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Antitrust

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. 

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. 

Bernstein analyzes "Plan B" competitive scenarios if EU or FTC block Google-DoubleClick merger

According to PaidContent.org, Sanford Bernstein's Google analyst, Jeff Lindsay:

  • "looks at some of the options available to Google, should the EU (or the FTC for that matter) ultimately come down against the acquisition. He lays out four scenarios: a) Forgo competing in the ad-exchange business. b) Purchase another player, possibly ValueClick. C) Build an in-house ad exchange. D) Form a JV, possibly with DoubleClick". (emphasis added)

The most important takeaway from this analysis is that Google and DoubleClick are obviously competitors in the natural and ongoing evolution of online advertising towards ad exchanges.

  • Lindsey believes it would make most sense for Google to build its own ad exchange in house and that with Google's advantages, Google could get it up and runnning faster than it took Right Media or DoubleClick.

Given the Senate Antitrust subcommittee's concerns in their recent letter to the FTC on the merger:

  • "Antitrust regulators need to be wary to guard against the creation of a powerful Internet conglomerate able to extend its market power in one market into adjacent markets, to the detriment of competition and consumers."

The challenge for the FTC in analyzing this dynamic market is to understand how it is changing and why.

Senators Kohl/Hatch write FTC on Google-Doubleclick merger -- conclude Google has market power

The top Senators overseeing Antitrust matters, Senate Antitrust Subcommittee Chairman Herb Kohl (D-WI) and Ranking Republican Member Orrin Hatch (R-UT), wrote a strong letter to the FTC urging serious scrutiny of the Google-DoubleClick merger. (see pasted copy of the letter at the bottom of this post.)

Having testified before their Senate Subcommittee in opposition to the merger September 27th, I was gratified to learn of the subcommitttee's serious bipartisan concern about the merger and also their very strong grasp of the potential anti-competitive issues arising from the merger.

There are three big takeaways from the letter.

First, the Subcommittee defines the relevant market as Internet advertising, "...combining these two companies' leading positions in these two forms of Internet advertising could cause significant harm to competition in the Internet advertising marketplace."

  • The subcommittee has adopted the same market definition as opponents of the deal.
  • Google had hoped the Subcommittee would, and still hopes the FTC and EU will, define the market as advertising overall.
    • If the FTC agrees with their Senate overseers that the relevant market is the ~$20B Internet advertising market, and not the ~$300B overall advertising market, the merger is at higher risk of disapproval.

Second, the subcommittee has concluded Google has market power in Internet search, another key conclusion of opponents of the merger. 

Study shows websites deny Google competitors web-crawler access to their sites

Have Penn State researchers stumbled upon a Google-DoubleClick anti-competitive smoking gun?  

PCWorld flagged some very troubling new research findings pertinent to the FTC/EU reviews of the Google-DoubleClick merger by Penn State researchers in its article "Google Favored By Web Admins."  

  • Penn State researchers: "Web-site policy makers are playing favorites, and Google is the big beneficiary, say Penn State researchers."
  • ""We expected that robots.txt files would treat all search engines equally, or maybe disfavor certain obnoxious bots, so we were surprised to discover a strong correlation between the robots favored and the search engines' market share," said C. Lee Giles, the David Reese Professor of Information Sciences and Technology at Penn State who led the research team that developed BotSeer, in a statement."

 Why is this significant?

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