Sunday, November 15, 2009

Google Antitrust Possibilities

The lawyers and executives over at Google must be very aware of the antitrust problems they face, but then again I am sure that the people at AT&T were similarly aware before they were forced to break up the company. If they need any insights perhaps they can go through Google Books and find Ray G. Besing's book "Who Broke Up AT&T".

Google is not helping themselves with recent moves, like the purchase of AdMob announced this week and their intention of providing free GPS software.

The question is has Google gotten so big that growth activity has swamped their executives and they are too busy to think about the possibility of serious antitrust problems. Or are they just too confident that it will not happen to them. Has success blinded them?

AT&T's biggest factor in being broken up was "was using monopoly profits from its Western Electric subsidiary to subsidize the costs of its network, which was contrary to U.S. antitrust law," as Wikipedia notes.

Obviously Google is using profits from other areas to provide free services to internet users and website owners. Google Analytics is a good example, and would be interesting if someone remaining in the space were to challenge them.

Interestingly, AT&T is pushing the FCC to look in to Google's activities with their new Voice product. Meanwhile, the EU has been investigating Google Books and recently added a complaint from Italian newspaper publishers who claim they are being removed from regular search results because they decided not to be included in Google News.

In the US, the actions of AdWords creating minimum bids and use of Quality Scores etc. to justify huge increases in the cost per click for keywords has been voiced by many in the space, but a suit by TradeComet may add to the momentum of antitrust actions against Google. TradeComet had been buying clicks from hundreds of thousands of keywords to drive traffic to their SourceTool site, but "the complaint states, Google raised the price SourceTool had to pay for many keywords 100-fold (from 10¢ a word, for example, to $10). In a short time, TradeComet alleges, SourceTool lost 90% of its monthly traffic from Google and millions of dollars in revenue," BusinessWeek reported.

The video below of Dana R. Wagner, Google's top in-house antitrust lawyer shows they are aware of their situation.

You have to give it to Google for not restricting its growth based on fear of antitrust actions but the groups they are challenging have gotten bigger and more conspicious.

The move into the analytics field may have been the start. It was a relatively new industry and one that had an obvious fit to the search engine. The fact that it saw the demise of many small companies could come back to haunt them.

The push in to publishing and the development of Google News initially was well received and many news organizations worked hard to get included. Unfortunately, the eventual backlash has created enemies with people who control the perception the public that could change its popularity. The Google Books move is another dangerous step. Obviously online book selling giants Amazon and Barnes and Noble see this as a possible challenge to their existence.

The purchase of Gizmo5 and the addition of it to Android to offer free GPS service could see the demise of TomTom and Garmin - previously the two major GPS companies. Actions like this can only add to the antitrust argument.

Their purchase of AdMob is another area that could get them flak. The purchase not only gives them a solid mobile ad platform but data about mobile platforms, in particular the iPhone. As Forbes notes: "With the acquisition of AdMob, Google now has access to usage data of many of the most popular mobile apps--especially the apps in the iTunes App Store... they just scored a huge competitive advantage. Google will know more details than ever about how people are using iPhone apps, how they are engaging with advertising within those apps, and users' loyalty to those apps."

Having Apple, Microsoft and News Corp looking to stop you may be taking on too many fronts at the same time - which history shows have brought about the defeat of many aggressors.

The other thing Google has to watch for is their own success. At some point, if they keep increasing their market share of search that could also lead to problems.

It is an interesting position Google finds themselves. Larry and Sergey could never have thought their Back Rub search engine would grow into this global conglomerate - loved by most people and feared by many major businesses.

Next article - How Would Google Be Chopped Up If Forced To Divest


  1. FYI: Gizmo5 is a sip provider. Please try to get your facts straight. All the news about Google lately has a lot of misinformation and bad research. Not that the rest of the article is invalid, but it does cause some discredit to whether or not you know your information. :-)

  2. I agree my post is a little misleading - Gizmo5 is a way Google can offer free VOIP and then connect to their own mapping system and Latitude/Longtitude service to provide free GPS.

    Since it can be added to any smart phone - it could eventually change the way the devices work;