Google polishes competition charm offensive

A month-long appeal to paint Google as a friendly face in a big Internet comes to San Francisco in a potential preview of Google's anti-antitrust talking points.

SAN FRANCISCO--Google continued to lay the groundwork Wednesday for an antitrust defense in the event that the federal government decides to take a formal look at its core business.

U.S. regulators have been scrutinized parts of the company in recent months, probing topics such as Google CEO Eric Schmidt's role on Apple's board of directors and Google's proposed settlement with book publishers on Google Books . In that vein, the company one month ago kicked off an effort to burnish its image , calling on the press, members of Congress, ad agencies, and publishers to convince them that when it comes to its overall business, Google is a not a threat.

Inside a conference room in Google's San Francisco office, executives ran through essentially the same presentation leaked last month by the consumer activist group Consumer Watchdog, focusing most of their efforts on trying to paint a picture of Google as just one part of a large Internet ecosystem, as opposed to a dominant search giant.

"We do have to win users back on a regular basis," said Dana Wagner, senior competition counsel at Google. "We want to be the next Google; we're not done with search."

Even though its name is widely used as a verb to describe "Internet search," Google argued that it faces competition from places like Amazon and eBay, where potential customers also search for information about a product. It likewise compared its earnings data--revenues, profits, and lobbying budget--to some of America's largest technology companies, such as Microsoft, AT&T, Verizon, and IBM, with far more resources than Google.

Executives also noted that Google competes for advertising dollars against essentially the entire world. Television, newspapers, magazines, billboards, and other Internet companies all want advertising dollars too, and Google's share of the total ad revenue market is just 3 percent, said Peter Greenberger, industry relations manager. Its share of the total Internet ad revenue is 30 percent, the largest single piece of that pie.

These are all clear signs that Google would attempt to paint the relevant market in any antitrust case it may face in the future as extremely broad. That's one of the first battlegrounds in which lawyers for Google and the Justice Department would face off, and really a key part of any antitrust case.

Several years ago, enterprise software-maker Oracle successfully made a similar argument in an antitrust fight over the eventual acquisition of rival PeopleSoft. While Justice lawyers attempted to narrowly define the market for software suites intended for multinational corporations, Oracle argued that the Web and upstart competitors made such a narrow definition impossible.

There's little question of Google's dominance in search. Its share of the search market is around 64 percent, and its revenue share of search advertising is higher, in the high 60s or low 70s, a Google representative estimated. Microsoft is making a renewed commitment to competing against Google in search that might have already paid off in the form of a point or two of market share gain , but that only gives it 11.1 percent.

So there's a question how tough the competition really is. Some wonder if Yahoo, the distant second in search, is willing to take on Google in its back yard under new CEO Carol Bartz.

Another point made by Google is that competitive search providers on the Internet "are just a click away," a phrase that has been repeated ad nauseum by Google executives since its goodwill tour began in May. It resonates because it's true: anyone dissatisfied with their search results can easily type yahoo.com or bing.com into their browsers, something Microsoft is counting on with its huge ad campaign around Bing. Unlike desktop software or corporate applications, there's little "lock-in" on a search engine.

However, any scrutiny on this score is likely to center around competition in search advertising, not search queries, as was the case last year when Yahoo and Google got within hours of finalizing a deal to let Google's AdSense technology place ads on Yahoo's sites before Google backed out over concern the Justice Department would scuttle the deal.

Wagner insisted that the potential Yahoo deal "had nothing to do with search. It was an advertising partnership." Google backed out of the deal because it realized it would have to take on a very public fight with a government agency to make the deal happen, and it was worried about the effect on its brand should it go down that road, he said.

That comes to one of the core parts of Google's argument: the company is trying to make the case that because of its principles and philosophies, it can be trusted to do the right thing despite its position in the market.

"If there was ever a situation in which Google had a legal fight with an agency, it's because we were doing something that was good for our users and good for the economy," Wagner said. "There's a lot of companies for which I wouldn't do this job. I would not be doing this at Halliburton."

The Justice Department may not buy that line of thinking. The new assistant attorney general for antitrust, Christine Varney, was quoted last year as saying, "I think we're going to continually to see a problem, potentially, with Google, who I think so far has acquired a monopoly in Internet online advertising lawfully."

Now, in the very next sentence, Varney was careful to note: "I do not think they have done anything other than be a spectacular, innovative company." Nonetheless, there's a reason why Google is on a charm offensive.

About the author

    Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.

     

    Join the discussion

    Conversation powered by Livefyre

    Don't Miss
    Hot Products
    Trending on CNET

    HOT ON CNET

    Love heavy and clunky tablets?

    Said no one ever. CNET brings you the lightest and thinnest tablets on the market.