Google-DoubleClick Counterpoint

Get the WebProNews Newsletter:

[ Search]

As is often the case, Danny surprises us with a level of detail in his rejoinder to Senators Hatch & Kohl about the impending Google-DoubleClick merger.

The short answer seems to be that Danny defends Google’s position against certain distortions.

I’m not sure I feel as certain about the issue, but Danny has certainly clarified the logic. Antitrust legislation probably needs to ask whether it would be legitimate and likely that the company under review would grow into a dominant position in a new area even without the acquisition, or if this event would "make" the new entity into a monopoly where it was once a "player" in a more competitive environment.

Based on global economic precedent, you have to wonder what it all means. Does anyone regulate the consolidating beverage industry? Does Procter & Gamble get questioned for its massive reach and control of shelf space?

Did anyone question Quaker Oats buying Snapple? Sounds funny now, doesn’t it? That’s an acquisition that didn’t lead to global dominance. In fact, Snapple tanked as a brand. Some acquisitions can just be expensive failures.

Here, the acid test needs to be how dominant the acquired company is – what it really controls in the industry it operates in, and whether that will lead to total dominance for the acquiring company. Google overpaid for DoubleClick based on the momentum of the industry and Google’s favorable stock price and cash reserves. If they’d picked it up for $500 million a couple of years prior, no one would have whispered anything about regulation.

You could almost look at the parallel with Google Analytics and Google Website Optimizer. Google acquired Urchin, transformed and integrated the product, and moved into an increasingly dominant position in web analytics. With Optimizer, they developed a product in-house, fast gaining market share — rather than acquiring Offermatica or similar software companies. The point is, none of these acquisitions arguably create a "closed territory" for a regulated service or something built on scarce public resources, such as may exist in banking, telecommunications, or transport. They still operate in the software industry where buyers have many choices, and there are no serious barriers to entry.

Until you get to Microsoft’s size and level of dominance at the behavioral level, that is. And that’s the territory Google’s moving into. So literally taken, no move by Google is technically afoul of the law, but eventually, as with Microsoft, it all adds up. And then the feds will go looking for faults. And they are sure to find many.

To restate: the fact that the impact of all of Google’s integrated activities is to give it massive control over multiple industries, enjoy monopolistic advantages, and become a leading repository of business and personal data, does not necessarily mean that a particular acquisition like DoubleClick conflicts with the letter of the law.

I guess the question will be, is this the straw that broke the camel’s back?


Google-DoubleClick Counterpoint
Comments Off
Top Rated White Papers and Resources

Comments are closed.

  • Join for Access to Our Exclusive Web Tools
  • Sidebar Top
  • Sidebar Middle
  • Sign Up For The Free Newsletter
  • Sidebar Bottom