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Google too 'small' to be a monopoly

The Washington Post is reporting that Google has been trying to paint itself as too small to be a monopoly in order to fend off increasing moves by US government agencies and others to take antitrust action against the Mountain View company.

The Bush administration's relatively lax view of monopolies (many think the Bush Republicans saved Microsoft from being split into two companies, an OS company and an applications company, earlier in the decade) has given way to a more hard-line approach under Obama. Christine Varney, who will soon be Obama's antitrust chief, has come out as claiming that Google "has acquired a monopoly in Internet online advertising."

Google has been fighting back, trying to turn the tide in legal and political opinion in several ways:

  • Hiring former US Department of Justice antitrust lawyer Dana Wagner to help present Google's case "to advertising clients, public officials, reporters and academics in an effort to diffuse the impression that Google has a competition law problem"
  • Pointing out the many ways Google contributes to the community and embodies its "do no evil" philosophy
  • Noting that Google has just a 2.66% share of the advertising market

This last point is the key: Google dominates online search advertising, but if you take the advertising market as a whole (and include newspaper, television and radio adverts, junk mail, billboards and the like), then Google is actually not a terribly big player. In fact, it is relatively "small". Defining the market this way, Google cannot possibly be considered to have a monopoly.

Whatever Google's arguments may be, the company is justifiably concerned about antitrust investigations into its practices. The US government is unlikely to follow Google's rather broad definition of the market in which it operates. Rather, the US government is likely to seek to define Google's main market as that of online search advertising, and this will probably lead to more antitrust reviews and, ultimately, the possible legal designation of the company as a monopoly.

As Microsoft and other companies that have been declared a monopoly well know, the status opens them up to an unending stream of legal challenges, both domestically and internationally, and this is something that Google will wish to avoid at all costs--or at least postpone for as long as possible.

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