DOJ vs. Google: Will it happen? Unlikely - as government would lose

There's a potential anti-trust fight looming on the horizon. The target: Google. It's a mega-sized company that many are beginning to become leery of.
Written by Doug Hanchard, Contributor

There's a potential anti-trust fight looming on the horizon. The target: Google. It's a mega-sized company that many are beginning to become leery of.  Already many are beginning to wonder just how much bigger Google can get without microscopic scrutiny by the U.S. Department of Justice.  Google's market capitalization is now hovering around 188 Billion U.S. dollars ($589.35/share - as of Dec 10th, 2009), 6thlargest market cap in the U.S. behind (in ranking order) Exxon, Microsoft, Wal-Mart, Apple and JP Morgan.

Google is already on the DOJ's radar screen with its book scanning deal with publishers around the world. The German government is reviewing its options carefully before signing off on the project. DOJ will be satisfied so long as there is no creation of a monopoly of the data or publishing rights being violated.

Google dominates in two primary categories, Internet Search and Advertising revenue.  Google and affiliates rank #1 in all 4 primary internet spaces that Nielsen ratings track.

Top 10 Global Web Parent Companies, Home & Work

October 2009

Rank Parent Unique Audience (000) Active Reach % Time Per Person (HH:MM:SS)
1 Google 353,880 83.75 2:52:53
2 Microsoft 317,671 75.18 3:13:13
3 Yahoo! 237,342 56.17 2:20:27
4 Facebook 199,961 47.33 5:47:04
5 eBay 159,424 37.73 1:51:02
6 Wikimedia Foundation 147,584 34.93 0:15:36
7 AOL LLC 134,635 31.86 2:22:51
8 News Corp. Online 120,681 28.56 1:07:49
9 Amazon 117,255 27.75 0:24:16
10 InterActiveCorp 114,749 27.16 0:12:48
Source: Nielsen NetView

Top 10 U.S. Web Parent Companies, Home & Work

October 2009

Rank Parent Unique Audience (000) Active Reach % Time Per Person (HH:MM:SS)
1 Google 156,635 79.66 2:34:50
2 Microsoft 138,773 70.57 2:06:16
3 Yahoo! 134,745 68.52 3:06:11
4 Facebook 107,482 54.66 6:09:48
5 AOL LLC 91,205 46.38 2:30:32
6 News Corp. Online 79,817 40.59 1:28:46
7 InterActiveCorp 71,310 36.26 0:16:52
8 eBay 66,191 33.66 1:25:29
9 Amazon 63,372 32.23 0:26:11
10 Wikimedia Foundation 62,084 31.57 0:17:07
Source: Nielsen NetView

Top 10 U.S. Online Video Brands, Home & Work

October 2009

Rank Brand Total Streams (000) Unique Viewers (000)
1 YouTube 6,632,964 105,923
2 Hulu 632,662 13,472
3 Facebook 217,765 31,594
4 MSN/WindowsLive/Bing 183,556 17,301
5 Yahoo! 173,482 24,265
6 Fox Interactive Media 160,698 13,142
7 ABC Television 136,348 5,642
8 Turner Sports and Entertainment Digital Network 119,850 5,741
9 ESPN Digital Network 109,799 8,625
10 CBS Entertainment Network 103,741 6,973
Source: Nielsen VideoCensus

Top 10 U.S. Search Providers, Home & Work

October 2009

Rank Provider Searches (000) Share of Searches
- All Search 10,218,842 100.0%
1 Google Search 6,759,395 66.1%
2 Yahoo! Search 1,574,891 15.4%
3 MSN/Windows Live/Bing Search 986,747 9.7%
4 AOL Search 310,178 3.0%
5 Ask.com Search 176,744 1.7%
6 My Web Search Search 101,436 1.0%
7 Comcast Search 51,995 0.5%
8 NexTag Search 35,088 0.3%
9 BizRate Search 30,690 0.3%
10 Yellow Pages Search 30,422 0.3%
Source: Nielsen MegaView Search

Google is on track for approximately 24 Billion dollars in gross revenues, 65+ percent of those being generated by website advertising links. The entire television broadcasting industry doesn't bring that sum of revenue. Little wonder why Microsoft wants to edge into this space as Yahoo's erosion in this space continues.

As Google continues to expand into new opportunities and applications it has not deviated away from its core business and continues innovative marketing solutions available to companies to advertise their products. Google is starting to see some pressure from advertising positions available to marketing departments. Microsoft has placed a bet and bought a significant share of Facebook at an opportune time. With Facebook now surpassing the 350 Million subscriber market, it becomes a valuable property in which to advertise inside of.  Facebook’s revenues, which the company does not disclose but which could reach $500 million this year, are still dwarfed by those of Google. It would appear that they will have a ways to go before catching up - if at all, particularly when compared to Google's advertising Goliath-sized presence.

That creates concern among many: Is Google simply getting to big? What government options are there to have some kind of oversight?

Anti-trust is not a possibility within the advertising industry, at least not right now. DOJ is not about to tell marketers where they have to spend their money and that they can't do business with the #1 search engine company in the world.  It would be impossible to 'break up' the company using this argument.

It can't regulate what Google charges for advertising either since there is no competitor trying to lock in what it costs to generate revenue with them and set prices. The only chance DOJ would have is if Google made exclusive deals for advertising space with specific companies and not allow others into that area.  From their perspective that would be dumb move to even contemplate let alone do, after all why would they want to?

Google will have to be careful with respects to its content group such as the e-Book project and others. Google's foray into publishing such as scholar.google.com will be under the microscope. Since Google does not charge for access to the content, it's likely DOJ would have a difficult time creating a case and it's close to a final settlement with publishers on E-Books. Google's general practice is ensuring that everything it does avoids the appearance and practice of exclusion.

Google's new application development in wireless, collaboration tools and other software applications are open source and thus there's no smoking gun for oversight in those spaces either.  Google's strategy and tactics seem well positioned to weather any government interference and there's little anyone can do about it.

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