Via Tech Crunch
Randall Stross at The New York Times goes to bat
for the Google/Yahoo search marketing deal, saying there’s “nothing to fear” from the two companies linking their search products. I believe most of his analysis is wrong, and he also skips the publisher side of the market entirely. In short, I feel that he is exactly wrong in both his approach and his conclusions.
He begins with “GOOGLE controls about 70 percent of the search advertising market. Doesn’t that give it a monopolist’s ability to set prices as high as it wishes?”
Well no actually, a monopoly controls only the supply side of a transaction, so it can’t change whatever it wants. If prices go too high, users stop buying (this is known as demand elasticity). Being a monopoly just gives you the ability to charge much higher prices than you otherwise would be able to because you don’t have a competitor who can undercut you for less profit.
