"abusing its monopoly position by overcharging corporations for access to consumers"
I guess I don't understand the problem here. If you advertise with Google you aren't barred from advertising elsewhere. This is like saying the Superbowl is abusing its popularity by charging high prices for ads. There are plenty of other places to buy advertising on the internet.
The American antitrust law (as I understand it, I'm not a lawyer) allows you to create and have a monopoly. What's illegal is using your monopoly in one market to muscle your way into another. The classical case is Microsoft having a monopoly on operating systems, and abusing that to dominate the browser market.
As I see the argument made by the author he is saying that Google has a monopoly on search, and that they are using that monopoly to dominate the advertising market.
"he is saying that Google has a monopoly on search, and that they are using that monopoly to dominate the advertising market"
That's also what I thought he meant. The problem is that search isn't a market. They dominate the search based advertising market because they dominate search (which is not a market in and of itself, it's free content that gets eyeballs like a TV show).
And in my opinion at least they are great at their ad distribution business (where the ads go on other people's sites) because of their high value brand, not from some sinister tactic they are able to inflict because of their dominant search engine.
It is interesting to me when people say that "search is not a market". So pardon my ignorance but if search isn't a market, why (in the case of antitrust clauses against Microsoft) are browsers a market?
The most salient point I saw there was that Google is using its search power to subsidize Gmail, gDrive, Google Office, etc. In my opinion, search is a narrow, competitive enough market that you can't break it up, but you can force Google to separate Gmail from search, and make Gmail pay for itself through its ads.
Will it happen? I'm not sure. But I think he had a pretty strong start to a case that argued Google controls too much of the general online market.
I dislike the implication that corporations have some sort of right to advertise on Google's search engine. Should Wikipedia be worried about antitrust because they refuse to allow /any/ companies 'access to customers'?
It would only be an illegal monopoly, like MSFT, if they charged customers for all ads even those placed elsewhere and charged customers less if they promised never to advertise anywhere else.
In fact, I sense a business opportunity in providing a service that creates ads on all of the major search engines for the same effort required to place them on only one.
Given that Eric Schmidt was, only about 2 weeks ago, actively campaigning in favor of The President's stimulus package I find it highly unlikely that the US Justice Department will be going after Google. This could change if Google does something egregious, or there are significant changes in the 2010 mid term elections. However, I don't find it likely.
Also, I think it more likely that companies would pursue action in EU courts rather than US courts, because the EU courts have been more receptive to this type of thing.
I think we'll see more and more Guest Posts with quality content in the future. To me at least, it looks like Arrington is setting up the company for a future sale, and since right now Techcrunch=Arrington, he has to distance himself from writing. So that leaves a lot of free space that they need to fill up.
It strikes me as extremely ironic that the government, an organization which uses force to fund massively wasteful, unaccountable bureaucracies, should be concerned that Google, a organization which does not charge most of its users, is gouging consumers.
From the article: Google is earning enough from sponsored search to subsidize almost all of other businesses, including gmail, Google Office, Latitude, gDrive, and others.
I don't think Facebook is subsidizing other businesses with its profit. Actually it doesn't have any profit yet.
It will take years for the DOJ to be done with Google. Give Facebook some time!
I agree with Facebook board member Marc Andreesen's assessment: Facebook could be profitable and make over a billion in annual revenue whenever they choose. Instead, they're forgoing that for bigger riches -- and even more entrenched market power -- down the road. Facebook understands the game they're playing.
Facebook users face higher switching costs than Google search users. And individual features in Facebook -- photo sharing, status streams, comment threads, group utilities, invitations/RSVPs, instant-messaging, etc. -- already compete against multiple other companies.
When Facebook turns on their revenue spigot -- whatever it turns out to be -- they will look a lot like Google, in the same ways the article highlights. They will be subsidizing a bunch of free services, to the detriment of potential competitors, to defend their master proprietary asset -- the social graph plus a critical mass of users -- and the massive revenue that flows from it.
I'm curious, do you know when Andreessen said that? Because two years ago I would've believed it, but now I just don't buy it.
Beacon was supposed to be their adsense and look how that turned out. I don't doubt facebook's potential, but I do doubt that there's a switch that they're just waiting for some magic user count to flip.
According to Alexa, Yahoo gets a little less than twice Facebook's traffic. Yahoo's revenue for 2008 was $7.22B. So yeah, $1B+ for Facebook from conventional ads is probably reasonable.
I guess I don't understand the problem here. If you advertise with Google you aren't barred from advertising elsewhere. This is like saying the Superbowl is abusing its popularity by charging high prices for ads. There are plenty of other places to buy advertising on the internet.