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May 28, 2008

Google monopoly: Techcrunch founder backs Microsoft as saviour

By Peter Kirwan MM blog

If we’re seeing the beginnings of a proper debate about Google’s dominance (monopoly?) in the UK, something similar seems to be happening in the US.

There, Michael Arrington, the Web 2.0 guru who runs TechCrunch, spent part of his Sunday penning a lengthy article entitled “The Importance Of A Competitive Search Market”.

In some respects, Arrington is arguing ahead of the pack. He claims, for example, that Google’s dominance of search means that “little effort is put into innovation”. Specifically, he offers up one example of what he believes is going wrong:

For example, the CPC (cost per click) model is flawed, but in Google’s favor because it puts fraud risk inefficiently on the advertisers, who have no way of controlling it at the search engine level. CPA (cost per action) models work much better, but Google has done little more than test them. The current system is great for Google and bad for advertisers. But advertisers have nowhere else to go. . .

And another: the fact that Google “doesn’t share enough revenue with content sites that show their ads”.

The only thing keeping them even close to honest is the fact that Yahoo and Microsoft will occasionally compete for those partners. Take that away, and Google will go back to keeping the majority of advertising revenue generated at those sites. . . That is a terrible outcome when you look at it from the perspective of the health of the Internet.

As a good Silicon Valley boy, Arrington wants everyone to get behind Microsoft and help it to provide Google with some real competition.

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The thought of Microsoft as a liberator of media and advertisers is novel. Given the lack of success the company has met with in search markets thus far, it’s also an unlikely one.

Arrington acknowledges as much when he writes: “There’s a reason monopolies get broken up by governments. Market forces can’t generally undo them.”

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