Senate Hearing On Google-DoubleClick & Post Office Metaphors

After all the buildup to yesterday’s hearing in the US Senate on the Google-DoubleClick deal, the actual hearing itself sounded to be a bit anti-climatic. Below, a look at what was said and how it doesn’t seem like it will influence the ultimate decision by the US Federal Trade Commission one way or the other.

Google plan to buy DoubleClick scrutinized in US Senate from the AFP has sound bites such as Microsoft warning that if Google and DoubleClick are allowed to combine, Google will become too dominant in online advertising:

"If Google and DoubleClick are allowed to merge, Google will become the overwhelmingly dominant pipeline for all forms of online advertising," Smith told Senator Herb Kohl, chairman of antitrust subcommittee, at a hearing.

"This merger will almost certainly result in higher profits for the operator of the dominant advertising pipeline, but it will be bad for everyone else," Smith said

Bad especially for Microsoft, which itself would like to be the dominant pipeline for online advertising, and in fact has spent several billion dollars in the past few months alone to be just that. Should it reach that goal, I wouldn’t expect to see it back in the US Senate arguing that it should be taken apart.

Google trotted out a "we’re complementary" argument:

"The simplest way to look at this is by way of analogy. DoubleClick is to Google what FedEx or UPS is to," he said, referring to the main US package delivery companies and the popular retail website.

While buying DoubleClick will help Google improve sales of display ads, it will not block other companies from competing, Drummond said.

Well, I wouldn’t say they’re complementary at all. That’s because Google already does display ads — and delivers them, as well. More accurately, DoubleClick is to Google like the US Postal Service buying FedEx. It already delivers the mail, but FedEx might help it deliver some things faster.

Like that metaphor with the post office? I wrote it, then came to this ClickZ coverage where an opponent to the deal says similarly:

Turning Drummond’s metaphor on its head, Scott Cleland, president of tech industry research and consulting firm Precursor said, "Google is already Amazon and is already FedEx. Now, they’re proposing to be the post office."

Hey, I can go with it either way — Google’s FedEx buying the post office or vice versa. Either way, it’s still not a good analogy. That’s because by purchasing FedEx [DoubleClick], Google doesn’t magically get to deliver to more houses on its mail route. People already voluntarily choose whether they want to accept delivery of Google’s ads. DoubleClick gives Google a better way to deliver those ads, but Google still needs to convince homeowners to take delivery from it, rather than Yahoo or Microsoft.

Indeed, arguments that DoubleClick will give Google too much power or market share overlook the fact that Google already has a massive display ad network called AdSense. They don’t need DoubleClick to achieve much of what the Google critics warn about. Google’s already there. As I commented at Silicon Alley Insider yesterday:

Search and display are completely different things….

Search ads are ads delivered against an actual expressed desire. You enter words, get results and ads with them. There’s little guessing about what you want.

Contextual ads are NOT ads that you somehow don’t have to search for to get but are somehow searchy. Contextual ads are targeted to the content of the page you are reading. But just because you are reading some web page does NOT indicate any expressed desire that you have a particular interest in a product or service. Read a story about someone murdered — you don’t want ads on murder. And so on. It is this inaccuracy and guessing that has forced Google to discount the amount it can get for contextual.

Display — aside from the behavioral target that Yahoo and Microsoft are doing (and Google is NOT) — is poorly targeted. This is largely brand building, guessing to match ads delivered against a demographic. You don’t need to do much demographic targeting in search because it is so precise. People tell you they want cars. With display, you guess where car buyers might be and hope showing enough ads may catch a few fish.

Now to the 50 percent thing. I’m not an anti-trust expert by any means. But Google already — without DoubleClick — has the ability to deliver display ads on the web. Indeed, it already does — AdSense For Content image ads (as opposed to text ads) are simply display ads.

So if Microsoft manages to kill the merger and then Google still gets a more than 50 percent share of online ad market (heck, aren’t they there already?), what happens — they have to rollback to 49 percent? And does Microsoft have to give up some of that 90 percent share of the operating system market it has?

DoubleClick gives Google some new capabilities, but without it Google already has a massive network — and the massive network that Microsoft seeks to build on its own, in part with its own acquisition that merrily breezed through….

I stick to my guns that search and contextual are radically different things. I’ve spoken about the "contextual pollution" for years, where it gets lumped into search simply because Google sells it as well.

Look, offline, the closest match you have for search are Yellow Pages. That’s the "we know the user is looking for something" medium. Now let’s say you’re a Yellow Pages company who then starts telling TV ads — the "we hope the user will want something" model. Are those the same? No way. They are fundamentally different mediums. Radically different.

I agree — the difference might be lost on a national audience. It shouldn’t be lost on elected leaders (though I have little faith here).

Everyone Fears Google (Again) & Will The Last Googler To Leave Turn The Lights Out? from me in May goes into more depth on some of the issues above, on how Google already has plenty of tracking in place.

Meanwhile, the AFP article clarifies the thing that had been puzzling me about yesterday’s hearing. I thought this was up to the FTC to decide? What’s the US Senate doing getting involved? Says the AFP, the senators are deciding if they want to exert political pressure on the FTC:

US senators do not have the authority to block the deal but can sway antitrust officials at the Federal Trade Commission, which is looking into whether Google would get unfair marketplace clout by owning DoubleClick.

At least one senator seems happier about things. Reports the New York Times:

Senator Charles E. Schumer, Democrat of New York, appeared satisfied with a letter from Google, dated Tuesday, that made commitments to take “important steps” to improve privacy standards. It also promised that the combined company would increase its work force in New York.

And as for things with the FTC, from Reuters, Google says thumbs-up is likely:

David Drummond, Google’s chief legal officer, told reporters he did not expect the Federal Trade Commission to require conditions regarding either antitrust or privacy concerns, which were raised earlier in the day during a Senate Judiciary subcommittee hearing.

"We don’t believe that’s likely to happen," Drummond said in response to a reporter’s question about whether Google would agree to any government-imposed conditions on the deal.

Privacy also came up at the hearing. Said Senator Herb Kohl:

"Google collects an enormous amount of information on computer users’ search history and Internet preferences."

As does Yahoo and Microsoft. That’s why the FTC Town Hall Meeting happening in November is good, in that it looks at privacy issues overall, rather than being a witchhunt about one company that shouldn’t get singled out when it has peers that pose just as strong a thread to privacy. Sort the lot of them out.

Need more? Techmeme has a round-up of coverage here and here. Over at ResourceShelf, you’ll find links to the prepared statements that were given.

Related Topics: Channel: Industry | Google: Business Issues | Legal: Privacy


About The Author: is a Founding Editor of Search Engine Land. He’s a widely cited authority on search engines and search marketing issues who has covered the space since 1996. Danny also serves as Chief Content Officer for Third Door Media, which publishes Search Engine Land and produces the SMX: Search Marketing Expo conference series. He has a personal blog called Daggle (and keeps his disclosures page there). He can be found on Facebook, Google + and microblogs on Twitter as @dannysullivan.

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