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Fri, 28 September 2007 07:47  |
TCB
Messages: 1261
Registered: July 2007
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Senior Member |
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From a cranky long/short value hedge fund guy. Love this stuff.
+++++++++++++++++++++++++++++++++++
Friday, September 28, 2007
Mr. Smith Goes to Washington…to Lobby for the World’s Largest Unregulated
Monopoly
It happens only occasionally: something so beyond the pale of logic and reason
that further commentary is barely necessary.
But it does happen, and it happened yesterday: Microsoft, of all companies,
sent its General Counsel to the United States Senate to beg the government
to stop Google, the world’s most successful internet search company, from
buying a small, unrelated banner ad company.
In other words, Microsoft—the world’s largest and most successful unregulated
monopoly—is asking our government to stop Google from continuing to beat
Microsoft in the free marketplace
I am not making this up.
Here are Microsoft General Counsel Brad Smith’s own words:
"Now, already Google is the dominant company for one of the two main types
of online advertising, search online ads. Roughly 70 percent of global spending
on searchbased advertising today flows through Google's AdWords service."
Roughly 95% of global spending on desktop computer operating software flows
through Microsoft bank account. What’s he complaining about?
Nevertheless, there’s more:
"If Google is allowed to proceed with this merger, it will also obtain a
dominant gateway position over the other main type of online advertising,
nonsearch ads the nonsearch ads that are displayed on Web sites that we visit.
Today, Google and DoubleClick are the two largest competitors in this area.
And as I hope we will discuss more, they are competitors in this area. And
yet combined, Google will account for nearly 80 percent of all spending on
nonsearch ads served to third party Web sites."
Both Google and DoubleClick became dominant in a free marketplace, with competitive
products against bigger, better-funded companies, including Mr. Smith's employer,
the World’s Largest Non-Utility Monopoly.
Again, what is he complaining about?
Quite a bit, as it turns out:
"In short, if Google and DoubleClick are allowed to merge, Google will become
the overwhelmingly dominant pipeline for all forms of online advertising."
"Now, this merger will almost certainly result in higher profits for the
operator of the dominant advertising pipeline, but we believe it will be
bad for everyone else. It will be bad for publishers, it will be bad for
advertisers and, most importantly, it will be bad for consumers."
In other words, Mr. Smith is suggesting, Google will become like Microsoft!
I hope somebody in Washington remembers the honor roll of companies that
Microsoft put out of business by leveraging its own monopoly of the desktop
operating system.
If they’ve forgotten, I’d be happy to dig through old trade confirmations
from the days when shorting whatever NASDAQ-listed company Microsoft had
targeted for destruction was like shooting fish in a barrel.
From memory, they include but are not limited to Lotus, Netscape, Quarterdeck,
Software Publishing, and Novell.
Readers with longer memories than mine are free to add to the list.
Jeff Matthews
I Am Not Making This Up
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