Google is a dangerous monopoly -- more than Microsoft ever was
The European Union's preliminary antitrust investigation of Google isn't the least surprising. But the timing is shockingly foreshadowing.
In December 2007, when Google announced the DoubleClick acquisition, I blogged: "The Google Monopoly Begins." I asserted that the acquisition would change everything about Google's search and advertising dominance and perceptions about the company's growing status as gatekeeper to all online information. The preliminary antitrust investigation comes as Google makes major changes to DoubleClick with hopes of boosting its display advertising business. The changes mark the final Googlefication of DoubleClick -- or the realistic, final integration of the acquisition into Google.
I don't believe in coincidence. More than two years ago, I asserted that DoubleClick marked the real beginning of the Google monopoly. The same week Google begins to flex that monopoly, the European Union starts informally investigating the information company. The European Competition Commission is taking seriously three competitor complaints, made by, according to a Google blog post: "UK price comparison site, Foundem, a French legal search engine called ejustice.fr and Microsoft's Ciao! from Bing."
For clarification, after I posted, the European Commission released statement: "The Commission has not opened a formal investigation for the time being." Right. It's preliminary, subject first to Google's response about the three complaints. In the Google blog post, Julia Holtz, senior competition counsel, asserted: "We will be providing feedback and additional information on these complaints," presumably to the European Commission. Microsoft's antitrust problems in Europe started in the late 1990s from a single complaint made by Sun Microsystems (now absorbed into Oracle).
Coincidence or not, the European Union is starting too late. Too much has changed in Google's favor since December 2007. The acquisition should never have been approved by European regulators. The mess they'll be cleaning up is one they helped create. I blogged 26 months ago:
The Google monopoly could be prevented, just as the Microsoft monopoly could have been. To be fair, monopolies aren't necessarily bad, and they certainly aren't illegal in the United States. But Google is positioned to fulfill the decade-old predictions made about Microsoft but as a more dangerous and consumer harming monopoly. Google's monopoly would be over information, and there is just too much opportunity for abuse. DoubleClick significantly cranks up the potential volume of abuse.
Much has changed; since the DoubleClick acquisition was announced, Google:
- Released the Chrome Web browser, which in less than 18 months reached version 5 beta.
- Launched the Android mobile operating system, which sales rose 961 percent year over year in 2009.
- Announced development of a new operating system -- Chrome OS -- for mobile devices, including netbooks.
- Negotiated a deal (now being scrutinized) for making millions of books freely available online via Google search.
- Increased search share on mobile devices, bolstered by new location-based search, local search, mapping and other services.
- Erected a mobile applications stack, by leveraging together Android, Chrome, disparate Google Web applications and search services.
That's a short, condensed list. But their meaning simply stated:
1) Google is expanding a monopoly over Web search and arguably trying to extend it into several adjacent markets, including display advertising, desktop operating systems, mobile operating systems, mobile Web applications and Web browsers. Microsoft's antitrust problems started with leveraging its Intel-based desktop operating system monopoly into the market for Web browsers.
2) Google's free business model is disrupting many, major established informational industries by reducing their contents' value to zero -- subsidized by search and adjacent services from which Google profits. While analyst estimates vary, the most reliable put Google's online advertising share at about 90 percent in the European Union.
3) Recent Google activities raise serious questions about trust, such as Buzz privacy settings. Can Google be trusted with all this information? Buzz demonstrates Google's increased willingness to put its interests ahead of customers. Likewise, ongoing tweaks to the search and keyword business model, technology or terms of agreement put Google's interests before partners.
A Monopoly Matures
In my December 2007 post declaring the Google monopoly, I gave five reasons it matters. I'll reiterate four of them here:
Google is the information gatekeeper. The US Justice Department went after Microsoft in May 1998 partly out of fear the company would become the Internet's gatekeeper. That never happened with Microsoft, but it most certainly is occurring with Google. Its business is all about profiting from information. For years, I've argued that Google is not a search company. Google is an information company, with search being a means to an end -- the end being information around which the company sells keywords and advertising. Google's search share reaches 70-80 percent or more in some geographies, according to combined analyst reports.
Google's business is rife with conflict-of-interest. Google provides through search the road leading to a destination, then profits from many of the businesses established around it. Additionally, as I explained 26 months ago:
Google doesn't just offer search, but advertising, keyword search and demographic services around information and businesses pay for this stuff. DoubleClick will greatly enhance the latter activity. Marketers are hungry for demographic information, and they're willing to pay for it. Google provides the door, checks who's coming inside and can pass that information onto marketing paparazzi. The temptation to mine the information will be huge, and that temptation will increase as Google matures, its growth slows and its stock falls to earth.
Google leaches off the good work of others -- for free. As I explained 26 months ago:
Google produces nothing. Shall I repeat that statement? The company's core business is about search and advertising, which relies on the content of other people and businesses. Google doesn't own the information from which it makes nearly all its revenue. Google is the middleman of the information, which it takes for free. At least Microsoft produces software and makes money off the licensing. Microsoft owns what it sells, but not Google.
Google abuses the intellectual property rights of others. "Google's information grubbing ways come without any asking permission," I wrote in December 2007. "In one sense, people want their Web sites to be found, for information to be mined. But they're not compensated for something for which Google makes oodles."
Much has changed -- for the worse -- since Google announced the DoubleClick acquisition. A late-2009 Fair Syndication Consortium study found that over one 30-day period 75,195 Websites published unlicensed content lifted from newspapers. Additionally, 112,000 unlicensed "full copies of U.S. newspaper articles were found on sites across the Internet." The profit motive: Search-driven revenue, with Google accounting for "53 percent of the total monetization." Interestingly, "38 percent of the sites were ranked in the top 100,000 most trafficked sites." Google's business model essentially allows -- and even encourages -- further intellectual property abuse.Better stated: Stealing.
Wrapping up, Google is a dangerous monopoly. Being a monopoly isn't illegal in the United States, although in Europe it seemingly is so (because of weight given to competitor complaints). Being dangerous doesn't necessarily mean acting dangerously. But the potential is there. How dangerous a company do you see Google -- or not? Please answer in comments.
Some related posts putting the Google monopoly in context:
- "Google lacks humanity"
- "Why is Google suddenly so evil?"
- "How would you rewrite Google's '10 Things?'"
- "Can there be a free Web if no one makes money?"
- "Advertising is the wrong model for the open Web"
- "Google's 'Open' definition: Simply brilliant business, but is it evil?"
- "If mobile-to-cloud sync is big in 2010, it's game over for Microsoft"
- "If the Obama Justice Department guns for Google, is Microsoft safe?"