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MS Urges Antitrust Scuttling of DoubleClick Deal
Microsoft contends that Google's $3.1 billion deal to buy DoubleClick would hurt competition in the online advertising market. And Microsoft expects AT&T, Yahoo, and other companies to join them next week in protesting the proposed sale.
Sounds like Microsoft have a conflict of interest here and shouldn't be shouting out-loud about this. It just makes it seem as though they want to manipulate the marketplace for their own good. If Microsoft had won the bid, you wouldn't hear them saying "perhaps we shouldn't do this, it makes the market unfair" and dropping their takeover.
And Microsoft have been duly punished.
Should we give another company the chance to do damage the market by abusing monopoly powers?
If MS can get Google identified as a monopoly, but then lose the case, they've given themselves a free ride out of any further antitrust proceedings they may find their lizard selves in in the future.
Interesting that AT&T joined in. They are moving against Google to support their Net Neutrality position. But let us look at how much money there really is in this market and then see whether an almighty Google might actually be able to hurt AT&T. Google currently makes 10 billion a year from 281 million broadband users worldwide. That's is $35/broadband user/year or $2.90 a month. Just look at the price of AT&T's offering and you can see that Google's ARPU is no more than a few percent of AT&T's ARPU (Average Return per User). Google's ARPU is supporting various content offers through this businessmodel, more than 40% of the ARPU flows to the content owner. So at the moment AT&T can beat up Google for a maximum of $2 per month per customer.
So how big could Google's ARPU grow? In a country like The Netherlands 5.7 billion a year is spent on advertising to about 7 million households. This makes 67/household/month (and this number isn't growing too much) This is the total advertising expenditure on the national market and includes all major media: Newspapers, television, direct mail, cinema, magazines, billboards, internet etc etc etc. If Google can get part of that on a global scale, it amounts to a major amount of money. But now look at it from ARPU point of view. It would be hard for Google to get more then 10-15% of this market space ($6-$10/household/month) because they would have to replace all the existing ways of doing advertising and these are still powerful and sustain many content business models)
If a telco can his hands on google's revenues, they might be able to knock a few dollars of the price of a broadband connection. But $6-$10 isn't going to pay for the line and the costly upgrades. Just go and look up the financial information of telco's to see how big they are and how much money they spend on a yearly basis. Google is dwarfed by that. (Broadband reports said that telco's would spend $41 billion on network upgrades just this year, Google made only $10 billion last year) Odlyzko was right when he said: "Content isn't King" and we can add to that "Advertising will never be king".
So when AT&T says that Google is making money over their networks. We are talking about change compared to what AT&T is charging its customers.
Will Google get a dominant position? Only if they offer content providers the most money for showing a banner and advertisers the greatest amount of clickthroughs. That is why Microsoft and Yahoo are loosing out. The offer less adviews per day, that generate less clickthroughs per thousand adviews and pay less per click and offer advertisers less conversions. Why would you use them? Nobody in the equation is getting better by using Microsoft and Yahoo not the content provider and not the advertiser.
Now lets hope Google pays some attention to my pitch for Adsense for Charity. The idea is that anyone using Adsense can designate a percentage of their Adsense revenues for good causes or open source projects. Even if we are only talking about a very small percentage of Adsense users doing this, we still would be talking about millions of dollars per year) So please help out in spreading this idea, by linking to it or spreading it onwards.
Use Adsense for Charity
Setting aside the default "screw M$" spinal chord reaction, can't we concede that they do have a point here? The fact that they are guilty of being monopolists themselves doesn't mean they have nothing that's worth saying. Google's latest acquisitions have definitely set them on a monopolistic path as they expand ownership over content providers and now methods of advertising through those providers.
