July 15th, 2008
The (un)Biased Parties Explain Online Ad Biz to Capitol Hill
Just so we understand each other, the Internet is like a series of tubes, kind of like tunnels. And large amounts of data get moved through those tunnels, like in the back of a truck, you see. And inside those tunnels, there are advertisements - sort of like the billboards that line the Interstates. And, you see, this billboards-on-the-Internet business is very lucrative. So, here in Washington, it’s our job to determine if companies who are in this business are engaging in anti-competitive deals to keep others out of this lucrative business.
Or something like that.
Apologies for mocking certain members of Congress with the overly simplistic - and borderline ridiculous - explanation of the online advertising business. But it’s safe to say that there’s a different level of understanding on Capitol Hill - compared to Silicon Valley - about what’s happening in technology these days. Today, members of a Senate subcommittee were treated to a first-row seat of the fight for online advertising, starring the impartial, no-agenda representatives of Google, Microsoft and Yahoo.
The topic at-hand today was supposed to be about a search ad deal - which doesn’t need regulatory approval, by the way - between Google and Yahoo. But clearly there is more at stake here. The deal, as Google quickly pointed out, is non-exclusive and by no means a merger. Microsoft, on the other hand, maintains that Yahoo and Google are forming a search ad powerhouse that leaves Microsoft far behind in the race.
For those keeping score at home, now’s the time to bring out the score card. Google partners with Yahoo on search ads. Microsoft engages in hostile takeover battle for Yahoo (or just its search business. It’s hard to keep track these days.) Yahoo, despite being on the verge of shareholder revolt, maintains that it will be a viable player on the Internet for years to come. Forget that Microsoft itself has been raked over the coals for anti-competitive practices in the past. Forget also that Google’s acquisition of Internet advertising giant Doubleclick already has scored regulatory approval.
The tech landscape is changing at, well, broadband-like speeds these days. But Washington, it seems, picks up on the developments over a dial-up modem (which, of course, is like the congested toll booth at the tunnel entrance.) Clearly, Congress understands that these deals need scrutiny and the government is right to hold these sorts of hearings. But testimony from Google, Yahoo and Microsoft?
At one point, the senators issued a reminder that the testimonies were being given under oath. Ah, words of comfort. Maybe I was wrong about Washington - after all, politicians may not understand everything about technology. But they certainly understand the idea of pushing one’s own agenda.
Also see:
The backstory on Senate’s Google-Yahoo hearing
Again, why does Microsoft want Yahoo?
Selling the suckers on Google-Yahoo
Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of his industry affiliations.
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