The WSJ reports that the FTC will issue a subpoena to Google imminently, kicking into high gear its monopolization investigation of Google. Some quick thoughts:
1) As I have said before (see here and here), the purpose of antitrust should be to create an innovation ecosystem. The first, middle, and last question for the FTC here should be the effect that Google’s practices have had on innovation in the entire entrepreneurial system, the only arena of US economic resurgence today. The question is not whether Expedia or Tripadvisor would like to have a higher search ranking. The answer to me to the proper question which concerns the effect on innovation should have been and remains crystal-clear.
2) Google is critical to the vibrancy of the startup ecosystem today; one that everyone acknowledges is at a high point. Many disruptive startups today are funded and started because entrepreneurs and investors know one exit possibility is that Google (and others like Facebook, Apple, Amazon etc.) will take the baton, continue investment, and grow a disruptive business model from child to man. Read In the Plex or look at Crunchbase for numerous examples. For a couple of examples off the bat, think of Youtube and Android, and what they have done to shake up their respective industries and the critical role that Google played in investing in them to take them beyond the limits of what their founders could do independently.
Moreover, what Google has done in validating search and display advertising has created an enormous industry for others as well, opening up numerous entrepreneurial opportunities. See here for a chart showing the enormous number of companies in the advertising ecosystem.
3) The analogy to the government’s antitrust case against Monopoly is wrong, misleading, and should be cast aside immediately. When Microsoft was investigated and prosecuted, the Windows monopoly had slowed the innovation economy. Venture capitalists hesitated to invest in technologies because of the fear that Microsoft would snuff them out by incorporating new businesses into Windows. Real Media Player and Netscape are two prominent examples. Google is not capable of doing this. For example, as I noted in my post responding to Bill Gurley,”the Apple iOS and Internet Explorer are under no threat to be vanquished from Android and Chrome, in the same way that Netscape was, nor by creating these products does Google lock up search for itself.”
4) Google is fundamentally investing to disrupt industries. Android in mobile phones. Youtube in video distribution. Mobile wallets. Chrome. MapReduce. On and on and on. The willingness to make these investments and take these risks is the hallmark of a pro-competitive company.
5) I have written a lot about how vulnerable Google is as Internet users employ alternate ways to find content. I call the thesis “post-Google search,” and there are a series of posts on this site starting here. There are social sites like Facebook and Twitter, there are answer sites like Quora, there are other content discovery sites like Flipboard, just to name a few.
Even where Google decides that it wants to provide its own content to its users in addition to linking to others’ content, the notion that Google is going to monopolize that additional area (take local guides) by extending its power from searches is ridiculous. If the quality is better on Yelp or Citysearch, users will find their way over there, either using Google or alternate means. It is just too easy for users to do so. As we all know, Google’s dominance in search engine results has been of little help in establishing a foothold in social.
The internet ecosystem cannot be boiled down simply to market shares in paid search, and neither should the antitrust analysis.
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