|
|
|
|
Google’s chief legal officer David Drummond and Microsoft’s general counsel Brad Smith appeared as witnesses at a Senate hearing about Google’s proposed merger with online ad placement firm DoubleClick on Thursday. The hearing took place before the Senate Committee on the Judiciary’s subcommittee on antitrust, competition policy and consumer rights and focused on what competitive and privacy risks the Google-DoubleClick merger would pose if it gets approved by the Federal Trade Commission. Google announced its plans to buy DoubleClick for $3.1 billion in April. But Google and Microsoft released the prepared remarks from their legal top dogs before the hearing. In his testimony, Google’s Drummond said that the purchase of DoubleClick should not raise antitrust worries. “Some have asked whether this acquisition raises competition concerns. We are confident – and numerous independent analysts have agreed – that our purchase of DoubleClick does not raise antitrust issues because of one simple fact: Google and DoubleClick are complementary businesses, and do not compete with each other. DoubleClick does not buy ads, sell ads, or buy or sell advertising space. All it does is provide the technology to enable advertisers and publishers to deliver ads once they have come to terms, and provide advertisers and publishers statistics relating to the ads,” he said in the prepared remarks. Drummond added that he felt DoubleClick is to Google what FedEx and UPS are to Amazon.com, namely that Google sells the ads, or books, and that DoubleClick delivers them. During the hearing, Microsoft’s Smith responded to this analogy by saying that “Google is already Amazon and it is already FedEx and now it’s proposing to buy the Post Office.” Smith maintained in his prepared remarks that Google and DoubleClick should not be allowed to merge since it would give Google a huge market position in the area of online advertising known as display ads, i.e. ads not tied to keyword search. Google, of course, already has a formidable lead in search. “If Google is allowed to proceed with this merger, it will also obtain a dominant gateway position over the other main type of online advertising – non-search ads. Today Google and DoubleClick are the two largest competitors in this area. Combined, Google will account for nearly 80 percent of all spending on non-search ads. If Google and DoubleClick are allowed to merge, Google will become the overwhelmingly dominant pipeline for all forms of online advertising,” Smith said. Smith added that the merger would “result in higher profits” for Google but would “be bad for everyone else. It will be bad for publishers, bad for advertisers, and most importantly, bad for consumers.” Smith also touched on the privacy implications of the merger and stressed that it should be a concern to give “a single company sole control over the largest database of user information the world has ever known.” “Online ads are served based on user data. As consumers we give up this data – though often without knowing it – in exchange for access to free content and services. Today, it’s generally believed that Google and DoubleClick have amassed the two largest databases of online user data in the world. This country doesn’t permit a phone company to listen to what you say and use that information to target ads. The computer industry doesn’t permit a software company to record what you type and use that information to target ads. Yet with this merger, Google seeks to record almost everything you see and do on the Internet and use that information to target ads. One question is whether this merger will create a whole new meaning to the term ‘being googled,’” Smith said in the prepared remarks. Drummond disputed the privacy concerns though, saying in his prepared testimony that it’s in Google’s best interest to protect consumers’ information because the consequences of not doing so would be that they would lose users. “We make privacy a priority because our business depends on it. If our users are uncomfortable with how we manage the information they provide to us, they are only one click away from switching to a competitor’s services,” Drummond said. “If you don’t believe me, recall that before Google, users clicked on an earlier generation of search engines like Excite, Altavista, Lycos, and Infoseek – each extremely popular in its time.” For the members of the Senate subcommittee, the issue of privacy appeared to take precedence over concerns about whether Google-DoubleClick would constitute a monopoly. During the hearing, subcommittee chairman Sen. Herb Kohl (D-Wis) said that although the subcommittee’s members have not come to a conclusion about the deal, “nobody concerned with antitrust policy should stand idly by if consolidation threatens privacy.” And subcommittee ranking member Sen. Orrin Hatch (R-UT) said that even though he expected Google to act responsibly, he felt that “many consumers don’t fully understand the amount of data being collected about them.” Sen. Charles Schumer (D-NY) also said he was concerned about privacy but said that some of his fears were allayed due to the fact that Google CEO Eric Schmidt wrote him a letter detailing the actions that Google would take to protect users’ privacy. In addition to the two legal executives from Microsoft and Google, Thomas Lenard, senior fellow with The Progress and Freedom Foundation, Marc Rotenberg, executive director of the Electronic Privacy Information Center and Scott Cleland, president of telecom and Internet research firm Precursor, appeared. Cleland’s remarks were worth noting since he has been a vocal critic of Google, writing in a recent Precursor blog post that a Google-DoubleClick merger would be anti-competitive. He said during his testimony that the Google-DoubleClick merger represents a “watershed moment for Internet competition”and that Google “has a naked ambition” to control the world’s market for information and the technological and financial wherewithal to pull it off unless the government intervenes. But Lenard, whose firm describes itself as “a market-oriented think tank that studies the digital revolution and its implications for public policy” said that he did not think a Google-DoubleClick deal would be anti-competitive and countered that “government interference could be harmful to consumers.” Microsoft has argued that the merger could hurt competition in the online advertising market and has been joined by AT&T (T), which has also expressed concerns about Google’s growing clout. And yes, it’s very amusing that two companies that both have been formally slapped for monopoly power have suddenly found religion in anti-trust law. For Microsoft, there is clearly a lot at stake. The company is playing catch-up in the online advertising business but is making some aggressive moves to become more of a viable threat to Google and Yahoo! (YHOO) and to stay ahead of other rivals such as IAC’s (IACI) Ask.com, News Corp.’s (NWS) MySpace social network and Time Warner’s (TWX) AOL. Time Warner is also the parent company of CNNMoney.com. Microsoft unveiled a major upgrade to its Live Search service on Thursday. It also is said to be considering making an investment in the popular social networking service Facebook in order to ensure that Facebook and Google don’t become partners. And the company also made a big acquisition of its own following the Google-DoubleClick announcement, agreeing to buy digital marketing firm aQuantive for $6 billion. In fact, Drummond noted that the aQuantive deal, as well as Microsoft’s purchase of AdECN and other acquisitions of online ad networks by Yahoo and AOL this year, as signs that the marketplace still was highly competitive. “Just this week Microsoft announced that it had added 20 new advertising clients after closing its acquisition of aQuantive, a DoubleClick competitor – providing fresh evidence that numerous companies are finding it possible to compete in the online advertising space and the free market,” Drummond said. “Each of the acquisitions following our purchase of DoubleClick demonstrates that there are many sophisticated, well-financed, and competitive companies that believe that the online advertising space merits more investment and remains open to strong competition.” The future of Microsoft, AT&T and many other tech and telecom firms lies on the Web so it will be very interesting to see whether regulators decide to put some limits on Google’s growth. Of course, the issue will be ultimately decided by the FTC and not the Senate. But based on the comments and questions from the various subcommittee members, it appeared that the government may have a healthy degree of skepticism, if not an outright distrust of Google. In fact, there also seemed to be some lingering resentment for Microsoft. After Smith made his comments about Google wanting to “buy the post office,” Kohl invited Drummond to “rip that argument to shreds.” And Hatch pointedly observed that the market would have the final say on whether Google grows too powerful. “If Microsoft or someone else comes along and creates a better search engine, it may not be the dominant player it is today. Why not just build a better product?” he asked Smith. Posted by Paul R. La Monica 11:52 am 6 Comments
 | Add a comment Funny how Microsoft was also trying to buy DoubleClick and lost out… Posted By Nick B, Seattle, WA : September 27, 2007 11:53 pm
I can live with the fact that the personal info I have to give up to access free content, but the problem I have is that Google uses the content of my personal gmails to post Ads related to any word I use in my personal communication. Posted By Abla, Los Angeles, California : September 27, 2007 7:03 pm
Somehow I really don’t care if google takes over the world. I’m not sure why though… I guess it’s batter than the alternative. Posted By DvBoard, Louisville, KY : September 27, 2007 3:43 pm
