's (5-0) proposed behavioral advertising privacy principles/regulation, which would require opt-in and "affirmative express consent" before Google could use "sensitive data."?

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