Googleopoly - With its search share approaching 80% in the US by some measures — and a deal to put paid results on the second largest search engine Yahoo — and expanding into new areas all the time, are we in Googleopoly? If so, can anything slow Google down? And if we are in an era where Google will be dominant for some time, are there strategies search marketers need to keep in mind?
Moderator: Jeffrey K. Rohrs, Vice President, Marketing, ExactTarget
Speakers:
James Grimmelmann, Associate Professor of Law, New York Law School Shelly Palmer, Managing Director, Advanced Media Ventures Group LLC Kevin Ryan, CEO and Founder, Motivity Marketing Jimmy Wales, Founder, Wikia Search
When you think of Google, who do you think of? Jeff Rohrs talks about the exposure of Google and its reach. He asks if you're afraid that Google is too ubiquitous. He asks if you think of Google as Sergey/Larry or if you think of Google as the Borg and something that will assimilate you and take over. Is Google a monopoly or not?
Jeff: When does antitrust law come into play? James: It's the opposite of competition of undercutting each other. Monopolists raise their costs sky high. It's not illegal to have a monopoly but you can't do unfair things to get one and once you have one, you can't exploit them unfairly. It's illegal if you have a monopoly to drive competitors out of business.
Jeff: Google is not one thing. It is many many things. There's organic and paid sides of the house. As someone who runs SES and SMX, are you hearing concerns about advertisers worrying about this growth of Google? Kevin: When you look at search traffic, every service uses a site of measuring. Advertisers are concerned obviously because they are not liking this Google/Yahoo partnership. The details of this partnership were intentionally vague so that you couldn't understand it. Someone from the DOJ isn't going to know. The rest of the world doesn't know what they don't know. As a general rule, people don't know that having one source of information and being restricted to this is a bad thing. Jeff: In organic search share, Google's growth is huge in many countries. Chris: We're going to see competitive responses. I was at SMX China last week and of all companies and all places, Microsoft revealed a new suite of tools for advertisers for complete transparency for bidding process, quality score, and more. I found the transparency remarkable. I think this is going to force Google to open up. Wikia search and so on are pushing the transparency. We're seeing other forces here. Google is not interfering with the competition and it's increasing in a good way.
Jeff shows a few graphs on the dominance of Google on a variety of properties, like maps and video. Does that concern Shelly? Shelly: We have to think a little bit about this before we decide it's a concern. Google is an ecosystem and it's not likely to go anywhere unless someone forces them to. Google, unchecked, is pretty much unstoppable. All of my clients are really caught in a funny place. Not only is Google a medium but it's a metric. It changes the game. Here, the medium is the metric. I want to look at my Google Analytics to determine how I was as a brand marketer through other media. Google is a metric by which I measure my business. When you talk about things that are crept into the fabric of my business this way, there is a lot of dissent. They sell the currency of intention. They won't stand in your way. Google wants to get you from where you are and where you want to go. They charge you a toll if you click on the non-organic side. But they just need to make you stay. Google is so part of the metric of how you do other media and that's because of its size. That's something you can't unseed culturally. People say to run a campaign and look at Google. Google is a deliverable metric to your client.
Jeff asks Jimmy about Google growth and Wikia Search as a potential competitor. Jimmy: When I think of Google's monpoly, I want to make a distinction between the search service and the advertiising business. Search doesn't have many network externalities from the end user. If we're all friends on Facebook, however, and I want to switch to another service, it will be hard. This is very different from the advertising marketplace, particularly the intentionality marketplace where the buyers need to go where sellers are and the sellers need to go where buyers are. It's really hard for anyone else to supplant that. I can launch a search engine anThd I'll be thrilled to get 1-2% of the market. To launch an advertising marketplace, it's really much harder.
Jeff: On the paid search discussion, on the advertising side of the house, are there any legal implications for dominance? James: It depends on what they do with that dominance. You need to think what the substitutes are. The Google/Doubleclick merger was more worrisome than the Google-Yahoo deal because buys on Google/DC. It's hard to see people being clobbered by Google.
Jeff: So let's see who is worried about this partnership. Rather, let's see what it even is. Kevin: If I've understood the 17,000 documents, it's an exchange of inventory or a handshake to figure out how to monetize together.
Jeff shows a list that has more skeptics than advocates in the Google and Yahoo deal. He also shows the Google-Yahoo advertising agreement fact page.
