Google: Employing Lawyers by the Score

September 10, 2008

A Walt Disney wizard is on the job for the US government. The issue, well stated by Jeff Jarvis, is “We Hate Success.” You can read his take on the latest and more threatening legal challenge to Google in its 10 year history here. The hook for his write up is the increasing heat directed at Google’s feet about “its growing dominance in advertising.” I agree with Mr. Jarvis when he wrote:

I’ve long argued that we do, indeed, need competition in the ad market but it’s not going to come from regulation. It’s going to come from getting off our asses and creating those competitors. I said that we need an open-source ad marketplace. Nobody’s heeded that advice.

I would like to add several comments about my perception and Mr. Jarvis’ regarding Google.

First, I do not believe that advertisers, telcos, and publishers understand what Google has built, what it is doing, or how the physics of Google operates in the cloud chamber businesses these business sectors try to enforce. Without understanding, there’s precious little hope of developing an effective, appropriate response to Google. These industries are watching Google’s digital beams punch holes in their semi closed business environments. Left to its own devices, Google will vaporize the “walls”. Then what?

Second, the competitors have watched Google through search colored glasses with some frou frou trim called online advertising. Competitors have assumed that with traffic, ad dollars would flow to them. So, the perception of what was needed to respond to Google was wrong in 1998 and it is wrong today–a decade later. That’s a pretty long time to misdiagnose a problem. At this point, there is no single company with sufficient resources to leap frog Google. I make this point in my 2007 study Google Version 2.0. That’s the reason that the billions spent by Microsoft haven’t d3elivered. The company is not investing enough. Meanwhile, Google keeps on widening its lead in technology, customer traffic, and advertising. You will have to read my study to find out who and what can get past the GOOG.

Third, local regulation won’t do the job. Where is Google selling advertising? In what country is the money booked? What is Google selling?

I am not sure that an auction, operated from servers somewhere in the cloud and arguably not in the US, and delivering a message on behalf of a person or company to an unknown user who happens to have an interest in a subject is going to be easy to limit. Google is not a local newspaper selling a fungible product with a guaranteed circulation, a physical product, and specific customers who are betting that the newspaper can catch the interest of a person wanting to buy a used car.

In short, lawyers will make a great deal of money chasing Google and its monopoly. The problem is that Google is a supra national entity dealing in zeros and ones. I was on the fringes of the AT&T break up in the late 1970s and early 1980s. That was trivial compared to dealing with the actions of individuals who do what ad agencies used to do by themselves on servers routing the work hither and yon.

The definition of terms will generate enough billable hours to keep a legion of attorneys gainfully employed for a long time. When a decision is reached, the question becomes, “Will Google be the same at that point in time as it was when the legal engine started running?” I don’t think so.

Stephen Arnold, September 10, 2008

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