Digital Destiny

Diane Mermigas is a trade reporter who has covered media and communications for a variety of publications. Here is a very insightful excerpt from her Feb. 5th, 2008 article:“…The ultimate irony is that Microsoft and Google are being driven by the same fear and greed: a penchant for market monopoly, a passion for manipulation and an obsession with losing a strategic advantage. Both companies understand that interactive advertising and commerce will provide the golden profit pipeline…Google…has a good chance of winning the ongoing bidding for wireless spectrum–a nearly $5 billion bet that it can make many times that managing user data, advertiser pitches and online transactions in its own branded space…Google CEO Eric Schmidt is openly taking aim at selling advertising and subsequent transactions on the world’s 3 billion mobile phones and other portable devices…If the deal goes through as expected, look for Google to ramp up its search-based personal data mining and marketing across all digital interactive platforms. It will bore deeper into tracking and reporting on users’ Web selections and activities. Auctioning premium connections with target consumers and mining the long tail of products and services is Google’s new advertising industry paradigm…”

from: Google v Microsoft: Fear and Loathing in Merger Land. Diane Mermigas. Mediapost.

We have long been worried about the failure of Google to candidly address the numerous policy issues involving its own growing dominance in the online ad market, especially the implications of the pending DoubleClick acquisition. Today, David Drummond, Google’s senior VP, posted a piece on the corporate policy blog on Microsoft’s attempted takeover of Yahoo! Mr. Drummond suggested that the “underlying principles of the Internet’s openness and innovation” were at stake if such a merger occurred.

But missing from the piece was any acknowledgment of Google’s own dominant role in interactive advertising; how it would be incorporating the client base and perspectives of the Fortune 1500 style users of DoubleClick’s data targeting/delivery system; its own aggressive plans to extend its market share in search to almost every other sector of the advertising and marketing business. In a glaring and telling omission, Mr. Drummond never used the “P” word–privacy. Because Google’s failure to seriously address the privacy implications of its own business practices–especially in the context of DoubleClick–is one of the most troubling and telling aspects about its future plans for the digital media.

Mr. Drummond does raise important questions that must be addressed as we review Microsoft’s plans for expansion, including the likely scenario of bundling operating system and desktop services with data collection and marketing. But Google should acknowledge that it was Microsoft that was the leading corporate opponent as it sought to win approval by the FTC of its DoubleClick deal. There’s a “tit for tat” quality to Mr. Drummond’s post. Mr. Drummond’s conveniently ignores the real question about preserving an open and innovative Internet. What happens to online publishing, diversity of expression, privacy, and innovation when we end up with only two mega giants–Google and Microsoft–in control of online advertising? And who both ultimately have the same data collection, micro-targeting across all platforms and applications, business model?

We have been privileged to work with Prof. Joe Turow of the Univ. of Penn.’s Annenberg School over the last few months on new media and marketing merger issues. Last fall, we asked him to brief the FTC and the Congress on the Google/DoubleClick merger. Prof. Turow brings a all-too-rare independent analysis to the critical issues involving the relationship of digital marketing to democratic civil society. We’re pleased the Washington Post, AP, and others cited him today in their coverage of the proposed deal. Here’s the full statement we helped send out to reporters yesterday: “Microsoft’s decision to buy Yahoo is a direct result of the decision by the FTC to allow Google to purchase DoubleClick. It is further evidence that despite the appearance of unlimited choice in the new media environment, people’s activities will be tracked and shaped by a very small number of companies who care far more about surveillance and targeted advertising than the public interest. The Federal government, which should have been the guardian of the public interest, has dropped the ball. A concerned public ought to call its political leaders to account about the problematic ways they are allowing the new digital world to develop.”

Joseph Turow is Robert Lewis Shayon Professor of Communication at the Annenberg School for Communication of the University of Pennsylvania. He is the author of over 70 articles and 10 books on mass media industries, including Niche Envy: Marketing Discrimination in the Digital Age (MIT Press, 2006), and the editor of The Hyperlinked Society: Questioning Connections in the Digital Age (University of Michigan Press, forthcoming).

Microsoft/Yahoo!, Google/DoubleClick et al: The Emerging “New Media” Media Monopoly
Consolidation of the Online Advertising Business Illustrates Failure of FTC and Antitrust Process
Privacy Threats Online to Consumers Will Grow: Federal Safeguards on Data Collection Urgently Required
Consequences to Democratic Discourse Must be Examined

Today’s proposed acquisition by Microsoft of Yahoo!, if consummated, will create a powerful interactive Internet interactive duopoly in online media. Google and Microsoft will have inordinate power to shape the online communications marketplace, including journalism, entertainment and advertising. The once most potentially democratic of all mediums—the Net—is being shaped by the same powerful forces that consolidated the “older” media of broadcasting and newspapers. There are consequences to democratic societies everywhere, as two digital gatekeepers are likely to control how the Internet and other interactive media evolve. In an era when individuals are increasingly conducting their personal, social and political lives online, the corporations that control the digital experience will have a far-reaching influence over every aspect of society.

The failure of the Federal Trade Commission (FTC) and the Congress to adequately address the emerging consolidation in the online advertising business helped lead to this proposed transaction. Two years ago [November 2006], the Center for Digital Democracy (CDD) and US Public Interest Research Group (USPIRG) petitioned the FTC to open up an antitrust investigation into the growing consolidation of the online ad business. We and other groups asked the FTC to impose competition safeguards in the Google/DoubleClick deal. The FTC failed to do both and has now placed consumers and competitors at risk. Beyond competition safeguards, the proposed deal underscores the need for both the FTC and the Congress to enact policies that will protect consumer data online. They are already at risk, as we reminded the FTC in an amended complaint and letter last November. In an online era dominated by digital behemoths, consumers will be more vulnerable to having their personal information become the property of the GoogleClick’s and Microhoo’s!