Magazine article Information Today

Google's Antitrust Woes Continue

Magazine article Information Today

Google's Antitrust Woes Continue

Article excerpt

The ubiquity of Google's presence on and beyond the internet is its biggest asset and is becoming its biggest problem.

Look at me, for example. Much of the research for this article was done using Google. Last night, I used Google Earth to search and make a hotel reservation for an upcoming trip. When my computer sleeps, Google's Picasa slide show screen saver appears. I can use Google products for web browsing, email, social networking, sharing documents, online shopping, getting reviews of restaurants and other services, translating web-pages, creating websites and blogs, and myriad other activities. Google also powers an increasing number of smartphones through its Android operating system, giving Google new inroads to customers and new platforms for its services.

Putting aside the smartphone market for a moment, it's interesting that most end users don't pay for these Google products and services. I didn't pay for my searches, Picasa, Google Earth, Google Docs, Gmail, or most other Google services.

Who does? Advertisers. Google receives more than 95% of its revenue from advertising. This advertising takes several forms: The most obvious forms are sponsored ads that often appear with the other results of Google searches and through Google's AdWords program, where advertisers can identify key terms that will generate ads when users type these key terms in their searches (or via email).

Up to 80% of the Search Market

There is no question that Google has been very successful in (almost) everything that it has set out to accomplish. Current estimates are that about two-thirds of online searches in the U.S. are done with Google, and that number climbs to 80% in other parts of the world. Android-based smartphones have been making significant inroads in the smartphone market, largely because, unlike Apple's iPhone, the Android system can be used by a number of manufacturers and on a number of cellular networks. Google's success has been shown by its ability to both rise to the pinnacle of its market (e.g., search) and effectively take on established competitors (e.g., smartphones).

Google's success in dominating its markets, along with its reliance on advertising for revenue, has raised any number of questions and concerns about whether it is competing fairly in its various markets. These concerns reached a critical point in recent months as several different government investigations are now reviewing Google's practices.

The Power of Google

The most critical investigation began in June when the Federal Trade Commission (FTC) began an extensive probe to determine whether Google was violating U.S. antitrust laws. In July 2011, the U.S. Department of Justice (DOJ) joined in the FTC's probe, focusing on whether recent and planned acquisitions by Google also violate antitrust laws. In August, Google's announcement of its plans to acquire Motorola Mobility Holdings, Inc. triggered expectations of additional antitrust reviews. And in September, the U.S. Senate Committee on the Judiciary's Subcommittee on Antitrust, Competition Policy and Consumer Rights was planning to hold hearings titled The Power of Google: Serving Consumers or Threatening Competition?

Antitrust law does not prevent a particular company from being dominant in its marketplace, nor does it prevent a company from entering new markets. However, antitrust law is intended to respond when a company uses its dominant position to crowd out other competitors by misusing or manipulating its position to prevent fair competition. It is also intended to prevent the establishment of monopolies where only one competitor effectively remains in the marketplace. Monopolies can be created when a company uses its market dominance to stifle competition by merging with or acquiring competing companies or by taking active steps to exclude new competition. The ultimate goal of antitrust law is to protect consumers by ensuring that market choice remains available. …

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