Are there any problems associated with monopoly laws if it's next to
impossible for any Pay Per Click search engine company to compete
against Google and Yahoo? If not, could you please explain why? |
Request for Question Clarification by
pafalafa-ga
on
13 Dec 2005 19:20 PST
Can you elaborate on your question a bit?
What is the basis for your statement that it's 'next to impossible'
for other search engines to compete with PPC?
Are you saying that Microsoft, AOL, or Altavista, e.g, are not in a
position to competitively enter the PPC marketplace?
Even if competition were fairly limited, that, in itself, is not
against the law. There are only a handful of competitors to Wal-Mart,
or Home Depot, but these companies are not generally regarded as
illegal monopolies.
Give us a bit more to go on. The better we can understand your
question, the better the likliehood we can respond in a satisfactory
way.
Thanks,
pafalafa-g
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Clarification of Question by
truthteller-ga
on
14 Dec 2005 17:51 PST
Pafalafa-g --
AOL uses Google's search results and their 'sponsored listing' are
powered by Google.... therefore, the people that run that company seem
to believe that they can NOT compete with Google i.e. that?s why they
joined them.
You mentioned AltaVista ?. It?s owned by Yahoo, so they don't count as
a competitor.
As far as MSN is concerned, I believe they too are moving towards
partnering up with Google because they can NOT compete with them in
the Pay Per Click world.
I understand what you?re saying about Wal-Mart and Home Depot.
However, they are not fair comparisons for two reasons:
1. Neither store controls a ?particular niche? i.e. they sell a wide
variety of products... Pay Per Click advertising, on the other hand,
IS a single niche.
2. Many Stores DO in fact compete with Home Depot and Wal-Mart ?.
Lowes, Ace Hardware, Target, K-Mart, Malls, etc. Furthermore,
specialized businesses such as lubber stores, plumbing supplies,
gardening centers, all compete with various sections of Home Depot
(and Wal-mart) ?. the same can NOT be said for Pay Per Click
advertising.
Pay Per Click advertising is ONE niche. Both Google and Yahoo control
that niche and no other companies can compete with them -- such as AOL
(that's why they joined the Google Adsense program as opposed to
starting their own PPC program). Therefore, I feel the question is
valid, and I'd like to know how this does not violate monopoly laws.
I appreciate your help.
Mark
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Request for Question Clarification by
pafalafa-ga
on
14 Dec 2005 18:58 PST
Mark,
Thanks for getting back to me.
I've been pondering your question for a while now, trying to come up
with a reasonable approach for answering it.
Of course, no one can come out and say, convincingly, that Google and
Yahoo are involved in anything illegal. If there were a clear-cut
case in that regard, doubtless it would have been made already, and
some sort of action initiated against either or both companies.
On the other hand, no one can say for certain that what they are doing
is perfectly legal. Who knows which companies and practices the
Justice Department Antitrust Division is focusing on these days, now
that the whole Microsoft affair is winding down?
I can tell you this, however. Having only two competitors in a market
-- or even having an out-and-out monopoly -- is not illegal.
A famous case in antitrust law basically established the principle in
the US that, if a company is the sole occupant of a market niche due
to its skill as a competitor (and not due to any trickery, threats, or
other illegal activities), then it's OK.
That is, they a company can be a monopoly, as long as they got there fairly.
If I explained more about this case -- and about the differences
between achieiving a monopoly (or a near-monopoly) through fair means,
vs unfair means -- would that be a reasonable answer to your question?
If it is, great...just let me know, and I'll get right on it.
But if that doesn't do the trick, perhaps you can suggest an
alternative way of going forward on this one.
Thanks.
paf
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Clarification of Question by
truthteller-ga
on
15 Dec 2005 15:02 PST
webadept-ga --
Due to the fact that somewhere around 95% of Google's money comes from
pay per click advertising, I think it's fair to call Google and Yahoo
"pay per click companies."
The problem I'm having here is this ?..
I'm wondering why the smaller search engines such as Miva.com.