How either of these companies can stand there in front of Congress with a straight face is simply beyond explanation from my point of view. They both operate unethical businesses. They are both hypocrites. They both use predatory business practices routinely. They are both willful copyright infringers. They are both trying as hard as they can to pull the wool over the non-technical Congressmen/women and Senators up there in Washington. Let alone half the federal judges in this country. Although not directly related to this subject, I thought your readers might enjoy an article I was asked to write earlier today to highlight some of the ways Microsoft (and Google) set out to fool their customers, the public, and government officials on their way to accumulating even more billions of dollars for their top “executives” … at the expense of all of us out here in the trenches. I’ll use this week’s successful launch of Halo 3 to make some of my points: Halo 3 is now free! What if I could figure out how to deliver Halo 3 to everyone for free and be protected from attacks by Microsoft based on the “safe harbor” or “fair use” provisions of the DMCA (that’s the Digital Millennium Copyright Act for those of you new to copyright law in this country)? What if I could make it run on any game console you had, or sell you a really cheap new one I’m having made in China? We’re thinking about calling it the X-Boxx. What if I could then sell advertising on the web pages where Halo 3 was displayed for downloading and keep most of the money for myself? What if I could keep records of everyone who downloaded or used Halo 3 and then send them e-mails and other solicitations for hardware and software (maybe even travel and food!) owned by companies other than Microsoft? Waht if I could bypass the standard distribution channels, like Best Buy, Game Stop, and Wal-Mart and keep all of the money for myself? What if all Halo 3 users could then join my new social networking community and I could sell even more advertising for every minute they surfed or “stuck around” on the Web? Well, don’t fool yourself. There are only a few things stopping this scenario from happening. It’s called “the companies with all the money”. It is also sometimes called a “monopoly”, or certainly at least an “oligopoly”. Some call it “truckloads of lawyers”, probably even more dangerous than all of the other three combined. Years ago it used to be called “Japan”. Microsoft routinely steals other people’s copyright-protected property every single second of every single day. And so does Google. I know. My small graphic arts development company is one of the victims. We have had to lay off more talented people in the last few years than we have hired. Let me give you a specific example of how this illegal activity occurs routinely at Microsoft: 1. Microsoft chose to copy Google’s illegal image search approach rather than make some simple changes to make their’s legal. Again, I know. I pointed this out to senior Microsoft executives and lawyers earlier this year and was politely told to pound sand. 2. I showed senior Microsoft officials a specific example. They claimed they were somehow protected by the DCMA. NONSENSE! 3. At the time, the N.Y. Yankees were 8 games behind the Boston Redsox. Their playoff chances looked “iffy” at best. 4. I found several web site publishers, one called Freefever and the other called Lunapic, that had been infringing our electronic clip art illustrations for some time, AND who had removed the infringing images after receiving an official notice from my company, Imageline. 5. I showed Microsoft exactly how they could still retrieve the Yankees clip art illustrations we had produced and registered with the U.S. Copyright Office many years ago from the Microsoft servers. AFTER they were removed from the infringing web sites. You see, top quality electronic graphic arts content actually increases in value over time. It’s not like an old version of WordPerfect or Microsoft Works. 6. Try it now yourself if you want to watch these ongoing infringements in action. Go to Microsoft Live image search and key in “Yankees clipart”. You can do the exact same thing on Google if you’d prefer. The cartoon image with the fans in Yankee caps and the “Go Yankees” banner is one of ours. 7. You might also notice the official logo of Major League Baseball, several original Yankees’ logos as well, and some other copyrighted works that are displayed by Microsoft on the exact same page with the Imageline clip art. Do you think Microsoft has a license to display and download any of these images? 8. Microsoft claims it is retrieving the Imageline clip art illustrations from Lunapics or Freefever or other infringing web sites, but they are NOT. They are stored in the Microsoft servers. The infringing web sites took the images down long ago! 9. Microsoft encourages you to place the infringed image into the Microsoft Scratchpad. From there, you can a) copy it to your computer, b) re-size it for use in other applications, c) e-mail it to a friend or business associate (or even a Boston fan), d) use it for your computer background as I have done here in Virginia, e) put it into a tiled background for a more dramatic impact, f) create a customized screen saver, or g) use readily available Windows software tools to modify, combine, or animate the copyrighted image. All EXCLUSIVE rights of the copyright holder. 