Will Google's Expansion Invite Antitrust Action?

from the trouble-with-the-law dept

This week saw Google make more moves to extend beyond its core search business. The big thing was the much-discussed acquisition of YouTube, a move that automatically vaults the company to the top of the online video heap. Getting less attention was its launch of Google Docs & Spreadsheets, essentially bringing its online word processor and spreadsheets under one roof, in a bid to sharpen its online applications strategy. So as it clearly wants to parlay its dominance in search into other areas, Nick Carr takes a moment to ponder the possibility of an eventual DOJ vs. Google antitrust case a la the case against Microsoft. It's a two-part issue, really. The first is whether such a case is likely; the second is whether such a case is warranted. As for the former, it's difficult to guess, but dominant companies that start spreading their footprint in this way do tend to attract regulatory attention over time. As for whether or not it's warranted, here Carr seems to hint that it might be, noting the company's powerful network effects and scale. But, just a few short years ago, most people still thought Microsoft's network effects gave it an unassailable monopoly; now people wonder to what extent the company can hang on to its most profitable lines. And if Google is already at the stage where it needs to spend billions to buy out a rival, it obviously isn't as strong as Carr believes. Recent history has shown how quickly dominant companies can fall purely by market forces. To already be talking about the need for government intervention seems quite premature.


Reader Comments (rss)

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  1.  
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    Secesh, Oct 13th, 2006 @ 9:09am

    Plain Crazy

    It's understandable how the DOJ wants Microsoft, what with their prices continually climbing and the way MS controls large parts of the market.

    But how can they attack Google under the same premise? -- Google isn't charging for their applications. Where's the price fixing monopoly to bring an antitrust case against?!

    This argument is just plain ignorant.

     

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  2.  
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    Ajax 4Hire, Oct 13th, 2006 @ 9:12am

    Huh? how is Google a monopoly?

    I am unclear how Google is a monopoly at anything.
    Google using its search business to help its burgeoning Video business is good business.

    There is no monopoly on the Video busniess; anyone can start a YouTube style site. The money is in advertising, eyeballs and click-thru rates.

    Success breeds contempt, I see contempt in the article; someone is upset that Google is sucessful on its own merits. Upset that Google is using its success to breed more success.

    Big and Successful does NOT define Anti-Trust.

    You do NOT have to be Big or Successful to be a monopoly (although it helps).

    Once Microsoft (a likely comparison) was so successful and so big, it forgot the difference between fair and un-fair business practices (Netscape, RealMedia and SCO/Baystar). Microsoft launched a whole new business model and now Google is successful at the new model.

    Big and Successful is not Anti-Trust.
    Using your size and Success unfairly IS Anti-Trust.
    Google does NOT beat up competitors, it compets with the competitors.

     

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  3.  
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    GOM, Oct 13th, 2006 @ 9:19am

    Re: Plain Crazy

    Perhaps my old brain is failing, but I thought the basis of the DOJ case was not price fixing, but the whole giving away IE? then rolled into the whole leaning on OEM's to only offer Windows OS? but I guess I could be wrong

    GOM

     

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  4.  
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    Z34107, Oct 13th, 2006 @ 9:19am

    Monopoly

    Whether or not you are a monopoly or not doesn't depend on what you charge for your applications; it depends on whether or not the market you dominate remains competitive.

    Ifr Google's expansion is a threat to competition, then Google may (or may not) be a monopoly. It's dominance, not price - and giving something away for free can be called "predatory pricing" and can *also* be a threat to competition.

     

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  5.  
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    Reality, Oct 13th, 2006 @ 9:47am

    Guilty or not, Google is getting too powerful

    Whether a case is brought or not has nothing to do with whether someone is guilty. All you need is someone who feels they have something to gain by suing. Let me list them: Competitors, politicians, lawyers, news media. If a company is powerful, it will attract their attention. Just go back and read some of the discussion about Microsoft in late eighties and early nineties and you will see tremendous similarities with what is being said about Google.

    Here is another aspect of this: Microsoft just tried to own your desktop. Google is trying to "organize the world's information". Doesn't that sound a lot more serious to you? Whether Google is guilty or not, I don't really know. But scrutinizing their business is essential, and it will happen.

