Yahoo

The biggest takeaway from the U.S. DOJ (and the EU) approving the Microsoft-Yahoo search partnership without any restrictions is that the Varney DOJ Antitrust Division implicitly agrees with the Barnett DOJ Antitrust Division (which blocked the Google-Yahoo Ad Agreement) --  that Google is indeed an dominant and enduring search advertising monopoly. 

If the DOJ did not believe Google was a monopoly, traditional antitrust analysis would have had more serious problems with the #2 and #3 competitors in a highly concentrated market combining forces.

This is a negative precursor for Google generally -- that they are indeed the next big antitrust problem of this decade.

It is also a negative precursor for the:

• FTC's antitrust review of Google-AdMob; and
• DOJ's review of the Google Book  Settlement.

Google, you have a problem.

To see "smoking gun" proof that "net neutrality" is a made-up issue and argument, read the short but telling excerpt below from George Lakoff's Book: "Thinking Points" published October 3, 2006, when the only net neutrality incident at that time was the FCC's Consent Decree with rural telco, Madison River Communications in February 2005.  

From Thinking Points, Chapter 8, The Art of Arguments:

"Thus, the argument for Net neutrality becomes an argument for government regulation in this form by the FCC.

What would be the DOJ's interest in having a formal investigation/review of the Google-Twitter agreement?

Microsoft publicly announced it has already launched a beta of bing Twitter that incorporates Twitter tweets into Microsoft's search results, while Google also announced an agreement with Twitter, but said in an announcement blog post that: "we look forward to having a product that showcases how tweets can make search better in the coming months."

The glaring question is why Google, which prides itself on speed and innovation, and which routinely launches new products and services in beta, will not offer a Twitter product for "months."

The most logical conclusion is what I blogged and tweeted about on October 9th: "Will Google seek DOJ approval of any Twitter agreement?"

In stark contrast to their opposition to the Google-Yahoo ad agreement, the American Association of Advertising Agencies (the 4As) is now urging the DOJ to quickly approve the Microsoft-Yahoo search agreement because they "believe that Yahoo! and Microsoft's proposal to combine their technologies and search platforms is good for advertisers, marketing services agencies, web publishers, and consumers."

• This letter is powerful evidence that the advertising industry remains deeply concerned about Google's dominance of search advertising, and welcomes the prospect of a more viable search advertising competitive alternative -- i.e. the proposed Microsoft-Yahoo's search agreement.

Reuters reports that Twitter is in talks with Google and Microsoft about "licensing its data feed to the companies search engines."

If a Google-Twitter agreement materializes, surely the DOJ will want to review any proposed Google-Twitter agreement for antitrust issues.

Given that the apparent justification for new formal net neutrality rules is that fifteen-year policy has failed and that the market is unable to ensure consumer choice, the FCC will need to justify with facts that broadband providers indeed have market power to exercise anti-competitively.

First, antitrust's modern day Pinocchio claimed that competition is just "one click away," now Google is claiming that the notion that scale is important to search competition is "bogus."

• Google's Chief Economist, Hal Varian is pushing a preposterous, self-serving argument in CNET that scale is not important to search competition:
  • "...the scale arguments are pretty bogus in our view because it's not the quantity or quality of the ingredients that make a difference, it's the recipes. We think we're where we are today because we've got better recipes...  I also think we have a better kitchen..."

Why is Google's "bogus" claim bogus?

First, does Google think for a minute that antitrust enforcers' investigations have not assembled substantial evidence/quotes from Google itself about the importance of scale in search?

The core question at the heart of the DOJ's review of the proposed Yahoo-Microsoft search partnership is where else will competition to Google's increasing dominance come from, if not from the proposed Yahoo-Microsoft search partnership? 

The DOJ has deep and current expertise in this market given their investigation of the Google-Yahoo ad partnership last fall and DOJ's current investigation of the Google Book Settlement. The DOJ also appreciates the facts that:

Yahoo lost 11% of its search revenue share to Google during the first six months of 2009 versus the last six months of 2008, per Yahoo's and Google's 2Q09 earnings reports. 

• This time period comparison was selected because it represents most of the time period since DOJ blocked the Google-Yahoo ad partnership 11-05-08, where the DOJ concluded that Google and Yahoo had combined market shares of 90% and 95% in the relevant antitrust markets of search advertising and search advertising syndication. 

It is relevant, interesting, and instructive to analyze what has happened since the DOJ's 11-05-09 action, and since the economic downturn, given that the DOJ concluded Google and Yahoo commanded 90% and 95% market shares at that time.  

This relative revenue share transfer analysis is straight-forward.