Scott Cleland over at The Precursor Blog is an ideological ally on many issues, most prominently, network neutrality. Scott has come out strongly against government intervention on a host of issues, but the Google/Doubleclick merger is not one of them. Last week Scott posted a long set of talking points supporting Senators Kohl and Hatch who have called for heightened scrutiny of the deal.
But the blackboard economics that are being applied to the deal just don’t relate to reality. A brief look at recent history should stem any worries that Scott and the incredulous Senators may have.
The history of the Internet is littered with former giants like AOL, AltaVista, and Lycos that lost significant market share or went bust because they couldn’t keep innovating. Yet these companies were also labeled monopolies or, more euphemistically, as “market dominant.” In 1999 the Motley Fool called Yahoo! “the dominant brand of the Internet.” Recently, Boston Business Journal recounted that “Lycos Inc., once one of the biggest Web portals on the planet, is now a shadow of its former self with a mere 70 employees in Waltham.”
The real competition to Google-DoubleClick may not even exist yet—Google itself was a grad student science project a decade ago. Startups can grow exponentially in a short time on the web. Look no farther than Facebook, a $10-billion gorilla today, that didn’t even exist four years ago.
Ultimately, concerns about online market consolidation are unfounded. They depict the web advertising market as static—yet the last decade has shown the dynamic nature of Internet commerce. How can one claim to find an iron-clad monopoly in a market that is best described as hyper-competitive?
But this isn’t just about defining “monopoly” or defending Google’s right to earn additional billions in revenue. Kohl and Hatch fail to see that a merger between Google and Doubleclick, were it successful, would be a boon to small websites, not just “Big Web.” We’re quick to label Google, Yahoo, and Microsoft as evil juggernauts, yet we fail to recognize that these companies make much of the small-web content that we enjoy possible.
Ad clicks are the largest if not the only source of revenue for many content-driven sites. With increasingly individualized information, Google-DoubleClick would be able to deliver tailored ads, better informing consumers of products they might actually purchase and giving fledgling websites a shot at establishing a strong online presence.
Of course, this point is lost on pundits and legislators who can only see the big players, forgetting that today’s market clout was yesterday’s garage-based business. Of course, not every David needs to take on Goliath, some bloggers-turned-moguls may be content with quitting their day job. Either way, if federal regulators reject the proposed Google acquisition, the little-guy will be counted among the victims.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.