The Google Search Advertising Cartel

Sep 24th

Whenever I read a story about Google losing it's competitive edge or spreading itself too thin I think that they author just does not get the network effects baked into web distribution when a company is the leader in search and advertising, and how solidly Google competes where it allegedly failed.

Sideline projects, like their book scanning project, turn into a treasure for librarians and researchers who guide others to trust Google. Syndicated products and services like their book API nearly create themselves as an off-shoot of creating indexable searchable content.

They monetize search much more efficiently than the competition. And that is only going to increase as time passes, especially since their leading competitor would rather outsource to Google than fix their monetization problems. Google can take any related market it touches and buy marketshare or introduce a new product to push free and openness. Everything should be open, except Google itself.

To sum up Google's lasting competitive advantage (including brand, marketshare, price control, distribution, undermining copyright, strategic partnerships, etc.) I turn to telecom lobbyist Scott Cleland's Googleopoly:

Google arguably enjoys more multi-dimensional dominating efficiencies and network effects of network effects of any company ever - obviously greater than Standard Oil, IBM, AT&T, or Microsoft ever were ever able to achieve in their day.
....
The five main anti-competitive strategies in Google's predatory playbook to foreclose competition are

  1. Cartelize most search competitors into financially-dependent 'partnerships;'
  2. Pay website traffic leaders predatory supra competitive fees to lock up traffic share;
  3. Buy/co-opt any potential first-mover product/service that could obsolete category's boundaries;
  4. Commoditize search complements to neutralize potential competiton; and
  5. Leverage information asymmetry to create entry barriers for competitive platforms.

If you have a spare hour to read, you may want to check out Mr. Cleland's Googleopoly 2 [PDF]. I don't agree with everything in it, but it sums up Google's competitive advantages and business strategies nicely. Anyone can learn a lot about marketing just by watching and analyzing what Google does.

Published: September 24, 2008

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Comments

September 26, 2008 - 7:03am

For example:
"Simply, Google has accumulated its dominant share of search by paying its traffic acquisition partners a
supra-competitive fee that no other competitor could economically justify, and that is much more than the
site could monetize on its own."

Googleopoly is a bunch of nonsense arbitrarily littered with loaded economic terms like "predatory" and "supra-competitive" to give some semblence of credibility. The quote you gave with the 5 anti-competitive strategies is barely comprehensible.

September 26, 2008 - 8:03pm

Well I said I didn't agree with everything in it...but it does paint a picture of the competitive strategy with Google. Everything should be free & open except their search algorithms and ad marketplace.

October 8, 2008 - 4:14pm

Thanks.....Not only for the post....But for the link Love.

The Link love is some edumacational shit.

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