Microsoft, Google Battle On Capitol Hill

    July 15, 2008
    WebProNews Staff

One might suppose it’s due diligence to listen to the arguments of companies enormously invested in the outcome of regulatory decisions, so the onus of coming to a reasonable conclusion rests solely on Congress whether to believe Microsoft or Google in two hearings today in the Senate and the House.

And to be sure, legislative judgment will be closely scrutinized. At issue is whether Google’s search advertising deal with Yahoo violates antitrust laws and/or poses significant privacy concerns. It seems only fitting the government—with books on tube systems, dump trucks, and pervasive economic indicator denial—would be dragged out to referee the urination streams of three tech giants, all of them praying the wind doesn’t shift.

Yahoo hasn’t been as quick to issue regulatory statements via press channels, preferring perhaps to sit back as two suitors duke it out, solidifying its place as a pawn, as a piece of meat. Microsoft and Google, however, have their weapons readied, their steely-eyed stares, their tap-dancing shoes.

Because, really, it’s not, never has been about sober judgment; it’s about money, plain and simple, and each company’s end game. They’re asking legislators to settle a civil, monetary dispute, as if legislators don’t have other things to do, and legislators will have to listen to both sides just as judges would have to, fully knowing both sides are slightly (okay, more than slightly) full of it, their arguments tainted by their own goals.

It all comes down to who sings prettiest. Or there is the smallest chance members of the Senate Judiciary Committee and the House Judiciary Committee will step outside the razzle-dazzle long enough to make an informed decision.

Microsoft’s argument, predictably, is this: “If search is the gateway to the Internet, and most believe that it is, this deal will put Google in a position to own that gateway and the information that flows through it,” says Brad Smith, Microsoft Corp. senior vice president and general counsel.

“Never before in the history of advertising has one company been in the position to control prices on up to 90 percent of advertising in a single medium. Not in television, not in radio, not in publishing. It should not happen on the Internet.

“When Yahoo! talks about this deal generating up to $800 million in additional revenue, that’s money out of the pockets of American businesses, big and small, who will pay higher prices for the very same ads they buy from Yahoo! today.”

It’s actually a very smart argument, even if rich coming from king-market-cornerer Microsoft, and echoes another smart theory about the leverage Google stands to gain in the online space. Smith also argues that so much control by default sets the nation’s privacy policy, too.

“If one company – Google – controls up to 90 percent of online search advertising it will have a complete picture of your online activities," says Smith. "If that happens, Congress won’t need to enact a federal privacy policy, we will already have a national privacy policy – Google’s privacy policy.” 

Just as predictably, Google believes those fears are unfounded and spins it so 90 percent control is good for everybody involved. Their argument, mainly rests on something rather abstract but plausible: A true monopoly is hard to come by on the Internet, so long as its open and interoperable natures are preserved. There will always be competition, always a challenger.  

One of those challengers, Google argues is still Yahoo, despite the search ad agreement. Google will not be providing a search engine for Yahoo, only advertisements, which will not increase Google’s search share. Senior VP for Corporate Development and Chief Legal Officer David Drummond argues the agreement is actually beneficial for Internet users and advertisers alike because of more precise targeting.

Also, it’s not unusual for companies to make commercial arrangements, and regulators have recognized the end-value of such arrangements to consumers. Privacy concerns, says Drummond, are overblown and cites an agreement between the two companies to anonymize IP addresses before search requests are passed to Google.

That may actually degrade search ad targeting, an outside voice says, making ads on Yahoo’s search results less on the mark than Google’s own. But these are all just details that cloud the reality: Google wants more reach, Yahoo wants protection from Microsoft, and Microsoft only wants the government to step in as a bouncer so Google is effectively junk-blocked and Yahoo’s head is pushed closer to Microsoft’s lap. 

If the government’s smart—i.e., not willing to be manipulated—it will step away from this issue for now. The chief plaintiff is far from altruistic, is self-serving and hypocritical; Microsoft’s own interests, as always, prevail over everything. By weighing in heavily against Google, despite Google’s own self-interest, the government is a party to and accomplice in Microsoft’s greed and bullying, indeed providing Microsoft the crowbar to wedge them apart long enough rend Yahoo to pieces—which will probably happen anyway at Yahoo’s annual shareholder meeting in August. A nice regulatory ruling is just the insult to injury Microsoft seems to be looking for.

The market will probably decide this issue, and if not, then anybody except Microsoft should be on Capitol Hill complaining. Ask? AOL? MIA so far.