All Kinds of Competition for Google Is in Development

by on October 2, 2008 · 9 comments

Information Week has an article in its September 29th issue that illustrates why regulatory interventions to temper Google’s dominance are folly – things like antitrust scrutiny of the Yahoo! deal. But it takes a little understanding of how markets work.

The article lists all kinds of innovative startups that plan to challenge Google and take the field of search in all kinds of new directions. “The burst of activity over the past 12 months is more befitting a land rush than a market dominated by one powerhouse,” it says. Read it. There’s lots of interesting stuff going on.

But it’s not going just because. It’s going on because there’s a dominant player in the market. It’s going on because venture capitalists, innovators, and entrepreneurs can see the large profit that Google is making, and they want a piece of it. Excess profits act as an invitation and a spur to others, bringing new businesses and business ideas to that market.

If profits are “managed” and “brought under control” by curtailing a company’s ability to make deals (like Google would make with Yahoo!), that signal – that there is money to be made here – dissipates. Fewer innovators come to the market.

A second signal also goes out: “If you come up with something truly revolutionary in this field, we’re going to reward you with a haircut.” That dissuades investors – telling them that high profits will not come to them if they produce something great.

It’s a shame that the federal government is working to stanch the flow of innovation coming to search by going after Google.

  • Ryan Radia

    A very informative article that ought to be read by anyone supporting using antitrust laws to limit Google's expansion. If Google really were a dominant monopoly destined to reign supreme over web advertising and search for years to come, then why would all these companies waste their time and money trying to beat Google? They may not have succeeded yet, but that doesn't mean they won't in the future.

  • MikeRT

    By the time they're done with Google, Google will have been rendered toothless as was Microsoft by the first year or so of the new millennium. The only concern that I see that's even remotely valid about Google is their penchant for censoring conservatives and libertarians via AdSense and AdWords restrictions on keyword use. The habit of blocking conservatives from buying ads for the word “abortion” comes to mind. Still, it is a private medium.

    Though you have to admit, Jim, that there is some sweet irony in an organization as openly left-wing as Google getting a shot across its bow by leftists in the DoJ's anti-trust regulatory group.

  • mblafkin

    Mike,

    You're mising the most ironic part. Google's CEO, is the guy who decided it was a good idea to drag antitrust regulators into our industry. At Novell, he was one of the key drivers of the “We can't beat Microsoft in the market, so let's get the DOJ to break them up” strategy. At Sun, he pushed the exact same agenda. Even at Google, Schmidt tried to leverage antitrust regulators to keep Microsoft from including fast searching of your hard drives in Vista! Schmidt spent a decade telling antitrust regulators, “Don't worry about stifling innovation. Don't worry about upsetting the unprecedented growth in our young, fast moving industry. Just start regulating!”

    It's the last thing that any of us want to see, but to some extent Google is now reaping with its CEO has been sowing for nearly a decade.

    All that said, I still think the scariest news for Google this week was Richard Stallman's interview with the Guardian. If Google starts losing the hearts and minds of the Free Software and Open Source communities on which it relies so heavily, it could be disasterous.

    http://blog.actonline.org/2008/10/google-aybabt

  • mblafkin

    Mike,

    You're mising the most ironic part. Google's CEO, is the guy who decided it was a good idea to drag antitrust regulators into our industry. At Novell, he was one of the key drivers of the “We can't beat Microsoft in the market, so let's get the DOJ to break them up” strategy. At Sun, he pushed the exact same agenda. Even at Google, Schmidt tried to leverage antitrust regulators to keep Microsoft from including fast searching of your hard drives in Vista! Schmidt spent a decade telling antitrust regulators, “Don't worry about stifling innovation. Don't worry about upsetting the unprecedented growth in our young, fast moving industry. Just start regulating!”

    It's the last thing that any of us want to see, but to some extent Google is now reaping with its CEO has been sowing for nearly a decade.

    All that said, I still think the scariest news for Google this week was Richard Stallman's interview with the Guardian. If Google starts losing the hearts and minds of the Free Software and Open Source communities on which it relies so heavily, it could be disasterous.

    http://blog.actonline.org/2008/10/google-aybabt

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