First Google trotted out economist Hal Varian to try to make its “of course we’re not a monopoly” case. Now comes chief salesman Tim Armstrong, who tries making the same argument, via a Q&A on the company’s public policy blog.
This will get even harder after today’s comScore report, which pegs Google’s search share at 63% and climbing. And we notice that Tim, like Google economist Hal Varian said earlier this week, doesn’t say that prices won’t go up. From the post (emphasis added):
Question: Will the Google-Yahoo! agreement raise ad prices?
Answer: Neither Google nor Yahoo! set ad prices. Ads are priced by an auction where an advertiser only bids what an ad is worth to them. Furthermore, ad price is only one part of the story. A more important measure for advertisers large and small is the return on investment of their advertising dollar. The Google-Yahoo! agreement will help advertisers convert more clicks into customers by showing more relevant ads on Yahoo!, giving advertisers a better return for every dollar they invest.
Question: Can Yahoo! pick whose ads to show based on who has the highest price?
Answer: No. Under the terms of our agreement Yahoo! won’t be able to see the current auction prices for Google ads, and Google won’t be able to see Yahoo!’s prices.
Question: Can Google and Yahoo! use minimum bids to set a unified price floor for ads?
Fact: No. Google and Yahoo! will continue to set minimum bids in their auctions independently. Google uses minimum bids to help advertisers know what they need to bid in order to have a realistic hope of having their ads shown. Minimum bids also help deter low quality spam ads. Google has never based minimums on what competitors are doing and this agreement won’t change our approach to minimum bids in any way.
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