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October 7, 2008

Googleopoly

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Finishing out the day on the Issues Track, let’s take a look at Googleopoly! Our moderator is Jeffrey K. Rohrs, VP, Marketing, ExactTarget, and he’ll be the one asking the questions. Our speakers are: James Grimmelmann, Associate Professor of Law, New York Law School; Shelly Palmer, Managing Director, Advanced Media Ventures Group LLC; Kevin Ryan, CEO and Founder, Motivity Marketing; and Jimmy Wales, Founder, Wikia Search.

What does it take to be considered a legal monopoly?

James says a monopoly is simply when you’re the only one selling something. There’s nothing illegal about having a monopoly. The thing is, you can’t do unfair things to get one and once you have one, it’s not legal to exploit it to discourage competition.

Are you hearing concerns from advertisers regarding the Google Yahoo deal?

Of course advertisers are concerned because they assume a partnership between Yahoo and Google is intentionally vague so as not to be understood. The world doesn’t know what it doesn’t know, and people generally don’t know that having one source of information on the Internet is a bad thing.

Does Google’s growth in the domestic market concern you?

Chris thinks we’re going to see competitive responses. In China, Microsoft revealed a new suite of tools that they’re going to have which show quite a bit of transparency. He doesn’t think that Google’s monopoly is bad, and he sees competition coming about.

Hitwise is reporting that Google has a dominance in the video space, which appears to be propped up by the search space. Is that concerning?

Shelly says there several things to think through. First, Google is an ecosystem and it’s not likely to go anywhere. The chart shows that Google, if left unchecked, is pretty much unstoppable. But not only is Google a medium, it’s a metric. That’s a new place advertisers are finding themselves. Google is the metric of how to do other media that has become ingrained and will be hard to unseat. He’s only concerned from the perspective of how advertisers will handle the circumstance after never having seen this kind of shift before.

Now Jeff pulls up the Wikipedia page for “Googleopoly” and it’s a sad little page. (Go at it, marketers!)

Share your thoughts on Google growth and how it fits into your view as a competitor.

Jimmy says that search doesn’t trend naturally toward monopoly. Like big brand spaces, there are reasons why some are going to be big and others are going to be small. He says if he can launch a search engine he’s going to be super thrilled to get even 2 percent of the market. To launch in the advertising space is much harder.

Jeff shows a chart of one company’s client’s paid search spend for Google, Yahoo and Microsoft. Google is up at the 70 to 80 percent line, Yahoo is around 15 to 25 while Microsoft is hovering around 5 percent. So what does this mean for the monopoly issue?

James says that from a market share perspective, Google is crossing the point of being considered a monopoly. At around 75 percent, some could start seeing monopoly, but the real question is if they are doing anything to clobber competition.

Jeff asks the audience who is an advocate for the deal, no one raises their hand. Almost everyone raises their hand when he asks who is a skeptic.

Advocates

  • 11 members of Congress (CA)
  • Ayn Rand Center
  • Google
  • Overstock.com
  • Publicis Group
  • Randall Stross (Author, Planet Google
  • Yahoo

Skeptics

  • American Antitrust Institute

Ugh, the slide is gone and I missed the whole skeptics list. You’ll have to forgive me. :( I did notice that the list of skeptics was longer than the list of advocates.

Are you a skeptic or an advocate of the deal?

Kevin likes Google’s culture and admires how they’ve added to the working environment. He doesn’t see people being thrown under the bus. Part of him says that that’s a great thing and maybe life would be better if we could all join collectives. The other part of him sees Android, Chrome, and many more things pointing to one dominant source of information, and he views that as a bad thing.

Shelly says that personally he could care less if the deal goes through or not. But, speaking as a representative of advertisers who need to buy advertising, it’s not a good thing because the mash-up will take the advertiser’s ability to target the distinct differences of the two audiences. As a buyer and a planner he can’t be effective. But Yahoo wouldn’t do the deal if they didn’t think they need to do the deal. Advertising has always competed to the death, but that’s not done in technology because there’s no reason to reinvent the wheel.

Jimmy says that Yahoo made a huge mistake by not being bought by Microsoft. It looks like this deal is the alternative to the failed Microsoft deal. To Yahoo this is a like giving up on something that should be a core part of their functionality. But his concerns for monopoly factors are that if you’re big enough to be a player you don’t want to sign everything off to the biggest guy.

Chris says that the deal has been suspended indefinitely. He also heard news today that Yahoo’s and AOL’s talks about merging have heated up. He doesn’t think the Google Yahoo deal will ever occur.

James says that it makes him sad that some large center of innovation has folded. While Yahoo lost the edge years ago, the recent effect is that someone else out there who was figuring out a good way to build tools for advertisers is now lost.

Shelly says that a combined Yahoo AOL would be a content behemoth, but they still can’t translate that value into wealth. To the level that Microsoft could buy that combined entity is funny. He also thinks it’s funny that the evil empire talk used to be reserved for Microsoft.

Kevin says that Google built everything organically while Yahoo tried to build through acquisition. He thinks we’re comparing apples to Buicks (hah!) because the two follow totally different strategies.

Is Google using their market power in organic search to propel YouTube, Google Maps and its other products in a disproportionate way?

Kevin says that Google’s acquisitions came fewer and slower. We’re going to see a lot more of search and behavioral targeting coming together because it’s a means of collecting all kinds of information.

Shelly says that the practical thing is that some things require a certain scale. When the DOJ decided to break up Microsoft, not a whole lot changed because no one understood what a browser was, what an operating system was, or any of the basic terminology that was needed to talk about Microsoft.

Jimmy says that it only occurs to us to be shocked by the idea of the deal because it doesn’t match what we understand about Google. Search is a report on the world, like a form of journalism. If people begin to sense that Google is promoting their properties over others, people would be suspect.

What is Google’s responsibility to ensure accuracy?

James says that Google doesn’t have any responsibility there. Shelly reiterates, saying that Google is a pipeline. It’s like blaming radio waves for what’s playing on the radio.

If Google knows everything about us, should we be more concerned about the aggregation of this data because of what the government could do with it?

Shelly says that it comes down to it, the electronic footprint that everyone leaves (completely apart from Google) is huge. Jimmy says that one of the interesting things about this is that if you’re someone of intense interest, the government will be able to subpoena all that data, but for most people most of the time, it’s not likely.

What does the Android phone do to the conversation of Googleopoly?

James says this is one of the best moves for openness in the telecom technology area. This is a great development in the mobile space because it’s holding Apple’s feet to the fire. Jimmy agrees and says it’s good that there’s something that will drive innovation.

Do you think the government is wise to look at Google for antitrust issues, or are there other places that they should be directing their attention that bear a far more negative impact on us as consumers and citizens?

Kevin says that they should look toward Google to figure out how to make money (hah!). James thinks we should worry about the ISPs first.

That was a fascinating conversation and I sometimes found myself entranced listening to the panelists instead of typing. That said, you can always check out alternative coverage. I saw Tamar Weinberg blogging away for Search Engine Roundtable, so if you like what you read so far, check it out!





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