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Judge Finds Google Isn't A Monopoly

The court suggests Google's high prices, by themselves, are not anti-competitive or exclusionary, but critics see things differently.

Despite Google's formidable presence in the online ad market, it's not a monopoly. That's essentially the view of U.S. District Court Judge Jeremy Fogel, who last week dismissed an antitrust lawsuit against Google.

"[B]eyond making conclusory allegations that Google acts as a monopoly and has denied access to an essential facility, [the plaintiff Carl Person] fails to allege exclusionary or anticompetitive conduct," said Judge Fogel in his ruling, noting that "high prices, by themselves, are not anticompetitive or exclusionary."

Judge Fogel handed Google another victory Tuesday in a lawsuit brought by a company unhappy with its lack of prominence on search results lists.

In his blog, law professor Eric Goldman notes that the judge rightly rejected the plaintiff's overly narrow definition of the online ad market. "Google is a major player in the search keyword ad business, but it has a comparatively small slice of the overall online advertising pie," he said.

That opinion is borne out by JupiterResearch's estimate that Google's share of the U.S. online advertising market in 2006 was 17% -- one percentage point ahead of Yahoo. While analyst David Card observed that this is "kind of concentrated for a long-tail market," he maintains it's "not enough to set off alarms at the [Federal Trade Commission] or [Department of Justice]."

EMarketer, however, sees Google in a more dominant position. "These Big Four [Google, Yahoo, AOL, MSN] dominate online ad revenues, much like the top four broadcast television networks still dominate TV's ad budgets," the market research firm said Monday. "By 2005, the four portals had captured more than half that year's Internet ad spending of $12.5 billion. In 2007, eMarketer projects two-thirds of the $19.5 billion spent online will go to the Big Four."

EMarketer says Google captured 25% of the U.S. online advertising revenue in 2006 and foresees that growing to 32.1% in 2007.

That's certainly a large share of a large market. Is it a monopoly? Not yet.

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