Google may be having its share of recessionary stumbles, but compared to most of techdom it’s still smooth sailing over in Mountain View. And apparently that’s enough to make everyone want to sue. Three potential legal threats are looming in the news today around Google: One deemed a non-issue, another that should be deemed a non-issue, and one a very serious and troubling issue.
Let’s look at them in order of most frivolous first. Remember the Pennsylvania couple who sued Google last spring for taking pictures of its house and posting them on Google Street View? The aptly named case, Boring v. Google, has been handily dismissed. The courts wisely struck down the idea that Google was compromising the couple’s privacy since, ahem, they launched a suit calling more attention to their house than an obscure picture on Google Street View ever would have in the first place. It also said the trucks driving by weren’t enough to be considered trespassing, threw out the idea that the whole thing had caused emotional distress, and just generally told the Borings to get a life. Score one for justice and capitalism working hand-in-hand.
But today Google has to contend with a new case that’s almost as absurd. TradeComet, which already complained to the New York Times that Google is upping its advertising rates unfairly, is now suing Google for antitrust. Here’s the gist of the complaint: TradeComet’s SourceTool.com is basically a middleman-site that aims to connect searchers with the businesses they are looking for by showing them search ads and directory listings. The press release says repeatedly that Google was supportive of SourceTool until the site got too powerful and became a clear “competitive threat” to Google. Now Google is using its monopolist power to run TradeComet—which plows some 80% of its profits back into Google ads—out of business.
Let’s count all the things wrong with that argument, starting with the obvious: Google may be a lot of things but modest isn’t one of them. The company isn’t even worried about Microsoft when it comes to search. It’s certainly not viewing SourceTool as a competitive threat, especially if the company is plowing 80% of its revenues back into Google keywords. That’s inane.
Second, Google’s bread-and-butter is helping searchers find what they’re looking for in one-click. My guess is someone coming to Google and entering the name of a business is looking for that business, not another search engine that will give you another list of results no matter how “specialized” it is. Google is right to use market pressures to make the end user experience better and make life harder for the useless middlemen.
Third, no one is forcing SourceTool to rely so heavily on Google for its business. Startup 101 dictates that you never want to be 100% reliant on a potentially competitive company for your business. If SourceTool is that reliant on Google keywords for traffic, perhaps it’s a sign that it hasn’t built something that useful. News flash to TradeComet: You can’t sue your way to a good product or a thriving business. Just ask SCO, that Salt Lake City company that claimed to own Linux and was last heard from filing Chapter 11.
But as absurd as the complaint is, Google has to take this seriously. Why? Eric Schmidt’s BFF President Barack Obama. Even before he took office, the Justice Department said it would block Google’s proposed ad search deal with Yahoo, citing the company’s more than 70% market share in search advertising. And now, things look worse. Christine A. Varney has been nominated as Obama’s choice to head the Justice Department’s antitrust division. The same Christine A. Varney who several months ago said, “For me, Microsoft is so last century. They are not the problem.” The new threat? Google, a company that Varney said has “acquired a monopoly in Internet online advertising.” Would that Google-DoubleClick deal have slid through under Varney? Doubtful.
I wasn’t at the conference where Varney reportedly said this, but my concern is the government loves to scapegoat in a downturn and that quote reads like an anti-trust wonk scanning tech for a new target. The debate over whether you can have a “monopoly” on the Internet the way you can on a desktop is still raging throughout the Valley, and I come down somewhere in the middle of Google saying it’s a fluffy, little, do-no-evil bunny no one needs to worry about and fear-mongers who say Google is going to hijack the Internet. Google needs to be watched certainly. But there’s a big difference between a writer like me having to use Microsoft Word because it’s installed on every desktop and its the program all my various editors also use, and me voluntarily going to Google each and every time I want to conduct a search. There’s nothing compelling me to pick Google over-and-over again; it’s just a better search engine. In today’s world of glitchy software and unreliable betas, let’s not punish a site that has market power simply because it works.
Insightful.
Erick, writers like you are why I love TC!
Is it Eric or Sarah? The byline I see says Sarah.
Anjai Sen
it’s a sarah-post actually. i asked eric to post it on wordpress for me and it put in his byline by default. hopefully zwhit still likes the story
Its a great post Sarah, thanks for it.