10. We’re talking about using the infringing images in the exact same size and resolution as they are stored in the Microsoft servers. This is not “indexing” or “framing” folks … this is DIRECT copyright infringement. 11. If ALL of the above are not flagrant examples of willful copyright infringement, I do not know what is. And I have been in this technology copyright game for over 25 years now. Remember, all of these infringements occur as a direct result of Microsoft instructions, Microsoft tools, and Microsoft trying to make extra billions of dollars from the hard work of others. 12. How long do you think it would take Microsoft’s army of lawyers to ascend on Central Virginia if we tried the the exact same stunt with Halo 3 as referenced above? This is simply corporate hypocrisy at its highest and most dangerous level. And the reason I personally do not believe that the government should take any pressure off of Microsoft for complying with the anti-competitive restrictions placed on them years ago. In many areas, I think they’ve made a turn for the worse, even while under the government scrutiny. 13. In addition, Microsoft is now selling advertising on the exact web pages where all of this infringing activity occurs. Just like Google, Microsoft’s new wicked twin sister in the copyright infringement “evil empire”. 14. Neither Microsoft nor Google pay the original copyright holders a dime. While their five top so-called “executives” and “visionaries” have accumulated an astonishing $115 billion+ of wealth. What has happened to the morals and ethics of this country? And why aren’t the existing copyright laws enforced against the largest violators in the land by far? Surely, lobbyists cannot be THAT powerful. 15. Until Washington politicians, the judiciary, and the business community as a whole, decide to enforce our laws evenly, and follow the rules of decency and fair play, there will be NO END to the damages caused by willful copyright infringement activity in this country. Let alone any chance in hell of lowering the copyright, trademark, and counterfeiting violations abroad. How long do you think it’s going to take before pirated copies of Halo 3 are everywhere? Does Microsoft really deserve protection of its copyrights while they routinely infringe the copyrights of others? This is a national crisis, folks. And I haven’t heard a single candidate for president mention it even once. Nothing that is happening today could have the negative consequences on both the reputation and the pocketbook of hard working Americans like this issue. Once our morals and standards are gone, we may as well choose which other country we want to “follow”. Who knows, maybe Microsoft and Google will form their own country by then. Why not, they are allowed to play by their own set of rules already. What a shame! And I hear there’s a guy named Gates who might be without a job this time time next year and would love to be “president”. Mark my words on this one! George P. Riddick, III Posted By George Riddick, Ashland, Virginia : September 27, 2007 3:16 pm
Is anyone else thinking…”pot calling the kettle black”?…It’s funny to hear Microsoft whining about the same thing they’ve done for years. Posted By dd, Abilene, TX : September 27, 2007 2:42 pm
To send a letter to the editor about Media Biz, click here. CNNMoney.com Comment Policy: CNNMoney.com encourages you to add a comment to this discussion. You may not post any unlawful, threatening, libelous, defamatory, obscene, pornographic or other material that would violate the law. Please note that CNNMoney.com may edit comments for clarity or to keep out questionable or off-topic material. All comments should be relevant to the post and remain respectful of other authors and commenters. By submitting your comment, you hereby give CNNMoney.com the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying information via all forms of media now known or hereafter devised, worldwide, in perpetuity. CNNMoney.com Privacy Statement.
|
|
It was a big day for Google (GOOG) and Microsoft (MSFT) on Capitol Hill.
* : Time reflects local markets trading time. † - Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Disclaimer
| Copyright © 2008 BigCharts.com Inc. All rights reserved. Please see our Terms of Use. MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc. Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. All Times are ET. Intraday data provided by Interactive Data Real-Time Services and subject to the Terms of Use. Historical, current end-of-day data, and splits data provided by Interactive Data Pricing and Reference Data. Fundamental data provided by Hemscott. SEC Filings data provided by Edgar Online Inc.. Earnings data provided by FactSet CallStreet, LLC. |
Hope Google buys Microsoft; everyone will benefit with a decent O/S at a reasonable price.