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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

September 27, 2007 at 3:34 PM

Senate testimony: Microsoft 1, Google 0

I wasn’t there so I can’t say for sure, but it sure sounds like Microsoft’s testimony spanked Google’s in today’s Senate subcommittee hearing on the DoubleClick acquisition.

Microsoft’s top lawyer, Brad Smith, said Google is spooky and will end up with a huge share of the online ad business if it acquires DoubleClick as planned. The deal will give Google an 80 percent share of non-search ads served to third-party Web sites, in addition to the 70 percent share of search ads that Google already has, he said.

Smith’s counterpart at Google, Dave Drummond, used Web 2.0 jargon like “the long tail of the Internet” in his testimony and peaked with a lame analogy:

The simplest way to look at this is by way of analogy. DoubleClick is to Google what FedEx or UPS is to Our current business involves primarily the selling of text-based ads — books in our analogy. By contrast, DoubleClick’s business at its core is to deliver and report on display ads.

Except that most everyone sees both Google and DoubleClick as doing the same basic thing — providing Internet advertising services. The distinction between display and search ads is too narrow — it’s not books versus trucks — and Google’s going to narrow it further if the acquisition goes through.

This is a little nitpicky, but there’s another problem with the analogy: isn’t just a bookseller anymore. Among other things, it’s also in the business of order fulfillment, just like FedEx and UPS. Check out this page, where Amazon says “You sell it, we’ll ship it.”

Instead of asking senators to sort that out, Smith played up basic concerns that speak to the concerns of these particular senators: The scary stuff and potential monopolies.

From his prepared testimony against Google’s acquistion, given today to the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights:

This country doesn’t permit the phone company to listen to what you say and use that information to target ads. The computer industry doesn’t permit a software company to record everything we type and use that information to target ads. Yet with this merger, Google seeks to record nearly everything you see and do on the Internet and use that information to target ads. Indeed, one question is whether this merger will create a whole new meaning to the term being Googled.

These privacy issues in fact have antitrust consequences. Given the nature and economics of online advertising, this concentration of user information means that no other company will be able serve ads as profitably. In short, it will substantially reduce the ability of other companies to compete.

It is spooky. But doesn’t Microsoft also compile user information for the purpose of targeting ads? Didn’t Microsoft also try to acquire DoubleClick?

You can tell Smith’s probably the world’s most experienced antitrust testifier. But Drummond may have a chance to catch up.

(P.S. Maybe I liked Smith’s testimony better because he made a great case for print media. Isn’t it worth 50 cents to get your news in a format where nobody’s tracking and recording every story you read?)

Comments | Topics: Google, Microsoft, Public policy


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