Google's Yahoo Offensive Smells Like Old Fish
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Earlier this week, the European Union launched an antitrust investigation into how the Google-Yahoo pact will affect competition in the market. The EU's investigation came about a week after the U.S. Department of Justice hired Sandy Litvack to head a domestic investigation into Google's online advertising business.
Armstrong's Friday post directly addresses how online advertising competition will be affected if the two largest search engine companies on the Web form an ad partnership.
The first issue Armstrong addresses is straight forward enough: is it bad for competition if Google and Yahoo to work together?
"Just the opposite," Armstrong writes. "This agreement - unlike Microsoft's proposed acquisition of Yahoo! - means that Yahoo! will remain an independent company in the business of search and advertising. Yahoo! has stated that it will reinvest the additional revenue from this agreement into improving its user services and competing vigorously against Google, Microsoft and other companies. This is similar to other standard business practices where competitors share components. In addition, the agreement is non-exclusive, meaning Yahoo! could make a similar deal with another company."
Nice jab at Microsoft in the first sentence. It seems like a pretty transparent move, as if Armstrong is saying, 'Hey, remember how evil Microsoft is? Remember that antitrust trial they went through and how they tried to buy Yahoo? Well, we're Google " the anti-Microsoft. We're still hip and cool and all about competition and innovation.'
Armstrong next addresses the perception that Google and Yahoo make up 90 percent of the search engine ad market. He denies that and gives a non-answer of the highest order.
"No. This agreement is not a merger," Armstrong writes. "This is about expanding the pie, not dividing it differently. Yahoo! will continue to run its own search engine and advertising system. Yahoo! will benefit from Google ads in areas where they have low ad inventory and maintain control over how much and what inventory they make available to Google. Yahoo! will invest additional revenue in remaining a viable competitor in advertising."
Sorry, but I don't buy it. There's been no discussion of the two companies merging. Instead, the investigations were launched in the U.S. and Europe because of a question of Yahoo and Google partnering in the ad space. And between the two companies, regardless of what Armstrong writes, the vast majority of ads served on Web pages come from one or the other.
We know this isn't a merger. But it is an agreement between two companies that should be in steel cage match fight to the death to serve ads, grow their businesses and grind the competition to dust. As someone I know likes to say: "It's not enough for us to win. Someone else has to lose."
Why does Google find it so odd that somewhere someone is asking this simple question: "What's in it for Google to pair with their main competitor?" It just so happens that, in this case, that someone is the Department of Justice and the EU.
Business isn't conducted on the wings of butterflies and on the shoulders of unicorns, despite what some search engine companies want us to think. Whenever you're teaming up with a competitor in a way that doesn't involved the words "hostile" and "takeover," something is going to smell fishy.
Something else worth considering is simply this: Google is getting bigger; the company is expanding and dipping its fingers into more pies. And, let's face it, the more successful and individual or company becomes, the more anonymous people will begin to take shots at it.
It may be that Google is just doing things the American Way. But let's not forget that we American's love scandals -- especially when it comes at the expense of the biggest fish in the pond. See: Clinton, Bill; Spears, Brittney.