Jeff: So what are your impressions of the deal? Kevin: I love Google's culture and what it means to the working environment and how they organically built everything. To me, that's something to be admired. I worked in ad agencies and you throw people on the bus to get ahead in life, but you don't see that at Google. A part of me says that it's a great thing and maybe the world would be better off and we should join the collective. The other part says that Google = search + android + analytics + .... + - that, to me is impressive. If we define monopoly as using this power to force competitors out, if you look at all of these pieces together, it looks to me like that power is not being used in a nice way.
Jeff: Shelly, you see a different perspective - what is it? Shelly: Personally, I could care less whether they do this deal or not. Speaking for advertisers buying, it's not a good thing. You can think of Yahoo and Google as WABC and WNBC television with slightly different audiences that have different media mixes. This mashup will take my ability to do that as an advertiser out. As subtle as this may be, sharepoints in advertising are the metric that matters most. This mashup doesn't let you be great at that as a buyer. From a media perspective, it's not a great thing. Jimmy: My thoughts are very close to the opposite of what Shelly said. I think that Yahoo made a huge mistake by not being bought by Microsoft. Jeff: We're in agreement that this is a defensive move from that takeover? Jimmy: It's certainly an alternative. For Yahoo, that's a huge problem - to some extent, giving up this something that is a core functionality of their business. Their approach is "why bother trying to build this if we can outsource it?" Chris follows up on Jimmy's comments. He said that the deal has been suspended indefinitely and Yahoo and AOL may merge. If that merger happens, he thinks Microsoft may buy the combined property and that will kill the Google/Yahoo partnership. That's the combination he sees and doesn't expect this to happen. (This is going to be good.) James: The deal makes me sad because someone who ought to be trying to do something better is giving up on it. Shelly: First of all, that ship sailed. The Yahoo guys put up a white flag. It is sad but it was a business decision. They agreed to put this off until the DOJ reviews it, though. A combined Yahoo-AOL is a content behemoth. It would be the #1 email client and IM client in the world, but that value may not be convered into wealth. If Microsoft did it, it would be hysterically funny. The only way that would happen is if Steve asked Jerry out for a cup of coffee. Jeff asks about the human element. Shelly says is that Microsoft is an evil empire (and not Google). Yahoo/AOL at some level is going to do something. Before the age of the Internet, we can think of two of everything competing head to head - Coke/Pepsi, Bud/Miller. But next to Google, who is the search guy? Next to eBay, who is the auction guy? There are no binary systems that rotate against one another. Maybe this kind of environment isn't set up for that. Kevin: It's a debacle or clusterfuck ("I'm just quoting him. I'd never say that word.") Google built everything organically and this is a decisive shift in strategy. Yahoo tried to build through acquisition. They build amazing things, the founders cash out, and you're left with white collar ditch diggers trying to go to their 9-5 job. Most of the clients that I work with are acquiring and figuring out how to structure their companies. The worst you can do is acquire too quickly. If you look at the acquisitions of Yahoo/Microsoft, they botched their acquisitions into disarray. If that would happen, it would be a Clint Eastwood situation.
Jeff: Google build the search organically but they did some strategic acquisitions. Not Google has its own brand -- you "google" to search. Does that give you pause? While Yahoo/Microsoft have their own properties, but search is so strong, does that give Google a disproportional competitive advantage that is a utilititarian monopoly? Kevin: Those acquisitions came a lot fewer and a lot smarter. I want to know who is searching and what they're searching for. Before TV converges with our computer screen, we're going to see more search and behavioral targeting because it's a means of collecting data. What are you searching for? What are you looking for? That doesn't worry me as much. Shelly: America is a funny place and so you can only be as big as you can be. Certain things need a lot of scale. Every time you think of Googleopoly, I think of when DOJ tried to break up Microsoft and there wasn't a guy in the room who didn't know what a browser was to make a learned scholarly call on whether this was a good thing or a bad thing. I think there are opportunities for all interesting things like Wikipedia. These positions can be leveraged to move your own agenda forward. People should talk about that instead. Jimmy: If you hear that Yahoo is promoting their brand through their search, this is no big deal to anybody. That's why they lost in search. One of the ways I like to think about search is as a form of journalism - you're reporting on the world. You need to face the same kinds of questions - if you're the NYTimes, do you want to write unfavorably about your advertisers? NOt if you're the NYTimes. If Google is promoting Google Maps over MapQuest becasue they want to promote their own property, that doesn't sound so good. I think Google Maps is promoting itself because it's just better than MapQuest. But there's also Gooogle Knol and Knol sucks. Right now, it would be completely a shock to everyone is Google started promoting Knol prominently on the SERPs. That undermines the Google brand. They can be strategic in the future when Knol (if?) is of higher quality.
