With Google now in the crosshairs of a potential European Union antitrust investigation, it may be useful to remember that generally only successful companies get investigated. In that context, an anti-trust action may be the sincerest form a flattery that regulators and competitors can offer a business.
But, what might the investigation do to Google’s cloud initiative and other business-to-business services?
In the worst case, an unfavorable ruling maybe cripple Goggle by cutting off the cash flow necessary to make huge investments in new technology, including that gigabit broadband experiment that’s been so much in the news.
Sure, Google has come to dominate search and online advertising. Both industries had competitors before Google arrived and still have competitors today, though perhaps fewer and smaller with Google around than before.
Nobody seems to have forced anyone, at least not large numbers of people, to use Google search. Nor have I seen allegations of people forced at gunpoint to use Google AdWords for their promotions.
I haven’t seen many credible allegations of Google competing unfairly, though I am sure there are companies that Google has upset, including the three–one a Microsoft business in Germany–that complained to the European Commission.
The complaints relate to search engine results positioning and AdSense terms and conditions. In the former, lacking a smoking gun, Google need only say–as it has–that its results rankings are designed to present the best results to users, not discriminate against rival search engines (two of the complaining companies are specialty search tools).
As for terms and conditions, those can presumably change without too much impact on Google’s business.
Some people, my pal and colleague Tony Bradley included, imagine that if people are complaining that Google must be doing something wrong. I think this comes from a misguided notion that once a company becomes “too dominant” (whatever that means) it needs to be cut down to size, just because.
Such a pruning might increase competition, but it also denies customers their right to choose.
When Tony says that “Google is the new Microsoft,” I say, “Halleluiah,” as we need a company to compete with Microsoft in just the way Google is doing. Who else could? It takes a company with a cash cow to compete with a company with a cash cow. And both Microsoft and Google are better for it.
Google is a dominant player because it’s done an excellent job of meeting customer needs. Its success is built upon customer acceptance, as well as perhaps the desire of the marketplace to standardize around a single search engine that we all use.
Amazon, eBay, Facebook, and Microsoft are all in a similar position of customer preference. Like Google, each faces serious competitors ready to take advantage of any serious missteps the dominant player makes.
One area where Google’s size does concern me, and Microsoft is here as well, is the ability for cash cow businesses to massively fund unrelated businesses. Google is a serious player in smart phones and operating systems not because those are such profitable markets but thanks to the huge profits it makes selling advertising.
Microsoft, of course, has funded many businesses with profits from Windows and Office. And such an arrangement may be necessary to fund investment in expensive new technologies, such as cloud computing, electricity, telephony, and wireless, all Google interests.
That cash cow funding may, however, in some instances inhibit competition.
Cutting Google “back to size” may seem attractive to some, and may even be necessary in specific cases, but the result could be world that’s a lot less interesting than one where Google remains unfettered.
David Coursey has been writing about technology products and companies for more than 25 years. He tweets as @techinciter and may be contacted via his Web site.