The Federal Trade Commission has hired the prosecutor who got Oklahoma City bomber Timothy McVeigh the death penalty to lead its investigation into potential anti-trust violations by Google, report David Streitfeld and Edward Wyatt of the New York Times.Her name is Beth Wilkinson.
Experts tell the Times her hiring sends “a strong signal that [the FTC is] prepared to take the Internet giant to court.”
According to Streitfeld and Wyatt, the government’s concern with Google is that “Google has manipulated its search results, making it less likely that competing companies or products appear at the top of a results page.”
“The general issue underlying the investigation is whether Google abuses its power in the market for Internet search. Google controls about 66 per cent of the United States search market, according to comScore. Microsoft’s Bing accounts for about 15 per cent of Internet searches, with Yahoo gathering 14 per cent.”
Streitfeld and Wyatt say the lawsuit is just like the government’s anti-trust case against Microsoft in the 1990s. That case, they argue, “transformed the tech industry, reining in its most powerful company and allowing for the rise of new companies like Google.”
“Now Google wields the same sort of power that Microsoft once did, and is under the same sort of scrutiny.”
The whole thing – the FTC’s case and the way the Times is covering it – is infuriating. All of it indicates a serious and dangerous misunderstanding of how the technology industry works.
Google does not have the same power Microsoft did in the 1990s.
Disruptive technology companies do not need the FTC to “allow” their rise.
In the 1990s, one platform dominated all of enterprise and consumer computing: Microsoft Windows.
Today, entrepreneurs, merchants, developers, content-creators, and investors have multiple platforms on which they can place their bets.
Google search is one of those platforms, and a very powerful and successful one at that. But search is just one platform – or method of discovery – on the Web, and there are many alternatives.
Facebook is the biggest. Twitter is another. Jonah Peretti, one of the cofounders of the Huffington Post, has raised $15.5 million to build a media company that is supposed depend on both for traffic far more than Google.
Google search makes money as a platform because it helps navigate commercial activity on the Web. But it’s not the only company on the Web making bank doing that: Another is Amazon.
Merchants large and small can sell through Amazon. And right now, through Amazon Prime, Kindle, and a coming phone, Amazon is carefully building a wall around that activity, hoping to lock consumers into an Amazon life. The buzz in the Valley is that this plan is working, and that more and more, consumers are skipping Google for commercial Web searches and going straight to Amazon.
Some e-commerce companies have skipped both Amazon and Google, and are building stores for Facebook. One such startup is Payvment.
The other crucial point that the FTC (and the people quoted in the Times article) seem to have missed is that while Google is still a dominant platform on the Web, the Web itself is just one platform for Internet-connected computing. There are an increasing number of alternatives for entrepreneurs, developers, merchants, content-creators, and investors.
The most powerful alternative to the Web is the mobile app ecosystem, which some experts say will have more users than the desktop-based Web by 2015.
In Android, Google has an offering in the mobile-only app world, but, at the moment, it’s getting smoked by Apple’s iOS app ecosystem.
According to Jay Yarow, the top 200 grossing apps in iPhone’s app store generated four times as much revenue as the top 200 grossing apps in the Android app market.
Instagram, which sold to Facebook for $1 billion, was an iPhone-only app for all of its independent life until two weeks before Facebook took it out. Clearly, Instagram did fine without the FTC’s help.
Google is not only number two in mobile; it’s also not the only powerful company chasing Apple. Facebook is coming out with a phone. So is Amazon. Even the manufacturers who use Google’s Android OS are potential competitors. Meanwhile, 1990s power Microsoft is pouring billions of dollars into making the Windows Phone an attractive place for entrepreneurs, developers, merchants, content-creators, and investors to do business.
So let’s review:
- Google search is a platform on the Web, to which there are many alternatives – including Facebook, Twitter, and Amazon.
- The Web itself is just one platform for Internet connected computing, to which there are alternatives – the most powerful of which is mobile, where Google is getting smoked by Apple and is under attack from Facebook, Amazon, and Microsoft.
Google is a very powerful company. No doubt.
But it’s a very powerful company that is riding out a pair of platforms (search and the Web) that are rapidly being disrupted from within (social is disrupting search on the Web) and from without (mobile apps are disrupting the Web).
Small companies like Facebook are turning into big ones, and big ones like Apple are turning into huge ones thanks to this disruption.
Google is fighting for its life to stop this process. There’s a chance Google will win this fight. It has a lot of resources. But so far, thanks to Google+ and the astounding popularity of the iPhone, it’s actually losing.
All of this is happening without the help of the FTC or a lawyer who is famous for getting a terrorist electrocuted.
And that’s how the process should continue.
Google must be allowed to fight for its life without government interference.
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