123seacrh.com, etc, etc, don't simply use Adsense for their top
results (the same way askjeeves.com is now doing)? Keywords such as
Mesothelioma, for example, are bidding at less than 17 cents a click,
and at the same time, Google is charging several hundred dollars per
click.
If miva.com receives 10 million visitors a day, for example, why do
they choose to lose millions of dollars by displaying ads from their
own advertisers?
Why does miva go through the troubles of dealing with advertisers that
pay only pennies for words when they could simply display Adsense and
make 500 times as much (even after splitting the profit)? If these
smaller pay per click search engines had their operation set up
similar to askjeeves.com, they'd be FARRRRRRR better off!
*What's the point of doing all that work to make 15 cents a click on
words that pulls 300 dollars per click off Google? Even if you split
the money with Google, they?d still be making WELL OVER 15 cents per
click.
Let's say you're the owner of one of these smaller Pay Per Click
search engines and you're faced with two options:
Option 1 Start your own Pay Per Click advertising program. Here
are a few problems associated with this option:
1. Your ads pay far less than simply displaying Google Adsense for your results
2. You have to hire a staff and pay them
3. You?re putting yourself in a position to be sued for things such as click fraud
4. You have to spend a ton of money on all the appropriate technology
to run a pay per click search engine
5. All the other problems/headaches associated with running a business
of this nature
Option 2 Simply sign up for the Adsense program (platinum member, of
course), and display Google Ads in your top results (labeled as
'sponsored listings)... again, a good example of this is
askjeeves.com. By choosing this option, you benefit in the following
ways:
a. You no longer have to deal with employees, advertisers, etc ...
therefore, your work time is cut in half (actually, WAY MORE than
half)
b. You no longer have to worry about legal problems associated with
running a corporation.
c. You make 50 times the amount per click for the SAME traffic....
again, look at the way askjeeves.com has their search engine set up.
If a company?s goal is to make as much money as possible, which is the
primary goal of most companies, then why in God?s name would anyone
chose option A? The amount of traffic many of these smaller Pay Per
Click search engines receive is VERY high ... so what's the logical
explanation for 'depriving themselves' of so much money while taking
on more work to do so?
I'm saying that I don't understand how it's possible for these smaller
pay per click search engines to compete with Google and Yahoo.
Furthermore, I don't understand what's going on with these guys and
why they are not simply displaying Adsense.... what makes it so much
smarter to lose millions?
Please let me know if I've clarified my questions enough for you to
give me an answer. I appreciate your time and help.
Mark
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Request for Question Clarification by
easterangel-ga
on
11 Jan 2006 22:43 PST
Hi truthteller-ga!
I think I have a fair understanding now of your question. However,
since this is a very opinionated question and the answers will be
mainly based on opinions as well.
Here is my opinion so please tell me if this is the type of answer you
want or if I am in the right direction and you want me to expand
discussions of these points in order to come out with an official
answer.
Your query is entitled monopoly laws but there is actually more to
this question than meets the eye based on your last clarification.
You wonder why is somebody going to choose Option A when Option B
seems to be the more profitable road down the path.
First off some smaller search engines choose Option A since frankly
they want to start something. They want to have a company that will
have small or no profits now but with a dream of making something big
and creating something different along the way.
Option A companies want their own brand and they view these big
companies, Google, Yahoo, etc as competitors. And putting their code
on their website destroys their brand identity.
Option B companies meanwhile this time want to leverage their existing
customer base, and also add value to their investors by offering them
the best of all worlds that is why they partner with companies like
Google. Please remember that in the not so distant past, Google and
Yahoo were partners.
"Yahoo Drops Google, Goes With Own Search Technology"
http://www.techweb.com/wire/26803879
So what does this lesson tell us?
There is really no clear cut way on what right path to take. Some
small companies partner with large ones so that when they are big
enough, they can make their move and be on their own. On the other
hand small companies start on their own and become big but once there
and they are famous, they partner with competitors so that they can
leverage what they have and also give more value to their investors.
Is this helpful to you?
Thanks!
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