What Comes Around Goes Around?
From 1994 to 1998 I worked on the Senate Judiciary Committee, for then Chairman Orrin Hatch. I had the privilege of working with some very talented attorneys as we explored potential anti-competitive conduct by Microsoft in the operating system software market.
On July 15, the Senate Judiciary Committee, Subcommittee on Antitrust, Competition Policy and Consumer Rights held a hearing titled, “The Google-Yahoo Agreement and the Future of Internet Advertising.” Generally, at issue is the competitive state of online advertising. The Committee discuss ed at this hearing the recent advertising agreement between Yahoo! and Google.
As described by David Drummond of Google, the agreement allows Yahoo! the option of displaying Google-supplied ads along with its search results, web pages and partner properties in North America. Google asserts that Yahoo! will maintain its own natural search results as it does today and that the arrangement will not increase Google’s share of search traffic. Mr. Drummond goes on to explain how, in his opinion , the agreement will benefit consumers, website owners and advertisers.
Microsoft’s Brad Smith counters that the agreement will stifle competition because together Yahoo! and Google control approximately 90 percent of search advertising. Smith argues that to allow these two forces to team up will create a monopoly in search advertising, having the effect of reducing competition. He goes on to state that resulting price coordination will force higher prices and limit choice to advertisers; harm consumers as Google is able to collect more and more user information that passes through its search gateway; and that Google would, through its monopoly power, increase its ability to shape what people see and experience online.
It was only ten short years ago that much of the pc industry attacked Microsoft for maintaining its market power through alleged anticompetitive conduct, and Microsoft defended itself largely by stating that its platform was a benefit to consumers, delivered efficiently due to its market power. Ten years later it has come around, they are now on the short end, and Microsoft doesn’t like it one bit.