     

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  6.  
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    kcjefff, Oct 13th, 2006 @ 10:05am

    Re: Plain Crazy

    Secesh, think a little deeper. Just because you aren't paying for anything doesn't mean no one is. In fact, in most cases someone most certainly is paying for you to get something free. I like to call it the law of conservation of money. They are charging advertisers, and can be working to fix those prices.

     

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  7.  
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    Mousky, Oct 13th, 2006 @ 10:19am

    Re: Guilty or not, Google is getting too powerful

    Just go back and read some of the discussion about Microsoft in late eighties and early nineties and you will see tremendous similarities with what is being said about Google.

    There are very few similarities between Microsoft and Google. Microsoft used their dominiant position in the desktop OS market to 'introduce' other products, such as IE, on users. I'm not seeing any evidence of Google using their dominant position in the search market to foist other products on users. There is nothing on the google.com front page about Blogspot, Writely, YouTube, Gmail, etc.

    Here is another aspect of this: Microsoft just tried to own your desktop. Google is trying to "organize the world's information". Doesn't that sound a lot more serious to you?

    No. There is a huge difference between organizing or cataloging information and controlling information. When you type in a search term in Google, you are presented with a list of relevant links. Almost all of those links will take to some non-Google site. That hardly sounds like some evil monopoly to me.

     

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  8.  
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    Mousky, Oct 13th, 2006 @ 10:25am

    Re: Monopoly

    it depends on whether or not the market you dominate remains competitive

    And the real question is: what is competitive?

     

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  9.  
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    Ajax 4Hire, Oct 13th, 2006 @ 10:43am

    Re: Re: Monopoly; competitive, defined

    enter into your firefox browser:
    google define:competitive and you will get

    http://www.google.com/search?q=define%3Acompetitive

    and of course a competitor to Google in the Information (vs. Data) area:
    http://en.wikipedia.org/wiki/Competitive

    Google is NOT using its over-reaching power to force others into using its own inferior services. Google services compete on merit and not by force.

    As an anti-example, Microsoft forced computer makers to prominently display its products (IE, MediaPlayer) to force users to bypass Microsoft for other equally good or better programs. Even today there are veiled references that if you are not using a Microsoft product "bad" things may happen, "not siged by Microsoft", un-authorized software may harm your computer, ooooooh.

    When Google starts using those tactics, then I will be calling for Anti-Trust action also.

     

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  10.  
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    Reality, Oct 13th, 2006 @ 10:55am

    Re: Re: Guilty or not, Google is getting too power

    There is nothing on the google.com front page about Blogspot, Writely, YouTube, Gmail, etc.

    Wrong. I just checked. I already see Video right there at the top of google.com. Also, you just need to click the "More" link to see all the others. Again, I am not saying that they are guilty - but that they should be scrutinized.

    When you type in a search term in Google, you are presented with a list of relevant links. Almost all of those links will take to some non-Google site.

    How can I be sure that I am not being taken to sites that benefit Google in some way? How can I be sure that the page ranking algorithms are unbiased? Without scrutiny, all I have is their word.

    Again, I am not saying that they are guilty. I don't really know. I am just stating what is likely to happen whether they are guilty or not.

     

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  11.  
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    Ajax 4Hire, Oct 13th, 2006 @ 11:05am

    Re: Guilty or not, Google is getting too power

    I'm sorry, but I didn't read where you said you are forced to use Google and not Yahoo, MSN, KartOO, Ask, Lycos, A9, blah, blah, blah.

    Oh yeah, you are not forced to use Google.
    Is this like some company policy or communist state that requires you to only use the company or country approved Search Engine?

     

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  12.  
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    Me, Oct 13th, 2006 @ 11:08am

    If ANYONE should be sued for anti-trust, it's Wal-Mart! They DO use their size and volume purchase power to get the cheapest prices from anywhere in the word (China, mostly), then they build a store in small-town America. They use the aforementioned "predatory pricing" techniques to put the corner drugstore, grocery store, harware store, quickie mart, and any others they can out of business. Then, when there's no more local competition, they jack their prices sky high ostensibly to make up for the loss they took putting their competetors down, only they never bring them back down to make a reasonable rather than exorbitant profit.

    When someone makes monopoly claims against them, they scoff saying that there's plenty of competion in the market citing other national chains with no mention of the tens-of-thousands of "Mom & Pop" businesses they've destroyed to date.

