Google Faces Possible Anti-Cartel Investigation - More Opposition and Google's Response
(Page 2 of 4 )
Additional opposition to the deal has come from a more surprising quarter: the World Association of Newspapers, which recently published a lengthy article on its web site accusing Google, with its "ever-tightening grip on internet traffic, its unbridled use of online content, and its dominance in online advertising," of posing "a very real threat to the continued viability of the independent content generation industry."
The article goes on to make the point that the newspaper business as a whole has a deep dependence on both Google and Yahoo for advertising revenue and for generating traffic, and that an effective merger between the two threatens the stability of this situation, in turn undermining the healthy competition that has kept the industry honest. However, opposition to the arrangement is by no means universal, with the influential American Advertising Federation - America's oldest national advertising trade association - remaining neutral on the subject.
Google's response to Litvack's appointment has been a curious combination of reticence, stout defense, and slight but unmistakable signs of paranoia. An official statement from the company immediately following the announcement of Litvack's appointment unsurprisingly played down the significance of the Yahoo deal, describing much of its anticipated effect as "speculation" and claiming that "it would be premature for regulators to halt the agreement before we implement it and everyone can judge the actual impact." The company also voluntarily suspended implementation of the deal for three and a half months while it is investigated by regulators.
These announcements were followed by a series of blogs from Tim Armstrong, Google's North American President of Advertising and Commerce, in which his attempts to refute the various criticisms of the deal come across more as an exercise in spin than an honest attempt to engage with the issues it raises. For example, Armstrong's argument that the arrangement will somehow incentivize Yahoo to maximize the number of its own adverts because "they get to keep all of the revenue from those ads" and only "a part of the revenue from ads served by Google" is disingenuous to say the least. Why would Yahoo have entered into the agreement in the first place if this were the case?
In another column Armstrong neatly evades the issue of whether the agreement is likely to raise ad prices in the longer term with the argument that ad prices are determined at auctions "where an advertiser only bids what an ad is worth to them." This, of course, says nothing about the possible effect of the deal on what winning advertisers will need to bid in an effectively monopolistic environment. Armstrong declares that Google and Yahoo will not conspire to artificially inflate minimum bids in order to raise revenues, but how this will turn out in practice remains to be seen.
Other than that, little has emanated from the Googleplex, although the depth of concern over the unfolding events in the corridors of the head office may be gauged by the company's recent charm offensive. One aspect of this has seen the formation, in collaboration with Liberty Global and HSBC Holdings, of the O3b communications company that will provide satellite-based Internet access to much of the developing world. At the same time Google has announced its intention to reduce by half, to nine months, the period for which it will retain user-identifying records on its servers.
These measures are an effective acknowledgment that the company has a PR problem. Whether they will be effective in solving it is another question entirely.
Next: Analysts Weigh In >>
More Search Engine News Articles
More By Bruce Coker
