Steve Lohr has an interesting post comparing networked competitive strategy. Whereas Microsoft may have hard power from direct network effects, Google has soft power from indirect network effects. Theory aside, something caught my eye:
Still, dominance alone is not an antitrust problem. The issue is the powerful company’s behavior, says Andrew I. Gavil, a professor at the Howard University School of Law. “You have to be big and bad, not just big,” he said.
The telltale signs of a company’s bad behavior include raising prices, hindering innovation and excluding competitors. There is no evidence that Google is engaged in suspect behavior, but it could be hard to spot. Its ad auction system, for example, is essentially a private marketplace run by Google, without much disclosure to advertisers or to Web publishers.
For the record, I think Google is good. But I have a question. What about when Google itself outbids you on Adwords? Now this isn't the biggest thing in the grand scheme of things, but they seem to win every auction I compete in and effectively raise prices.
UPDATE: some good clarification in my Flickr comments:
Alex. C. says:
Google's internal ads actually compete with
other ads, so Google is not always #1:
Check Matt Cutts' post from 2006: www.mattcutts.com/blog/im-on-debunking-duty/ which replied to a sensationalistic article about the same topic. There's also a post on AdWords blog about this: adwords.blogspot.com/2006/12/google-advertisi ng-on-adword... . The second comment from an interesting Nicholas Carr post ( www.roughtype.com/archives/2006/12/when_the_a uctio.php#co... ) explains why it's not in Google's interest to play unfair.