How Eric Schmidt Plays Google’s Monopoly Game
By DONNA BOGATIN • Jun 14th, 2008 • Category: BIG PICTUREGiven Yahoo’s sell-out to Google, Facebook and Microsoft are now the World Wide Web’s sole remaining defenses against the ever encroaching Googley stranglehold, I underscored yesterday.
No fear, though, Web 2.0 to the rescue, so says the man that takes credit for Web 2.0–the conference that is–For Tim O’Reilly Media, the Web 2.0 franchise he advocates for holds the universal answer to most everything, even an Internet economy in which Google has propelled itself into an increasingly golden–but stubbornly black-box–driver’s seat.
Contrary to O’Reilly’s PR slogans, however, Google is NOT driving in a “virtuous circle.”
Apparently unfamiliar with how Google actually operates, O’Reilly hails Mountain View for its supposed net contribution to the Internet third-party value chain:
Tim O’Reilly: If Google takes too much of the pie, it will be a great opening for a new competitor. Right now, because Google is creating the most value for the ecosystem, competitors continue to lose share. If they started taking a lot more of the revenue, Microsoft’s share would go up, plus new startups would have an opening that they don’t have now.
Wrong, wrong, wrong: Here’s‘ why,
The “ecosystem” has no knowledge whatsoever of how much “value” Google is “creating” for self-retention. Google’s Ad Sense dealings with publisher partners, in fact, FAIL the standards for fair dealing set by the Council of Better Business Bureaus.
What “specific” commission rate does Google “promise” to pay out for Ad Sense placements? A vague “portion“ of whatever pie it chooses!
Google continues to intensify its monopoly-like stranglehold on search advertising due to shrewd exploitation of destination search network scale effects, not because of its supposed generosity: Given that an SEM buy at Google reaches many more searchers than a Yahoo buy does, Google is the must-buy, but Yahoo is not.
Startups have scant “openings” to wage a competitive battle against Google: If well financed power houses Yahoo, Ask.com and AOL have all raised Googley white flags, a newcomer’s chances of displacing Google are remote.
Google is keenly aware of the seemingly invincible position it has been able to build for itself and the Googler-In-Chief takes every opportunity to remind the world just how determined Googlers are to accomplish a mission of world wide domination, for example:
Eric Schmidt: The long-term fantasy is we walk up to you and you give us, say $10 million, and we’ll completely allocate it for you across different media and ad types.
With the personal version of Google, iGoogle, the computer will get to know you so well, it will say good morning, you are late this morning, but you are always late; It will almost understand how you think and mimic behavior.
If you think about it, all the world’s information includes personal information. Personal information is held in online word processing, online spreadsheets, online calendar, online email.
It is possible to build a culture around optimism. Google is an example…of a culture that can be built based on relatively scalable principles. We could run our country this way. We could run the world this way.
PLEDGE OF ALLEGIANCE TO ERIC SCHMIDT?
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DONNA BOGATIN is the Founder & CEO of STARTUP ALPHA
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