Tech Watch | InfoWorld Staff » Google-DoubleClick: Dangerous monopoly?

April 13, 2007 | Comments: (0)

Google-DoubleClick: Dangerous monopoly?

TAGS: Business, Search

Google already scares the pants off many Web site publishers. Yes, the sites love the traffic -- can't live without it, in fact. But they compete with Google for advertising dollars, often chasing the same ad dollars. To add insult to injury, it is those same Web sites' ever-expanding content base that allows Google to do what Google does.

And now, the crushing blow: Google buys DoubleClick, the service that serves up ads on a fantastically high percentage of major web sites. DoubleClick has a stranglehold on the digital advertising market, just as Google owns the search market.

I smell monopoly here, one that could be disastrous for many Web site publishers --and ultimately bad for Web consumers as well. Here's the danger: Google already knows a tremendous amount about the traffic it sends to individual Web sites -- where it comes from, what people are looking for, even some basic demographics. With DoubleClick in the fold, they will also know what ads are being served on any given page. That gives Google unprecedented insight into publishers' business. And remember, those publishers may be partners, but they are also competitors, often trying to woo the same advertisers as Google.

Web sites live and die based upon ad revenue and on charging advertisers a certain rate based upon the number of pages served and the quality of their readership/user base. I could imagine a not-entirely-paranoid fantasy in which Google can run the numbers, turn around, and offer better rates to advertisers for a similar audience. Let's say you run a fashion site and charge $100 CPM, or cost per thousand, meaning an advertiser would pay you a hundred bucks for every thousand page impressions. Google/DoubleClick may not know your CPM (though they could take a good guess based upon your traffic). But they will know who they've sent your way and how many ads you've served. With a bit of calculation, they could easily offer a slightly better deal to a fashion advertiser, offering up $90 CPMs to anyone who types in "fashion," "couture" and "Prada." Long-standing rumors that Google will soon enter the banner ad market further fuel these fears.

An ad ops guy I know who chooses to remain anonymous notes that DoubleClick has been exploring a product that would establish auctions to sell surplus ad inventory. DC wants to open an auction for those transactions. Google has also expressed interest in the remnant ad market, making Google potentially a full service media buying agency -- picking the audience, buying the ads, etc. As a combined entity, Google and DoubleClick could undercut publishers' ability to set their own CPM base, "allowing the market to set those prices."

Clearly this prospect would terrify publishers because it commoditizes advertising and ultimately makes it hard for sites to compete. That might sound great to advertisers for a while -- at least until sites started folding because they could no longer afford to stay in business.

DoubleClick has assured customers in a memo that a "change in ownership will not affect your ownership of your data. Your data remains your property and subject to the terms of your contract." That's a lovely sentiment, but I am by nature suspicious. I'm thinking many publishers will be as well.

I would not be surprised to see this one smacked down by antitrust law. Or at the very least, I'd expect DoubleClick customers will insist that a firewall be put in place that will keep the two sides of the Google/DC house from merging and mining their data.

When one company owns the railroad tracks, the trains, and the ticket office, customers may benefit in the short run. In the long run, monopolies are bad for everyone, unless you happen to own stock in the monopoly.

Posted by Steve Fox on April 13, 2007 04:22 PM

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