Is Google The New Microsoft?

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February 26th, 2008 by Click Consult

Microsoft is a convicted monopolist. It has been found guilty of anti-competitive practices in both America and the EU and seems to treat huge antitrust fines as a cost of doing business. A lot has been written recently about Microsoft's $44.6 billion shares and cash bid for Yahoo, but perhaps the one thing it demonstrates the most is Microsoft's fear of a new monopoly on the block.

In December 2007, Google commanded 62.4% of the internet search market, compared with 12.8% for Yahoo and 2.9% for Microsoft AdCenter (source: comScore, a market research firm). Indeed, Google is leaving all the other search engines far behind and, once it completes its acquisition of DoubleClick, a leader in display advertising, it may soon become even more of a dot on the horizon to Yahoo and MSN.

Ironically, Microsoft complains that Google will benefit from the same advantage that has long made it almost impossible for any other firm to compete with its own Windows operating system. Since so much software is written to run on Windows, it is difficult for competing operating systems to enter the market. Similarly, if too many publishers and advertisers adopt Google's online-advertising platform, rivals will not be able “to mount a credible competitive challenge”, as an internal Microsoft document puts it (The Economist, 07/08/2008).

To call Google the new Microsoft, however, is perhaps a little unfair. As internet users can easily switch between search engines, Google’s dominance in online advertising is not related to a proprietary technological lock-in. Moreover, its market share falls far short of the 90% that Microsoft boasts in desktop operating-systems and office software. But it is undeniably the company that every technology firms and Microsoft itself is most scared of. I’m sure there will be many people (Netscape employees anyone?) who will be smiling at the thought of Microsoft getting a taste of its own monopoly medicine!

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