IndustryTo Fear or Not to Fear: That is the Question (About the Google-Yahoo Ad Deal)

To Fear or Not to Fear: That is the Question (About the Google-Yahoo Ad Deal)

As October approaches, and Google prepares to implement its advertising deal with Yahoo, more and more commentary is flowing about the pros and cons of the deal.

The New York Times is saying there’s nothing to worry about. But their argument is mostly full of talking points released by Google itself last week. (Their talking points were not bad, mind you.)

Meanwhile, TechCrunch is so afraid of the deal, I’m thinking the makers of Xanax must be making a huge profit off of their anxiety alone.

Fears of price-setting do seem to be misunderstood, and the timing might only fuel those fears. Advertisers are flocking to the web in large numbers. In an unstable economy, they do so even more because search advertising is still a great deal over some traditional forms of advertising. With demand and competition higher, prices could increase. So the timing of this deal may affect how people view the prices, even though those traditional forms of advertising are a form of competition.

Still, people want competition in search.

Personally, when it comes to monopolies, I think of Microsoft (not for their search, of course). They’ve had so much of the operating system market for a long time. But in recent years, Apple has come along to snag some of that market share away.

This had nothing to do with regulation, but instead innovation. That innovation is based on how people want to work and what they want to do with their computers. There are other operating systems, but there are reasons why they don’t appeal to the masses. It’s the same in the search industry.

There’s a reason Google has so much of the market share. It’s because their search and Adwords program are what people want. In the future, I suspect the tides will shift. After all, how many times do you really find what you’re looking for on the first search? And how many times have we heard complaints about Adwords?

But no one else has anything better – at the moment. However, perhaps letting Google dominate will be the very thing that drives innovation.

There’s enough to dislike about Google to desire something better. And some genius, perhaps in a dorm room or working passionately late nights on a project after work, will come up with it.

But preventing a Google-Yahoo deal won’t make that happen any sooner. Regulation in this matter will not spur innovation. Regulation will not keep prices down. Google already has too much of a market share, and hardly anyone views Yahoo as a real competitor anyway.

Oddly enough, if Yahoo were to ever become a stronger competitor, it could result largely from the increase in income generated by this deal. More revenue would provide more money to fund research into search. This, of course, can only be facilitated by a good business model and the right focus at Yahoo. And for this, we can only hope that Carl Icahn continues to give Yahoo a much needed kick in the butt.


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