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Googleopoly V -- Why the FTC Should Block Google-AdMob

Submitted by Scott Cleland on Wed, 2009-12-16 17:23

Below is the abstract of my latest white paper in my five-part "Googleopoly" series of antitrust white papers. The full white paper is at this link and at www.googleopoly.net.

 

Googleopoly V* -- Why the FTC Should Block Google-AdMob

The Top Ten Reasons Why Google-AdMob Would “Substantially Lessen Competition”

 

By Scott Cleland,** President, Precursor LLC

December 16, 2009

 

Abstract: A Google acquisition of AdMob would eliminate Google’s only substantial rival platform in mobile in-application advertising and catapult Google from an estimated 25% share to over 75% share of this strategic gatekeeper market for monetizing mobile Internet applications. Combined with Google’s search advertising monopoly and dominance of mobile search advertising, Google’s acquisition of AdMob, “the world’s largest mobile advertising marketplace,” would likely tip the broader mobile advertising marketplace from a competitive to a monopoly trajectory. In short, the AdMob acquisition threatens to foreclose competition and facilitate monopoly in a strategic gatekeeper market essential to the Internet economy, which would harm: consumers, developers, advertisers, publishers, smart-phone manufacturers, and broadband providers.

 

The Top Ten Reasons Why Google-AdMob Would “Substantially Lessen Competition:”

  1. Google-AdMob would combine the #1 & #2 mobile in-application display advertisers in a highly-concentrated and exceptionally-strategic gatekeeper market, effectively eliminating Google’s only substantial rival competitive platform in this market.
  2. Acquiring AdMob’s ~50% share would catapult Google to >75% share of the mobile in-application display advertising market.
  3. Preserving competition in this market is key to preserving a competitive mobile ecosystem.
  4. Google-AdMob would tip mobile advertising toward a monopoly trajectory.
  5. The extraordinary price paid for AdMob is evidence of acquisition of market power.
  6. Google proactively thwarted Apple from becoming a stronger competitor to Google.
  7. Déjà vu: DOJ’s Google-YouTube approval proved that antitrust enforcers need to be much more aware of the extraordinary network effects of adding fast-growing, first-mover strategic platforms to firms with existing market power.
  8. Google misled the FTC in the FTC’s Google-DoubleClick investigation by representing Yahoo as a viable long-term competitor when the two firms were exceptionally close and cooperative as evidenced by the proposed and rejected Google-Yahoo ad agreement.
  9. Google-AdMob could snuff out potential mobile application monetization competition in the crib.
  10. AdMob would enable Google to further dominate the collection of data and sensitive competitive information that is central to competing in the monetization of Internet content in the mobile or PC stationary markets.  

 

*Googleopoly IV: How Google Extends Search Monopoly to Monopsony over Digital Info 9-15-09

Googleopoly III: Dependency: The Crux of Google-Yahoo Ad Agreement 10-3-08

Googleopoly II: Google’s Predatory Playbook to Thwart Competition; 9-23-08

Googleopoly: The Google-DoubleClick Anti-Competitive Case; 9-17-07

See www.Googleopoly.net

 

**The views expressed in this white paper are solely the author’s and not the views of any Precursor clients. See Scott Cleland’s Full Biography at: http://www.precursor.com/bio_long.htm

 

 

 

 

 

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Google only wishes what you say its true

Submitted by mobile_ad_insider on Thu, 2009-12-17 22:24.

Scott,

I'll build a case as to why you are wrong in the sense that this does not create a monopoly. I'm very involved in the mobile business and have first hand deep knowledge of how Admob works.

Lets start with market fragmentation. Not even google can de-fragment the mobile market. Its the reason mobile continues to be an also ran to the "real" web even though there are more mobile devices than computers. This fragmentation is google proof and will continue to be. Android and Admob are just feeble attempts at dealing with fragmentation. In the case of Android is dealing with fragmentation by using fragmentation itself (i.e. multiple devices under a single infrastructure). In the case of Admob is simply gaining a way to underwrite their upcoming google phone using knowledge about the patterns behind iPhone click throughs where every piece of information count.

As far as market dominance here is where your argument falls. Go to Admob and download their monthly reports where they show their usage statistics. Download the last 4 months and look at their total global requests and US requests. Notice something?

What you will notice is a monthly decline for the last 3 months consecutively. This is after massive growth month over month and year to year. Why? well because Admob reached its peak. That was it. Admob had a head start but then others like Millenial media came in and started to take huge chunks of the market. Admob hat to sell now or watch their price decrease as their numbers decrease. Not because they are not doing a good job but because their head start was over and the fragmentation was setting in.

Now. Admob + Google is likely to do better than Admob itself but not by much really simply because the other players are beginning to take massive chunks of the market and because the power if shifting to ad aggregators (which is why Admob bought and released adwhirl). You see. Unlike the web where aggregators and brokers cant compete with Google the mobile web by virtue of the fragmentation is an ideal place for aggregators. This is why Adwhirl became such a threat and why others of their ilk will be threatening Google as well thereby eroding their market share further. The only thing Google can do is lock their Android phones to only use Google advertising but then this is against Google's general standings and unlikely to happen.

So in summary what you have here is a company that had done great opening a market but had to sell now because it had reached its peak and the others are making great gains. Google was in a position to use their asset strategically and they bought them. Does this make a monopoly? not at all. Not even close. Just makes Google a bit more competent in this space as they seem to have no clue how to address mobile marketing before. Admob has no technology that Google couldnt easily replicate. The real price is the data and click patterns which are precious for the Google phone eventual success. It buys google about a year worth of time thereby reducing Apples 3 year head start to about 2. Thats all it is.

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