Just how powerful can Google become, and what are the consequences?
These questions deserve attention, and are getting a lot lately -- some hyperbolic, some not.
Bill Snyder at Infoworld is raising the alarm because of the potential advertising tie-up between Yahoo and Google. In "Warning: Google is becoming Microsoft's evil twin" he writes,
" Sergey Brin and the gang that will do no harm have learned the worst possible lesson from Microsoft: build a monopoly and they will come -- because they have to.
Being naive, and not owning any Microsoft stock as Snyder does, I thought that Google was offering its services to Yahoo in order to avoid the necessity that Microsoft buys Yahoo.
The deal with Google, he says,
" is bad for business, bad for consumers, and bad for IT. It will raise Web advertising rates by more than 20 percent. It ought to be stopped.
Where did that number come from? SearchIgnite, which helps advertisers make their ads more productive. Searchignite compared the cost per click of keywords, and found that they cost 22% more at Google than at Yahoo. It's a kangaroo's leap to say that the deal will automatically raise Yahoo's prices by that much.
This analysis ignores the fact that advertisers bid on the price per click, which sets them at a fair market value. If you're not getting results to justify the price, you bid lower. The Google ads have higher payoff, so the bids are higher.
There are two scenarios: Either bid to just place your ads on Yahoo and get them cheaper, or bid on Google's entire collection of AdSense sites and pay more. This isn't exactly Microsoftean evil.
Neither is this on a par with the kind of tactics Microsoft used to get itself into trouble. Microsoft didn't let PC makers bid on their software, it set prices. If the customers dared to install competitors' software on their PCs, Microsoft charged them higher prices for Windows.
The comparison of this deal to Microsoft's tactics is just silly.
And, I may note, it was Google News that led me to Snyder's article. That's not the tactic of an evil monopolist.
Nevertheless, prices may go up with this deal. When there's only one auction to bid under, prices are likely to increase. That's a concern. Competition is good and as necessary as a well-armed militia.
Here's the solution I propose. Mimic Google, don't fight it. Microsoft and Yahoo should make sure their ad systems link to the most relevant content, are not obnoxious and rise to the top of the list if they're effective, regardless of the price people pay for them.
Then Google won't be so much of a monopoly.
(And I don't own stock in any company. Period.)