Antitrust

The NY Times unearthed a fascinating and extremely important piece of antitrust-relevant information in its great article today: "Firefox and the anxiety of growing pains." 

• The NYT obviously wrote the article because it exposes a comical and ironic juxtaposition of an Open Source company like Mozilla, which is passionate about transparency, having cut a secret and lucrative royalty deal with Google, which is passionate about the "secrecy of its arrangement and agreements."

However, why this article is such a gem and is so important, is that it provides missing link evidence of why Google has become such a dominant search engine so fast, and why that domination is destined to increase. 

I believe Microsoft's purchase of Aquantive will have the effect of increasing antitrust scrutiny of Google-DoubleClick.

• Listen to this quote in today's Investor's Business daily in an article by Patrick Seitz "In ads, Microsoft chooses a $6 Bil Buy-in":
• "Microsoft believes consolidation in the ad sector will continue and that there ultimately will be only two meaningful companies in online advertising, says Matt Rossoff, an analyst at independent research firm Directions on Microsoft."

Let me count the ways that quote gives antitrust authorities the willies:

• First it is their job to not allow industries to become duopolies or acquire market power through acquisition. If that occurs naturally, it is not a problem, but "acquiring" market power is illegal.
• Second, Microsoft, an expert in market power, is reportedly the one that sees this market trending to two players.
• Third, to the extent that most all of the business model of the Internet is being driven by the advertising model and Google's spectacular success at that model, Microsoft is indicating that the Internet business is destined to be controlled by two entities that the Government allowed to consolidate.

I can hear the Antitrust authorities sharpening their pencils and flexing their mouse clicking fingers now.

I was able to ask the only question from the audience of the Educause net neutrality panel today.

• After introducing myself and disclosing that NetCompetition.org is funded by broadband companies, I asked Rick Whit of Google the following very important questions:
• "If non-discrimination is an important principle of the Internet, why should it not apply to all Internet access technologies in a neutral way?
• And why shouldn't net neutrality apply to all internet access technologies that have the potential to block content like:
• Microsoft's ~90% share of the browser market; or
• Google's 65% share of the search market in the US and Google's 75% market share in Europe? 

Mr. Whit's first weak line of defense was that the term is really "network" neutrality implying it was not about "Internet" neutrality.

• Oops! Seems Mr. Whit is so new to Google that he hasn't had the time to read Google's very own brief: 
•  "Guide to Net Neutrality for Google Users

  "Net neutrality" is an issue that will shape the future of the Internet.

  What is Net Neutrality?

  Network neutrality is the principle that Internet users should be in control of what content they view and what applications they use on the Internet. The Internet has operated according to this neutrality principle since its earliest days."

USA Today reported today that "Google accounted for 65.3% of all U.S. online searches for the four weeks ended April 28, up from 58.6% in April 2006, according to web tracker Hitwise."

Hitwise has:

• Google at      65.3%
• Yahoo at       20.7%
• Microsoft at    8.5%
• Ask.com  at     3.7%

To be fair, Hitwise has Google a little higher than ComScore or Neilsen NetRatings in absolute terms, but all three consistently record the same inexorable fact: Google is increasing its dominance of Internet search.

Harry Gold on ClickZ gives a good and balanced review of the "Pros and cons of Google and Doubleclick."

• As an industry insider, he gives a sophisticated analysis that is worth the read.  
• This was the most interesting factoid to me:
• Doubleclick's "DART does have a hold on over 70 percent of the ad-serving marketing, according to a March 2007 CIMA/William Blair study. Also on the paranoia side of the equation: the data Google and DART collectively have on the population at large are already rather Big Brotherish, never mind Google extending its cookies' reach onto DART's network of sites.

eGoogle-YouTube was sued yet again for rampant copyright infringement in U.S. District Court in New York.

• See www.youtubeclassaction.com

Plaintiffs, including the English Football Association Premier League and others said in their court filing that Google-YouTube is "pursuing a deliberate strategy of engaging in, permitting, encouraging, and facilitating massive copyright infringement" in order to increase the value of Google by generating more traffic which it could monetize without having to pay for.

Why is this British suit particularly interesting? Remember the fact that Google already has 75% share of the search market in the UK?

I always take time to read interviews with CEOs because I always learn something.

• The USA Today cover story interview with Steve Ballmer of April 30th was no exception.

What did he say that was relevant to the Google-DoubleClick?

First, he made the case why the Google-DoubleClick merger is a big deal:

• "I do think that it would be worth the regulators taking time to understand this market, much the way they took the time to understand other parts of the technology business, because the whole future of the media and advertising will move to the Internet. "
• "What we think of television today, what we think of newspapers, magazines, you name it -- all of these things are going to move to the Internet and be funded by advertising. And so we are talking about a pretty important part of ... people's basic lives." 
• What this means is that Google-Doubleclick is about the evolution and the future of advertising. 

In response to a question about being third in search -- Ballmer said:

The WSJ yesterday had an illuminating interview with David Rosenblatt CEO of DoubleClick about its acquisition by Google.  

Mr. Rosenblatt engaged in some pretty effective "spin" so I thought it would be helpful to shine a brighter light on some of his pat answers that were... how should I say it... less than forthcoming.

In response to a question about whether he could reassure web publishers that Google did not have too much market power, he said: "Google shares revenues with publishers so it makes sense that their interests are pretty much aligned." 

I always love to juxtapose a couple of stories to point out irony.

Yesterday, I blogged that Tech Daily reported that the Google gang, AKA ItsOurNet ... will be relaunched in May as the "Open" Net coalition.

Well today I laughed out loud when I read in Tech Daily, that Wikipedia cofounder Jimmy Wales is promoting a new collaborative search process like the wiki online encyclopedia.

• Wales said: "I believe Internet search is currently broken and the way to fix it is to build a community whose mission is to develop a search platform that is open and totally transparent."   

Seems like those who really know "open" don't think Google is worthy of its self annointed name of the "Open" Net Coalition.

The ItsOurNet coalition is relaunching under a new name the "Open Internet Coalition" in May according to Todays' National Journal's Tech Daily .

• The article intimates that the new incarnation of the online giant coalition may not include Microsoft.
• Since ItsOurNet formed last year Google was much more radical and hyper-regulatory than Microsoft was comfortable with.
• After coming out swinging the antitrust bat when Google outbid Microsoft, it will be very surprising if Microsoft rejoins Google's gang after parting ways with ItsOurNet last fall.

I must say I am sad to see the ItsOurNet name fall by the wayside, it was a glorious pinata of a concept.

• I needled ItsOurNet when they announced their name that it was a tad bit greedy for the online giants to claim in their name that they "owned" the Internet.
• I suggested it would have been a little wiser and fit with their "democratic" message to have called it "ItsEveryonesNet" or "ItsEverybodysNet".
• But no, they apparently are calling it the "Open Net coalition" or "OpenNetCoalition.com."
• Not bad but for grins, quickly checkout an Internet artifact before they pull it down: opennetcoalition.org.

It also will be interesting to see if they have retooled the substance of their message and if they will abandon Moveon.org and the Dorgan-Snowe bill to try and appear more reasonable and practical.

Reading between the lines of the article it seems Moveon is "on" the defensive so to speak.

lastly it will be interesting to see if: