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Antitrust

Candor in NYT op ed on how "open platforms engender "winner takes all" network effects"

For those who missed it, there was some surprisingly candid and chilling assertions made by Tim O'Reilly, the co-producer of the Web 2.0 conference in a recent New York Times op ed entitled: "Static on the Dream Phone."

While the article is ostensibly about cell phones, it is most relevant to the pending Google-DoubleClick merger and whether or not it will substantially lessen competition. Listen to someone who knows about the natural anti-competitive advantage of network effects.

  • "Like the open architecture of the personal computer, the open architecture of the Internet didn’t mean the end of competitive advantage. What we learn from the history of both is that open platforms engender “winner takes all” network effects. [bold added] Once a company gets a first-mover advantage, the mass of users adopting the company’s application or platform makes that product more attractive to the next user."...
  • "For the current generation of Internet applications, sometimes referred to as “Web 2.0,” the data collected from users is the true source of competitive advantage. [bold added] And the first movers, the companies that understand and apply this insight, have services that get better fast enough that their competition never catches up." [bold added]

The question is there anyone at the FTC that appreciates this point.

The legal standard that exists in reviewing mergers is does the merger "substantially lessen competition?"  

"Google Knols Best?" or should we say: "serfing" for Google?" yes "serfing" with an "e"

Google's latest business move to create "knols" should be sending shivers down the spine of any cognizant content publisher that cares about the future economics or growth of their online content. 

  • As Google explained in their blog announcement:
    • "At the heart, a knol is just a web page; we use the word "knol" as the name of the project and as an instance of an article interchangeably. It is well-organized, nicely presented, and has a distinct look and feel, but it is still just a web page. Google will provide easy-to-use tools for writing, editing, and so on, and it will provide free hosting of the content. Writers only need to write; we'll do the rest."

Google's ranked the LEAST ACCOUNTABLE in One World Trust's 2007 Global Accountability Report

What may be the most troublesome aspect of Google's extraordinary ascent to power in the marketplace and in our society is Google's exceptional lack of accountability.

On what basis can I say Google has "exceptional lack of accountability"?

  • First, the independent One World Trust just released its 2007 Global Accountability report in which it ranked Google lowest in its world survey of leading institutions when it comes to accountability.
    • "The Report applies the Global Accountability Framework’s four dimensions of accountability – transparency, participation, evaluation, and complaint and response – to examine the capabilities of transnational actors to be accountable."
    •  Why Does Global Accountabilty Matter?" "...their decisions and actions can have a profound affect on people’s daily lives."
    • "Those at the bottom... need to raise their game."

More on how #1 Google's Internet tentacles reach and "hold" onto #4 Ask.com's "private" data

ITNews has an interesting take in its piece "Google keeps what Ask.com erases."

  • "AskEraser may remove user search query data from Ask.com's servers, but deleted data may live on, in part at least, on Google's servers. That's because Google delivers the bulk of the ads on Ask.com, based on information provided by Ask.."

 I flag this in the context of the Google-DoubleClick merger because not only does Google:

  • Have dominant search market share (65% per Hitwise);
  • Enjoy exceptional network effects;
  • It's hidden market power tentacles reach farther than most appreciate...
    • What the ITNews article tells us is that there is a whole hidden layer of market power/influence by the #1 search engine over its #4 Ask.com "competitor." 

The market is even less competitive than I outlined in my Googleopoly white paper.

It reminds the astute watcher of how Microsoft used non-disclosed contractual arrangements to acquire more market power in the 1990's...

Google share increases -- evidence continues to mount that this market has tipped to dominance

With the Google-DoubleClick merger reportedly in the final decision phase at the FTC, it will be interesting to learn what they ultimately conclude and if they have been monitoring recent market developments closely.  

In my Googleopoly analysis published in July, I explained in detail why the search market had already tipped to dominance and why Yahoo and Microsoft would continue to fall behind Google.

