Out of Control Policy Blog

Google Might Be Many Things, But It's Not a Monopoly

Cord Blumquest writes today at Technology Liberation Front:

Okay. Google gets the lion's share of search engine traffic. But controlling search doesn't amount to controlling online advertising, not by a long shot.

We haven't seen prices go up because the time people spend on search engines every day is minimal, amounting to only a handful of minutes. Google has successfully turned these few minutes a day into a machine that generates billions of dollars a year. Yet despite its powerful position in the search market, competition from outside of search is forcing Google to keep its rates low.

Think of where the majority of our time online is spent. Viewing content, not getting to it. Facebook and MySpace hold their users attention for hours in some cases, offering advertisers great venues to reach key consumer demographics. Popular news and entertainment sites bypass Google's advertising auction system altogether by selling ads directly to advertisers.

But the biggest competitive threat to Google comes from the growing online video industry.

Americans spend several hours a day watching television, compare this to mere minutes of online searches. During an hour of watching television consumer typically view 18 minutes of advertising. That's one of the reasons why half of all advertising dollars are spent on TV ads. It's simply the biggest thing going.

As more video moves online, we'll see the bulk of online advertising dollars move toward that content. Google has brought us the online equivalent of a newspaper ad, soon others will bring the 30-second spot to our computer screens.

Google is very vulnerable in this space. YouTube generates little for the company and its advertising model is unproven. Video veterans like the television networks have shown themselves to be much more adept in this space. Look no farther than Hulu. With the backing of giant companies like NBC/GE/Universal, this video viewing site has the potential to scoop up future billions in ad revenue.

As it did with DirecTV-Dish Network and Sirius-XM Satellite, the Justice Department is once again slicing business segments as narrow as possible and then crying "Monopoly!" While a Google-Yahoo partnership would give the two 90 percent control of the search ad "inventory," search engines are not the only place to advertise on the Web. In addition to Google, there are at least six other general English-language search engines, including newcomer Cuil, as well as several in other languages. Add to that numerous specialized search engines for jobs, businesses, legal and medical and it's plain off-base to call Google a monopoly.


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