Sure, Google conspiracy theories may be a bit of an exaggeration, but I think few people would disagree that an internet largely dominated by Google and Google-backed products, generating more Google revenue (positive feedback, anyone?) would entail the typical monopoly shortcomings (less innovation once the market is consolidated, arbitrariness, a bigger buffer zone for failed services, etc.). Right now I can't help but feel that Google is almost administering a utility, like water or electricity. Half of what I do online is powered (or directly coded) by Google -- ensuring a major share of the advertising revenue wouldn't be so different to ensuring they get most of their rightful toll/tax money for providing those basic services. Sure, there's nothing wrong with these services so far, but do we really want one guy centralizing all the cool net stuff? I for one, have to hand this one to our traditional Microsoft overlords.
I do agree that Google isn't necessarily the "sweet-faced cherub" in all of this, but from my own personal perspective as a general computer geek who uses non-Microsoft products (Linux and Open Source) more than Microsoft ones, so far Google have given me free of charge a good search engine with minimal advertising, an email system with almost 3 GB of storage space that (unlike Hotmail) is pretty good at catching spam and doesn't keep emailing me with useless adverts, the very useful Google Earth tool and "Docs and Spreadsheets" which I have found very useful for collaboration and for converting Word docs (albeit simple ones) to PDF. Plus I've not even looked at all the other Google services that I could subscribe to.
I do accept that MS does give quite a bit away to VB/DotNET/Whatever developers but for me, as an occasional coder in Perl, Python, shell scripts and a little C, there's nothing of any use to me that MS gives away.
So from my own selfish viewpoint, I'd rather Google was left to get on with it and MS kept their hypocritical noses out of it - and if Google does ever start pulling their monopolistic weight, I'll worry about it then.
Gentoo Linux - another day, another USE flag.
Am I the only one who was disappointed when Google beat MS to this? I was hoping that MS would buy them and then force all Windows users to view the ads and kill off things like adblock etc for the Windows platform. This would have been the single biggest win for the non-Windows community ever because it would drive everyone who currently blocks DoubleClick etc off the platform.
Oh well, I can dream can't I?
"I have the attention span of a strobe lit goldfish, please get to the point quickly!"
Google submits a significant number of changes to the mainstream Linux tree, as shown by (among other things) this recent lwn.net article. For 2.6.20 they landed up rougly between Intel and HP ... both of whom have much more reason to be working heavily on the kernel, especially on the server end of the market.
Of course, there's no way of knowing if they maintain whole new optimised subarches, special file system drivers, etc in-house... but I suspect that anything they do keep private is mostly not released because it won't be very useful outside Google. Perhaps they're limiting access to things that'd only be useful to their direct competition in immense data warehouses - but y'know what, I don't care myself. I wouldn't be surprised if the kernel folks would reject any excessively specialised or over-complex changes anyway.
That said, as you pointed out little of what they do is releases as OS. More than most companies (at some) - including some nice search and data handling tech and some handy libraries - but hardly the crown jewels. I for one do not find this overly troubling.
I do, however, share your spine-crawling feelings with regards to the DoubleClick association. I've never been fond of DoubleClick at the best of times, and don't like the thought of their data being combined with Google's.
Ok, I like how this assumption exists that if Microsoft owned a sophisticated low-end to high-end advertising service, as Google now does with DoubleClick's acquisition, that Microsoft would immediately turn it into an abusive monopoly and Google won't. What's the difference between the two? Other than the standard "Slashdot hates Microsoft."
If anything, Google will find it much easier to slip monopolistic abuses past regulators and customers because of the following reason:
1) For the most part, their 'product' is invisible. It's not something you see on store shelves, and it all exists digitally
2) Their product is also in a market that's only existed for maybe ten years, because there's no history, people have no comparison of what is 'normal' activity and what is 'monopolistic.'
3) While Google has many competitors in that marketplace, none of them get a lot of press. Or any press at all, aside from trade journals.
For the record, Microsoft doesn't really have anything to compete with Google in the advertising space right now. The only part of Google's model they've replicated is providing free services that are ad-supported, but that's all. All of MSN's ads are provided by one of those companies which, while it owns a significant portion of the market, isn't getting any press. (I won't name it for obvious reasons.)
Comment of the year
But it's not always right.
We should be clear on one thing: There's nothing wrong with getting a monopoly by outcompeting or outsmarting others.