    What's worse is that they don't expand their stores, they build new ones. While that may be great for commercial construction, it's terrible for small-town America where people have to look at abandoned store fronts and empty lots everywhere they go.

    AND they treat even the most intelligent workers as if they were the r-tards greeting guests at the door! They must think that they are mentally challenged for they pay them only enough so that they have to live-to-work rather than being able to work-to-live.

    I HATE WAL-MART!

     

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  13.  
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    James, Oct 13th, 2006 @ 11:29am

    F%@*ing Whiners

    NO they should not be investigated ....so far they've done nothing wrong except be VERY good at what they do.

    I say GO Google!! I just wish I had bought stock in you when you IPO'd (I do not own shares even now), but, I believe whole-heartedly in the company. They are great at what they do (for the most part) and they are succeeding... this is an American hallmark.

    They should be celebrated. If you don't like them.. use Yahoo, or MSN, or a gazillion other search engines.

     

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  14.  
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    Anonymous Coward, Oct 13th, 2006 @ 11:49am

    Sorry...

    "They use the aforementioned "predatory pricing" techniques to put the corner drugstore, grocery store, harware store, quickie mart, and any others they can out of business."

    Um, it's not predatory if they're still making a profit, which Walmart does. It's simply called out-competing. And that's quite legal.

    If communities don't want Walmart, with the traffic and lower-wage jobs, that's a zoning issue. But Walmart has nothing close to a monopoly (Target? Kmart?), so the argument doesn't work.

     

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  15.  
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    Anonymous Coward, Oct 13th, 2006 @ 1:26pm

    This is an entirely different scenario than Microsoft. Google doesn't try to tell you how you use your computer. You can use Google services across many platforms, and you can easily choose whether or not you wish to use the services. One can just as easily go to ask.com instead of google.com. And since the services are mostly free, they can't be blamed for trying to overcharge customers and shut out vendors and whatnot. Folks, what we have here is a genuine legitimate competitor. While I do agree that I think Google is trying to expand too far too fast, the fact is it's not doing anything apparently illegal in the process. I say bring on the competition. It's healthy for all of us. If Google's office apps somehow start to seriously take away Microsoft's market share, we just might actually see Microsoft start pricing their software somewhat reasonably, making the world a better place for all. And they might be forced to be more friendly to interoperability as well.

     

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  16.  
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    Mousky, Oct 13th, 2006 @ 4:14pm

    Re: Re: Re: Guilty or not, Google is getting too p

    Wrong how? Where is the link to Blogspot? Where is the link to Writely? Where is the link to YouTube? Where is the link to Gmail? There are no links.

    When I checked google.com there was no link to Video. I guess that's why it says 'New' beside it. And that link takes you to Google Video not YouTube. Besides you have to CLICK on that link to get to Google Video. And like you said, you have to CLICK on "More" to see all the other services. So explain why Google should be scrutinized when their behaviour clearly shows that they are not being anti-competitive?

     

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  17.  
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    Mousky, Oct 13th, 2006 @ 4:22pm

    Re:

    Funniest thing I have read all day. Too bad it's all untrue.

    Wal-Mart does not put anyone out of business. It's the customers shopping at Wal-Mart that have had it with high prices at the local competition that put them out of business.

    Do you have any evidence that Wal-Mart increases their prices "sky high" when the so-called local competition is gone? I'll be waiting.

    The mythical 'Mom & Pop' business was well on it's way out well before Wal-Mart became a household name.

     

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  18.  
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    Carl E. Person, Nov 2nd, 2007 @ 9:45am

    Google's monopolization of monetization of website

    The monopoly is complete. Nobody can compete with Google's search advertising. Panama is a bust, and Yahoo is is rapid decline. MSN has no answers and is losing ground as well. Google is now expanding into competition with its customers, by moving aggressively into ownership of social networking websites. See my brief on appeal in the 9th Circuit court of appeals to reverse the court below which held that search advertising is interchangeable with display advertising (that any advertiser would just as readily buy display advertising as he/she would buy keyword-targeted search advertising. You will see how Google has a monopoly in search advertising and is using that monopoly to monetize social networking websites owned by it (YouTube) or in which Google creates an interest (MySpace). See www.lawmall.com/google

    and look for links to my brief on appeal.

    Carl E. Person

     

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