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My House Judiciary Antitrust Testimony -- The Blue Whale in the Antitrust Room -- Googleopoly
Submitted by Scott Cleland on Wed, 2010-09-15 23:21
(Don't miss the eye-opening numbers at the end of this post.)
I am testifying tomorrow before the House Judiciary Competition Subcommittee hearing on "Competition in the Evolving Digital Marketplace."
- My written testimony, with a one-page summary, is here.
- In addition, to talking generally about the evolving digital marketplace, I focus specifically on "The Main Antitrust Event -- Googleopoly."
The other witnesses I have heard that are testifying are: Ed Black of CCIA, Morgan Reed of ACT, Mark Cooper of Consumer Federation, and Geoff Mannes of Lewis and Clarke Law School.
It is a particularly timely hearing given Google's pending acquisition of ITA Software, which is under review at the DOJ, and which is a quintessential example of how Google exploits the soft underbelly of antitrust enforcement to buy its way to monopoly power in vertical markets like travel. My testimony attachment explains how Google already bought its way to a Internet video monopoly via its acquisitions and integration of YouTube, DoubleClick, and AdMob.
For fun let me tease you with an interesting eye-opening statistic about Google's monopoly business model.
- Google CEO Eric Schmidt recently said Google's DoubleClick platform serves 45 billion ads daily. 45 x 365 = 16.425 Trillion Google ads served a year. Big number!
- Then divide Google's annual revenues (TTM) of $26b by the 16.425 Trillion ads served (assuming the DoubleClick platform now serves all of Google's ads) and one learns that Google makes about one sixth of a penny per ad that it serves. Tiny number!
- In other words Google has to serve 60 ads to earn a dollar in revenue.
- Does that sound like targeted or "relevant" advertising as Google claims?
- Moreover, if Google is the most efficient online advertiser by far, think about how many more ads a smaller company without a monopoly has to serve in order to earn a dollar in revenue? a hundred? two hundred? a thousand?
- My point here is how much competition do you think can survive long term in the supposed nirvana of a Google's "free" information Internet sector -- where information is paid for with ads that generate at best an average one sixth of one cent apiece?