The incoming evidence continues to prove my Googleopoly analysis was dead on.

  • Information Week reported that per Hitwise: Google's search market share increased in the last year from 61.84% to 65.1%, while during the same period Yahoo's share fell 1.22% and Microsoft's share fell 2.73%. 
    • To put that in perspective, in the last year alone per Hitwise, Yahoo lost 5% of its overall share while Microsoft lost a whopping 28% of its overall share. Whoa.
    • Not the kind of facts that are easy to ignore.
  • Comscore has Google's share at 58.5% and also reports that Yahoo and Google are losing share. To put this in perspective again, Comscore had Google share at only 36.5% in April 2005.

There has been some reporting of Ask.com's new program "search eraser" which is a great new feature to help protect people's privacy that want it.

Techcrunch: "further proof that Google flat out owns the online advertising space..."

I had to point you to a short, but great post by Michael Arrington of Techcrunch that shows how Yahoo and Facebook feel they must advertise on Google to reach Internet customers.

  • He also included an interesting link to a previous post of his that spotlights how Google now has almost 40% share of online advertising revenues and how its share is rising surprisingly fast.

A core point I made in my "Googleopoly" white paper on the pending Google-DoubleClick merger, was why no competitor will be able to catch Google in search advertising, including #2 Yahoo and #3 Microsoft. (see pages 17-18 in particular)

Read a funny spoof on Google's galatic ambitions in an old The Onion satire....

Knowing I appreciate good satire, and especially good satire on Google, someone sent me the link to a 2005 spoof on Google that rings surprisingly true today...

Don't miss The Onion's: "Google plans to destroy all information it can't index."  

That DARK "cloud" on the Net's horizon is Google's dominant cloud computing/storage ambitions

The Wall Street Journal article yesterday: "Google plans service to store users' data" is another stark reminder of the very dark cloud on the Internet's horizon -- Google's dominant "cloud computing" capability (i.e. Google's world-leading parallel processing computing grid and storage centers, which Google uses to cache a more-than-daily copy of every page of every website on the Internet and also every Google users' clickstream history.)

  • According to the WSJ, Google is planning to offer a free way to store all the information on people's computer hard drives in Google's "cloud" -- ostensibly to give consumers the 'freedom" to access their computer's files from any where, whether or not they are at their computer.

Now why would Google want to give you that type of service for "free"? Because they want even more personal and total information about you than they have in your search history, in order to sell to advertisers even more info about your most private "hot buttons."

  • If you are a free Google gmail user, Google already reads your email to send you targeted advertising. 
  • If you use Google's free documents or spreadsheets, you may remember from a previous post of mine that:

Did you know Google's corporate mascot is a T-rex named "Stan" -- the "moralosaurus"

In "Google's tar pit," an article in the Atlantic about how Google's market dominance is attracting antitrust scrutiny in Washington -- much like Microsoft did before it -- provides us a new "image" or "word picture" of Google.

The article starts with this wonderfully telling scene-setter: "

  • "The lawn outside Google’s headquarters in Mountain View, California, is dominated by the imposing visage of “Stan”—tail thrashing, jaws agape, a full replica of the largest Tyrannosaurus rex fossil ever discovered. Stan mysteriously appeared on the lawn one morning several years ago, and is presumed by Google employees to have been a gift from the company’s quirky founders, Larry Page and Sergey Brin."

So what does Google's choice of a T-rex as its corporate mascot tell us about Google?

First, non-Google paleontologists have gotten it all wrong about the T-rex.

Barron's online has great summary of Google's relentlessly increasing market share

For those following Google's relentlessly increasing market share, Barrons Online has a succinct summary of ComScore's and Hitwise's latest numbers.

The numbers show why the Senate Antitrust Subcommittee believes Google has market power and why it believe the FTC should determine if Google can leverage its market power in search into other markets before approving the Google-DoubleClick merger. 

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Q&A One Pager Debunking Net Neutrality Myths