What's bad is using your monopoly position to deny other vendors access to the market. This means not only refraining from things that only a monopolist can do, but refraining from doing things that have uniquely anticompetitive effects when done by a monopolist. The fundamental axiom is that competition is good.
Google may be a monopolist as far as desktop search is concerned; if so it's probably the most unstable monopoly in history, thanks to net neutrality. We could all simply switch to yahoo tomorrow if we wanted to. The greatest danger relating to Google is in their service APIs, in which they could potentially induce developers to build applications on top of Google services, then crush the developers by the user of secret extensions. But they have shown no sign of doing that yet, because for the time being most of the innovation around Google APIs is coming from Google.
As odd as it sounds, companies have character, like people have character. Some companies (e.g. Lotus) never seem to be able to come up with a decent user interface, whereas surely all they need to do is hire some HCI experts early in the development cycle. Microsoft got where it was by cunning and aggressive competition. Nobody begrudges the huge windfall they got by snookering IBM over PC-DOS. They saw the potential and were looking farther down the road than IBM. But when they used their power to punish distributors who distributed competitor's products, they were doing something illegal and they knew it. The temptation is stronger for them because of the company's aggressive, strategic character.
Google is a company with a fundamentally different character. They are much more innovation driven than MS, which is much more focused on reacting to what the competition is doing. The only way to survive in a MS dominated marketplace is continual but disciplined innovation. The problem with companies that tried to compete with Microsoft is that they tried to compete with Microsoft. It's critical not just to think outside the box, but stay far from the box as possible, because MS owns the box.
Microsoft has forced the industry into a post-postmodernist style of competition. The postmodern strategy exploits niches that are social constructs of the vendor community. The post-postmodern strategy is to fulfill customer needs more effectively. It's back to basics, with a twist; you still have to look at what the competition is doing, but instead of conforming to that, you have to harmonize but not conform. Google builds its services on top of standards, but it builds them with an unique Google style and feel.
This switch in competition style is why we see so much more major vendor support for open source. Not that putting your thumb in the competition's eye isn't desirable anymore, but it's lower on the chain of values. In an industry dominated by one vendor, there can only be one winner at that game. So cooperation via open source becomes a possibility. Google is not a major player in open source, but the reason they often get lumped in with vendors who are is that they share common characteristics of having a longer term, customer centered strategy.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
Just because it's not illegal doesn't mean it's a good thing. Illegal or not, monopolies are bad for consumers in almost every case.
You can go on all day about the evils of Microsoft and Yahoo, and how superior Google is, but it doesn't make a Google monopoly any more desirable.
Maybe not
Nope -- all charges were overturned by the Bush Administration (pretty much). [http://news.bbc.co.uk/1/hi/business/1361934.stm]
It is by my will alone my thoughts acquire motion; it is by the juice of the coffee bean that the thoughts acquire speed
Indeed. But I reckon that's a very mixed blessing for Google.
Google's ability to rank the search results is based on links from other pages. Now, when the web was young and blue-eyed and men everywhere were free, they navigated using lists of bookmarks, and by following links. In many cases they published their lists of bookmarks on their web sites, so that others could discover interesting sites. This meant that most interesting sites had lots of links to them, which Google could harvest and use.
But now, when the main route to finding sites is to use Google, Google itself has less to go on. With fewer people creating links for it to harvest, how can it work out its rankings?
Of course, it still has lots of links from blogs and automated sources. But are those as relevant, as useful from Google's PoV? Have we reached a point where even the best search algorithms are being starved of data to work from?
Ceterum censeo subscriptionem esse delendam.
There is another way to look at it. MS historically has a "win or die at all costs" attitude. In other words, they will do whatever it takes to kill a deal even if they can't get anything out of it. Think "scorched earth" policy. There isn't any "playing nice" in such a scenario. IMHO what needs to happen is for MS to realize that they are no longer a start-up. They no longer need to compete with such a fury that they force entire markets and nations. They no longer need to win everything in sight just on principle. Perhaps it is possible for a corporation to have deep-seated insecurities much like an individual, and I think that is what is happening here.
C|N>K