Is Google Going Better Than Free On Navigation? Will That Set Off Antitrust Alarms?

from the should-it? dept

A few friends have passed along Bill Gurley's excellent (as usual) analysis of how Google is disrupting the navigation market by ditching the two big players in the space (Tele Atlas and Navteq), going it alone and also (the big news) offering its navigation info for free. Gurley points out that the truly disruptive part is that Google is actually offering mobile operators a deal that is better than free, in that they get to share in some of the ad revenue associated with anyone using the services. The point is pretty clear: those who are relying on the old business model of getting paid for navigation info are likely in serious trouble.

Of course, there are some perception issues. Plenty of companies who have tried a "we'll pay you" approach to marketing often find that it actually breeds some level of mistrust, as partners/users start wondering why, and if there's some sort of nasty catch. Google, of course, has a pretty good reputation, and ought to be able to overcome that issue. However, it does make me wonder if this will set off the Justice Department (and Google's enemies) on some silly witchhunt, claiming that this is somehow "predatory pricing." That, of course, is ridiculous if you actually think it through. The only real problem with predatory pricing is if it's used purposely to drive others out of business to then jack up prices. But Google's idea is to just give it more opportunity to make ad revenue. It's not predatory, it's just smart from a business sense. However, with so much scrutiny on Google these days, you could certainly see this backfiring.

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