I think that TC writers get too much hate, so I give you praise instead!
This is all Sarah. I hit publish before changing the byline.
Will people just stop screaming Google’s Name, everyone is just mad because they are successfull! If you have something you think is better then build it!
If not, stop trying to beat up the successfull guys!
Darin
good to know these kind of news. thanks.
Word.
Stupid people need to be neutered.
“In today’s world of glitchy software and unreliable betas, let’s not punish a site that has market power simply because it works.” Google rocks any time ..all time \\m//
Erick:
since when does microsoft word come pre-installed?
google comes pre-installed as the default start page and default browser search box for Firefox, as well as the default search on the iPhone. i’d say that’s more monopolistic than your MS Word example. in fact, it’s eerily reminiscent of the trouble MS had with IE where they were doing essentially the same thing. and they got busted for it.
so yeah, your example sucks.
and, google stores your search history for something like 9 months. MS Word doesn’t store your typing history.
that’s why it’s a bigger deal.
Firefox doesn’t come pre-installed either and offers several other search engines in the drop down. Same as IE.
Except for a couple nerds, no one changes the search engines in the dropdown.
She didn’t say Word comes pre-installed. She said: “it’s installed on every desktop and its the program all my various editors also use…”
Which is true. MS Word is effectively on every enterprise desktop in the world. WordPerfect is still around ya know (and better than MS Word). Is your company using it?
Anyone who uses Google for ads feels the pain of their monopoly every time they pay their bill, which continues to go up dramatically each year.
Many of you virtual soapboxers think of Google as the teet for your revenue and us cows on the other end are sick and tired of Google’s control of the search space.
I am actually suprised the author of this article is soooooooooo clueless.
By far, without a doubt, Google is a MUCH BIGGER threat to fair pricing and privacy than Microsoft EVER has been.
Excellent article. Keep up the good work. It’s true. I go to google at least 100 times a day, and I don’t think I have been to yahoo or microsoft (do they even have a search site?) in a year. What’s the point? Google gets the job done, and does it well. Are they going to pull the “fairness doctrine” on google too?
The issue of monopoly is not necessary for the people who use google for search, but rather for advertisers who want exposure to as many people as possible.
You sign-posted for three points, but only elaborated on two.
Was the antitrust thing supposed to be independent of the frivolous monopoly suit?
Yeah, can you please explain what the third suit was? I count only two…
1) Boring vs. Google (such a great name)
2) TradeComet vs. Google
Is the third one the potential suit from the DOJ antitrust division?
I would say the third issue is the appointment of Varney. Sure, her transition to that issue was kind of weak, or perhaps just too subtle for readers whose heads are clouded with Mountain Dew.
In a practical sense, how do you “break up” Google if you do convict them of being a monopoly? Whatever piece got AdWords would eventually buy back the other pieces (a la AT&T). There’s no way the government pulls this off.
Google loves these pieces. Thanks Sarah!
Google’s threat is in an advertising monopoly, but Sarah writes the article from her non-relevant point of view as a consumer. The advertising issue is not explored.
Instead, we get more of Google being so nice and so great. To me. I love them. For my searches.
How could they EVER (gasp!) be manipulating their advertisers or choking a market? Aren’t they the good guys since I get blogger and search for free?
Kisses.
Here here. It seems like most people don’t have a real grasp of the issue here. Google is pulling off a feat that MS dared only dreamed of. But the real trick is that they are welcomed by the masses.
“One deemed a non-issue, another that should be deemed a non-issue, and one a very serious and troubling issue.”
1. Boring v Google
2. TradeComet v Google
and… 3?
thanks for pointing this out . . I thought I was an idiot for not being able to count to 3. Glad that others are in the boat with me.
You knew it was only a matter of time until someone sued over Street View. I wonder if anyone has tried suing Microsoft for it’s Live Maps Birds-Eye View?
Wouldn’t at least one person need to use M$’s Live Maps before someone could sue for any sort of invasion of privacy?
(Sorry, couldn’t resist.)
-b
I think when Google expanded their business into maps, weather, news etc there would always be resentment. The fact Google has executed these new services brilliantly, particularly with maps, has added to their power.
