For months, I've suspected that Google was pursuing the impending
Yahoogle alliance solely to delay its nearest competitor from falling into the hands of its fiercest rival, while prolonging the limbo period in which both Yahoo and Microsoft continue to fade into irrelevance as ad search players.
Google would repeat optimistic statements while slo-o-owly moving the deal forward. Then, the minute the alliance started to invite any antitrust scrutiny, the company would demure and politely apologize to
Yahoo, not wanting to risk its relatively government-unfettered existence as arguably the single most influential commercial enterprise on the planet.
But after watching their spin efforts last week, I now wonders if Google isn't genuinely serious about throwing some more coal on the alliance fire as it locomotes itself right into a hot, buzzing antitrust swamp.
First, at the company's annual Zeitgeist conference, C.E.O. Eric Schmidt told reporters that the company planned to move forward with the alliance in October, saying the deal was "designed precisely to meet the terms of antitrust law in the United States."
Then, two tech-world biggies came forward to argue against the skepticism generally expressed about the alliance's potential antitrust liabilities. Boomtown's Kara Swisher was fair enough to present an on-the-other-hand addendum to her previous smack-down of the alliance's prospects, prompted by "some insights from some smart people I have kibitzed with on the issue."
A couple of days later in Sunday's New York Times, Randall Stross reprised -- as SearchEngineWatch's Nathania Johnson pointed out -- most of the key points from two posts on Google's Public Policy Blog. Tagged with the headline, "Why
Regulators Shouldn't Fear a Google-Yahoo Deal," the piece drew some heat from tech bloggers. In fact, more than one specifically notedthe
"unprecedented access" Stross received from Google while writing his latest book, which was generally hailed as a even-handed, insightful look at the company's innards.
So maybe Google does indeed really want the alliance? After all, who could blame them from wanting to keep Yahoo just healthy enough to continue to shrivel away independently?
But if that's the case, then the antitrust swamp surely waits.
Why?
There are almost too many reasons to count. But let's tag all the big ones.
Too technical. Virtually all of Google's public communications thus far indicate that the company feels like it has structured the deal to meet all technical requirements of the law.
Google has undoubtedly solicited precise opinions from some of the best antitrust lawyers on the planet, seeking to understand exactly how far it can push things. That's usually dangerous territory. When corporate giants walk the edge of the legal cliffs, that edge often crumbles beneath their immense weight.
__Too cute. __ When the technical argument seems to fail the "common sense" test, it usually comes off as hubris. Viewed through the "common sense" lens, the sheer size of the combined share numbers are damning, as the average person on the street would conclude that anything north of 70 percent smells like dominance. The argument that somehow an alliance doesn't give Google the same control as a merger seems particularly disingenuous.
__Too obvious. __ Incrementally grinding down a competitor often goes unnoticed, but transactions often trigger alarm bells. And even with the Wall Street meltdown, the Microhooglecahn story will remain one of the most visible business dramas.
__Too spooky. __ The very nature of Google's business invites nosiness. Not a lot of people care if some struggling new niche-industry like satellite radio falls under the control of a single power. They don't feel the same way about the all-powerful internet, which is why privacy will always be one of Google's key issues to manage. Combine the privacy and dominance issues together, and you've got "Big Brother."
__Too many fronts. __ Because of the universal nature of its business, Google faces almost unlimited jurisdictions. California? D.O.J.? Jack Flack's money is on the Europeans, who traditionally use antitrust law to protect competitors, not just the consumer.
__Too many enemies. __ And thus, too many parties who can file complaints of abuse down the line. Advertisers, oddly enough, get a little squeamish about "auctions" that occur in a marketplace with only one seller. Competing old media who have been watching all that cash flow out of their industry are a little horrified to see it all migrating to a single competitor. Even Yahoo shareholders would immediately chuck the alliance overboard if they knew they could get
$27 per share by selling to Microsoft.
And oh yeah, there's Microsoft. Through the course of its own troubles, the previous monopolist has developed perhaps the single strongest network of lawyers, lobbyists and other antitrust specialists in existence. Think that network might be getting a little active?
Too Pre-Crash-of-'08. After last week's meltdown on
Wall Street, the national appetite for regulation and oversight just went up, no matter which ticket leads the next administration.
So with all of those potential liabilities, why would Google risk inviting the nose of the regulatory camel into its otherwise happy, lucrative tent?
Again, let's rattle off a list.
Audacity. In its lone decade of existence, Google has not only made itself the world's single biggest business success story, but it has done so by actually changing the way much of the world works. When you've got that on your resume, and when you're fighting for control of the next tech-world iteration, what's a little regulatory trouble to overcome?
__Pride. __ Google genuinely wants to make good on its promise to Yahoo.
__Logic. __ When writing code is in your DNA, its easy to see the various legal and regulatory codes as the black-and-white absolutes about what will or won't get you into trouble. But almost every major antitrust struggle of recent years has been fought about the gray.
Fear. Google truly believes the tech world could slip back into a second dark age of Microsoft dominance.
Precedent. Google's lawyers undoubtedly fear that any retreat would be interpreted as a sign of guilt.
Identity. Google still sees itself as noble band of rebels who now simply huddle around the best-funded campfire in the world. They don't understand that dominant players are viewed differently than smaller competitors, both by regulators and consumers.
So what if Google does indeed steam ahead with the alliance, and what if that does indeed lead to an extended antitrust tangle? Is that really such a bad thing for Google?
For most companies, probably not. You take the critical headlines, and move on.
But somehow Google's situation seems different. Google first soared because it sold a better product, and then because it became a verb/brand that exuded a clear vibe of possibility. And in recent years, Google has become very good at using strength to create dominance. That dominance has created great fear and growing resentment in the tech, media and advertising industries.
That fear and resentment have not yet seeped into the consciousness of most consumers. But nothing could change that faster than a nice, prolonged, symbolic antitrust investigation, in which the brand that is all about "possibility" suddenly becomes more about "monopoly."
Google does indeed need better antitrust advice.
But even more critically, Google needs to remember what kind of brand it must be if it wants consumers to continue to let it rule the world.
By Jack Flack, for Portfolio
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