Jeff: Google is synonymous with search. Wikipedia is synonymous with encyclopedia. Is Wikia synonymous with anything? Jimmy: I have no idea. I'm just having fun.
Chris: You mentioned maps and YouTube about Google's promotion of products. I would be willing to bet that no more than 10 or 15 of those products can be named. There are outliers who haven't gained traction.
Jeff shows a slide that says that Bloomberg said that United was dead. CNN thought Steve Jobs is dead. This is a cultural concern about what is truth. What is our responsibility to this to ensure accuracy? James: People need to look beyond the first page of results. Jeff: Is Google culpable? Shelly: Google is a pipeline. It's like blaming radio waves for what's carried on the radio. Google picked up a date -- it should never have been on Bloomberg. When people react to these search things, you'd think they'd know better. With the Steve Jobs thing, it was picked up by Digg and Twitter and then Silicon Valley insider wrote an article about the importance of citizen journalism -- but everything about the report was wrong and everything was inaccurate. There's a lot of misinformation. Where in the food chain are things falling apart? There's a mob mentality. It's like the game of telephone. We're coming to a time where Bloomberg soon won't be able to control this information. Jimmy: People believed the Steve Jobs thing becasue the source is CNN. If you heard about it on Wikipedia, people would be like "so what? Let's check the sources and see if it's actually true." Most people know that Wikipedia can be wrong. Kevin: "Unfiltered unedited news" - the only problem with that term is the word "news." News is crap.
Jeff: If that topic isn't scary, let's bring up another entity that is centralizing the power - the government. If Google knows what I'm searching, surfing, clicking, receiving via email, and purchasing (Google Analytics), and calling (Android), should we be concerned because of what the government may want to do? It's out of Google's hands then. Shelly: Someone made a compelling argument for Google's data. Does anyody really care? If the government wants something from you, the electronic footprint that everybody leaves without Google is so incredibly frightening [that it will happen anyway]. Jimmy: If you are Osama bin Laden or someone of intense interest, they may subpoena and gather that data. For most people most of the time, it's not like your divorce attorney is going to go out and subpoena records for 5,000 differnet websites. One stop shopping is more interesting.
Jeff says that Wired had an article that Google doesn't disclose things about its properties. There was a Google server farm that isn't on Google Maps (so why is everything else on Google Maps?) Does that give you any pause? Chris: When was this image taken? 2 years ago, Microsoft was accused of obliterating Apple because Apple's information wasn't in the satellite imagery. Is this Google protecting their own interests or was the satellite imagery outdated? Jimmy: Did Google admit that they censored the image? Jeff: The implication of the article implied that Google did. Chris's point is very good. My follow-up is "how do I figure that out?" Chris: Go to Microsoft Live and find the same images. Google doesn't show you the date on the image. I personally laugh becasue Google has said the same thing to me that they don't disclose this and that. Shelly: There's an important thing that needs to be said. Anyone who does any statistics for any purpose, you can unbelievably predict what a population will do - no matter how good you are, you cannot predict what an individual is going to do. Kevin: There are places that we are not entitled to see. We need to have confidence in the people making these decisions for us but we don't. People are stupid. The collective wisdom and the entire foundation is flawed.
Jeff: What about Google's phone using Android? What does this do about Googleopoly? James: It is the best moves for competition that you've seen in this space. The mobile space is dominant in phones and now we have 2 players in the open space of phones. This is the competition that drives innovation and drives prices down. In the mobile space, this is a wonderful development. Jimmy: Anything to knock the carriers in the head would be fabulous. (I agree but I want some Sprint love, please.) Kevin: We're force fed carrier crap. No one owns the local information and the local space is crap. We're hoping it doesn't happen at Google. Shelly: Android would be more interesting in 4G. We don't know what phone companies are going to do - they sat on DSL, after all - but they bought 100% of the usable 700MHz that can turn the phone into spectacular things. The carriers, however, own that spectrum. It's a great shot at competition but there's an FCC rule inside of this that says that they have to be open to other networks and theoretically that rule applies to 700MHz as well. We'll see how long the lobbiests will let that stand. This phone can never realize its potential unless the network exists.