I don’t see the harm in what they’re doing with these apps. It’s a fact that maps, news etc are the most popular reasons why people use the internet. Their advertising leverage is slightly concerning but I don’t think you can have total equality here either.
As long as Yahoo is still in the online advertising business, I don’t see a problem for them.
You’re right, but it is a problem if they use their natural search dominance to negatively impact competitors in these other fields. Mixing search/advertising with content makes them a monopoly (if that’s in fact what they’re doing).
My understanding is that most businesses advertising through Google are using adwords to do so. Since the rates are just a combination of clicks * bid = maximized revenue, Google doesn’t raise the rates at all. Other businesses do by driving up the value (bids) of the ad space. If your business model doesn’t drive enough revenue to pay for this particular marketing vehicle that is just too bad. It’s like complaining about superbowl ads being unfairly expensive. You can always buy spot cable advertising and you can always find places online to advertise for almost any budget. If you can’t pay for the reach you want, it’s not the fault of the market that values it.
For all those upset with GOOGLE, I have an alternative – go to http://www.ixquick.com. They don’t have any lawsuit issues yet, not monopolistic, so no anti-trust issues and they don’t do any tracking. Not sure how they will monitize but check it out.
dont sue google but instead please sue facebook because you’ll would probably win.
Great article Sarah, you’re off to a good start!
In today’s environment market monopoly is an outdated concept. A new entrant with the right technology and skills can create an altogether new market in matter of months, let alone beat the incumbent.
this is a slower day than celeb news…crushing.
amazing post
And the third threat is….?
Ugh… who are these people? If you can’t beat em’, sue em’.
I’ve had to buy a copy of iWork, and Windows for my Mac, to interact with the California state government. It feels like a tax, rather than a choice. I’ve used Yahoo search, because a laid-off Yahoo employee bristled at hearing me talk about “google”ing something. It works fine.
Seems like the Google near-monopoly for advertising is as if NBC, for instance, had a 70% market share, and could charge more for their TV ads as a result. Does Google’s share of search stem from the advantages of scale or incumbency, or just a better search strategy or faster-loading home page?
I’m changing my default Safari search box to yahoo right now.
How does SiriusXM fit into all this? Surely there is a connection…:)
Interesting topic, but I’m amazed (yet again) at people’s complete misunderstanding of the word “monopoly” as it pertains to business laws.
Having a monopoly is NOT illegal. Taking advantage of monopoly status to prevent competitors from prospering is the illegal part.
For this reason, I see little chance of the DOJ convicting Google of anything other than being really good at what they do. Because that’s all they do. They don’t prevent other search engines from working, or stop other ad networks from making a buck. They just make them both easier and faster to work with, and have a greater following of users.
Sadly, the economic conditions are only going to motivate more of these ill-conceived suits.
In terms of advertising costs however, our experience over the last few months has been that the CPC of our ads is decreasing. For example, our AdWords ads for this site – http://www.GetO...nizedWizard.com – which is in a reasonably competitive niche are almost half what we were paying late last year.
We’ve seen a lot more people trying AdWords, but having no proper strategy – with the result being that those that do are getting much cheaper advertising. So I’m surprised to see that big companies (like TradeComet) appear to be getting hefty rate increases. Perhaps they need to further understand that Google changes it’s programs pretty regularly and take advantage of that, rather than simply complaining?
Are you an attorney, what is your formal background in legal analysis? Especially when writing a blog with near definitive conclusions it is always good to know the authors background in the subject matter. Legal issues are especially complex and oftentimes simple sounding cases have immense complexity.
Without knowing anything about you, I would defer to my instinct to assume it is uneducated ranting?
Google (Search) works. That’s why they have a virtual “monopoly” on the internet.
Microsoft, on the other hand…
hhhhmmmmm a monopoly? more like they have the highest share of their market. or have msn and yahoo dropped off the face of the planet?
“But there’s a big difference between a writer like me having to use Microsoft Word because it’s installed on every desktop and its the program all my various editors also use, and me voluntarily going to Google each and every time I want to conduct a search.”
this is very wrong since it’s not microsoft forcing you to use it’s products but your editors.. and nobody forced people into windows but themselves..
outstanding research
Google is doing a fine job. Hats off to them.
