Google antitrust? Ask the one man who can (almost) answer
To know the unknowable
Exclusive Outside of Google, no one really knows how the company makes its money. We know that most of Google's billions come from AdWords, its search advertising system. But no one really knows how AdWords works. By design, AdWords is a black box. If the world knew how it worked, Google says, unscrupulous advertisers would game the thing.
That may be true. But the black box also makes life difficult for legitimate advertisers. And with Google's search engine now controlling 85 per cent of the market — according to one research outfit — there's an added conundrum: How do you really know if AdWords deserves antitrust scrutiny? Google says that it doesn't control prices on the ad platform, that AdWords is an auction where prices are set by advertisers. But AdWords pushes the boundaries of the traditional auction, and we have no way of knowing just how far it pushes.
The best we can do is ask Preston McAfee.
Preston McAfee is Yahoo!'s chief economist. Overseeing the company's microeconomics and social-sciences research group, he's among those who drive Yahoo!'s "Panama" search-ad system — an attempt to mimic Google AdWords — and he helped rebuild the company's display-ad exchange with an auction-like real-time pricing system. Yahoo! CEO Carol Bartz owns a sweat shirt emblazoned with his math.
McAfee joined Yahoo! in 2007, after 28 years as a professor of economics at the California Institute of Technology and the University of Texas at Austin. Auctions were his speciality. In the early 90s he helped build the simultaneous ascending auction, which governments across the globe have since used to license over $100 million in wireless spectrum. But he was also an authority on mergers and antitrust. He testified as an expert witness in the FTC v Rambus case, in which the Federal Trade Commission charged Rambus with violating antitrust laws, and USA v Oracle, in which the government sued to stop Oracle's acquisition of Peoplesoft over antitrust concerns.
"I've worked on pricing and auctions and antitrust. So when I came to Yahoo!, I thought 'This will pretty much cover everything I've done, except for antitrust,'" he told The Register in an interview earlier this year, before a sly acknowledgement that antitrust eventually came into play as well: "Little did I know."
In 2008, as Microsoft attempted a forceful takeover of Yahoo!, McAfee's company inked a search pact with Google. But Mountain View eventually pulled out of the deal when the Department of Justice threatened an antitrust suit. Microsoft never did acquire Yahoo!, but the two companies eventually signed a search pact of their own. Microsoft Bing now underpins Yahoo!'s organic search, and soon, Redmond's AdCenter will drive Yahoo!'s search ads as well, replacing Panama.
In objecting to the Google-Yahoo! pact, Microsoft said that the deal would give Google more than 90 per cent of search-advertising market. But according to one source familiar with Mountain View's internal data, Google was approaching 90 per cent of the market even without Yahoo!, and with preliminary investigations underway in the European Union and in Texas over AdWords as well as Google's "organic" search results, the antitrust questions still linger.
Next page: How the DoJ 'got it wrong'
How could any business be dumb enough to drink this kool-aid?
They are running the market, and at the same time continue to introduce new products in new markets on an almost constant basis.
They will not stop ever on their own... the Google plan is to get you to use their free mail and search and advertising services, while they scan all your data (only with computers for keywords, not a live person as if that mattered). They will get all relevant key words associated with your business model, then create a cheaper competing product, and then use all the website and resources you usually access against you.
Say you rent cars for living. Google will scan your employee emails, the corporate emails, search behavior, etc combine that all with the paid adwords,
And then they mesh this review with their general database on the public at large.
and now Google has great information on what kind of cars people rent, where the renting companies hold expos and internal meetings, what subscriptions they use to get information etc. Google can come in steal their best practices and good ideas, and start a new competing company with their billions, and buy only the best product that will sell for the most margin.
Fast forward a few years, google owns the market, they have expanded their offering to take over the less profitable sectors as well. and the competition is dead or floundering.
Why oh why would any business owner commit suicide and sign on with this awful organization is beyond me.
I have given up hope on the general public being able to get the danger here, and don't think our government will wise up until long after it is too late.
The only hope I have now is some rogue Google millionaire with a shred of conscience left will leak some of the formula and uber shady things going on behind the curtain.
Of course all the cash, flextime and massages are helping keep the fools happy so slim chance on that.... besides you can't bank on the morality of someone who chose to go work for such a company to begin with.
I just have to say...
Graham Google, Michael Microsoft, Andy Apple, Ingrid IBM, Donald Daewoo, Betty Ford, Freddy Foxconn, Vera Volvo
If only life had such irony!
"Legitimate Advertisers" is an Oxymoron, and...
"The best we can do is ask Preston McAfee...Preston McAfee is Yahoo!'s chief economist. "
Sure. Because when you want unbiased analysis, the best thing to do is ask a direct competitor -- someone with a vested interest in the outcome always gives you a straight answer.