Tuesday, March 2, 2010

Microsoft: Google monopolizes paid search ads

It's not easy being a monopolist. Microsoft knows. Convicted of antitrust violations in both the US and EU. Losing market dominance to new technologies. Staking its future on me-too products that no one really wants. So what do you do? Yesterday's WSJ headline: "Google, Microsoft Spar on Antitrust." Google indeed has a virtual monopoly on paid search advertising, which may or may not be alarming to you depending on the cross-elasticity of demand between search and other forms of advertising (translation: if small price changes lead companies to switch their ads between Google to other outlets, this isn't a monopoly.) Microsoft's lead outside counsel has filed briefs for small firms in Ohio and New York accusing Google of antitrust violations. The Justice Department is investigating as well.

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