Allen
Its a good work
whatever people say iam gonna love Google.
Dear vooood:
You’re right, in that Microsoft isn’t forcing me to buy their products, in the sense that Attila the Hun forced the Romans to pay tribute.
However, the editors, the people who send MSWord attachments, the State workers who require IE to access their mandatory reporting sites, etc, give MS monopoly power. If you invent in certain areas, Microsoft can cause compatibility problems or put free clones on 95% of your potential buyers’ computers. Consequently, innovation is discouraged in these areas, and tends to occur elsewhere.
There’s no reason to be so literal about the word “monopolist.”
When Christine Varney says “monopolist,” she means it the way antitrust people do: A company that can raise and lower prices, output or both without worrying they will lose market share.
There ARE limits to adjusting output and price, but the extra $ dominant firms get is unbreatable — it’s why companies like Intel and MSFT and CIsco have margins that put the competition to shame precisely because there is no serious competition.
If Google has abused it position it will pay a steep price. The Justice Department already determined that Google had a de facto monopoly in search ads when it blocked the Yahoo deal. Any future signs of abuse will bring the wrath of the Justice Department down upon GOOG, just as they once prosecuted MSFT.
So, sarah, why not read up on the law (Bork’s “The Antitrust Paradox” is a great place to start) then call around and talk to some antitrust professors? You’ll get an earful if you do, trust me.
I don’t understand when you compare Google’s Monopoly do the use of Microsoft Word as a text editor. You don’t have to use it either, people use it because it’s a lot better than any other text editor available. Same as Google Search.
Good conclusion…
“… let’s not punish a site that has market power simply because it works.”
Thanks for that post Sarah, finally someone on TC that agrees there is a difference between a monopoly that forces users into using their crappy products and a monopoly that has become a monopoly because nobody else can do the same job quite as well as them.
The MS Office analogy is a great example of how M$ locks people in. The company I earn my bread and butter at would jump to open office if given the chance but our proofreaders and contributors all use MS Office.
If any other search engine actually found me exactly what I was looking for even when I didn’t really know what I was looking for I would give it a full go. I have yet to find that fresh search engine and so I am quite comfortable with Google.
The other element of Google’s “monopoly” that the writer misses is the fact that their monopoly extends beyond the consumer search technology (google.com, .co.uk, etc) to the Adwords platform.
I would encourage TC writers to also consider how Google is using/can abuse its dominant market position in search queries to act uncompetitively towards advertisers who have really no other option when it comes to keyword advertising online (and no, Y! or MSN is not an alternative). Businesses DO NOT have a choice here, unlike your example of your choice of deciding to go to use google.com everyday. Businesses do not have this same choice – its Adwords or nothing!
Google has used its monopoly position here to introduce elements that increase their revenue at the the expense of businesses by introducing things like first page min. bids, and even auto-opting in Adwords campaigns to new platforms (for example showing ads on iPhones) which causes ad budgets to get spent more quickly.
I wrote a blog post on the last element (http://busterbl...mobile-devices/), but as an advertiser via Adwords for my company Wahanda, it is clear that Google is using its market dominance to squeeze more dollars in a very non-consumer friendly manner (almost “evil”).
i think that’s a fair point, salim, but there’s also a huge difference between being a dominant market leader and monopolist. you say other ad networks are not an alternative, but that’s not because google has abused some inherent advantage unfairly. this is not a case of google, say, using its search dominance to only direct you to sites that advertise with google. this is, again, because google has built the better search engine and people want to advertise on it to reach people like me who chose to go there for every search. if they abuse that– not as a monopolist, but as a business that has a trust with its users and advertisers– well then that’s an opportunity for someone to build something better and that’s what silicon valley is built on. blame yahoo and microsoft for not building comparable products, don’t ask the government to hobble google because they’ve won a market and you as a business want to advertise to their base.
i think that’s a fair point, salim, but there’s also a huge difference between being a dominant market leader and monopolist. you say other ad networks are not an alternative, but that’s not because google has abused some inherent advantage unfairly. this is not a case of google, say, using its search dominance to only direct you to sites that advertise with google. this is, again, because google has built the better search engine and people want to advertise on it to reach people like me who chose to go there for every search