There have been many articles written about the Google-Yahoo deal since it was announced.
All basically come to the same conclusion. The deal basically give Google a monopoly on the Pay Per Click industry.
Bad for advertisers, Horrible for domainers.
Not since “Ma Bell” the old AT&T, was adjudicated to be a monopoly in the telephone business and ordered to be broken up into regional companies, has such an important industry fallen into the hands of one company.
With the acquisition of Doubleclick last year (approval not give until this year) and Google acquisition of YouTube.com, if this deal is allowed to go forward, Google will be in a position to control most of what is referred to as online advertising.
Want some thoughts from non-domainers on the deal:
Deutsche Bank analyst Jeetil Patel described Yahoo’s decision to farm out advertising to Google as “one of the worst strategic maneuvers seen in the Internet industry.”
ThinkPanmure analyst William Morrison wrote in a research note titled “Giving Away The Store (To Google), “Google will get such great access to Yahoo’s highly trafficked Web site that it should be able to gather more insights about the correlation between search requests and advertising”
Yahoo’s move is nothing less than an act of desperation which won’t work.
If Yahoo is going to serve up Google ads, why should or would advertisers do business with them?
Why not just go go to Google directly?
It’s only a matter of time before advertisers shift all their business to Google because they know their messages will show up on Yahoo either way.
From a pure domainers perspective, if Google has complete control of the domain channel they can squeeze the life (and money) out of it.
Google would be in a position that they could dictate, not negotiate, with domain owners and parking companies, the terms of their next contracts. This includes not only revenue share, which will certainly sink, but on other issues such as which domains will be allowed to be parked, what countries ads will be shown in, and the placing of any restrictions or requirements Google wants on parked pages.
For example. Google has been rumored to start requiring parked pages to show non-paid results along with paid results like the search engine does. If Google has no competition they can demand what they want from domainers and parking companies.
And what about parking companies. How many does the industry need if their is only one upstream partner?
And if Google is so great for domainers how come are the majority of parking companies are using Yahoo?
Even if you do not park domains, let’s face it that much of the run up in domain values has some relation to parking revenues. If nothing else domainers who already have experienced a decline in revenue would have less to spend on new acquisitions.
Yes I know we can and should develop domains but that is great for 100 domains you own but not practical when your holdings get into the thousands or tens of thousands.
For advertiser’s having one source basically for pay per click advertising is not going to be good.
Through Google other holdings, which we have mentioned, Doubleclick and YouTube.com, they are going to control a tremendous amount of the entire online advertising world.
As we blogged about several days ago, online advertising is predicted to be the 2nd biggest advertising medium within 5 years and Google would be basically in control of much of it.
Eventually, as with all monopolies, rates will rise, rules and restrictions will be implemented and people dependant on the service, in this case advertisers, are going to pay.
In a Google control online advertising world what does an advertiser do if they are banned or blocked by Google for whatever reason?
What if Google demands 3 months of payment in advance?
What if Google demands a minimum spending amount to advertise?
There are hundreds of possibilities that can and will arise in the coming years if Google is allowed to have control of the industry.
None of them are good.
There are four things that can derail this deal.
First is the August 1 meeting of Yahoo. Let’s not forget that Carl Icahn and his 50 million Yahoo shares is still out there, (as far as we know) and he is not use to losing. He reported bought his shares at around $25 so now he is down a couple of bucks or 100 million.
The proxy battle for the board of directors is ongoing and if he can get enough votes he can take control of the Yahoo board and sell the company or at least the search business of Yahoo to Microsoft.
Second their are going to be lawsuits, ton’s of them, by shareholders of Yahoo who are not going to be too happy with the $23 a share price when they turned down $33.
Third the US government will have to approve the deal. When just the 2 week test deal was announced Congress already said they would hold hearings any Google-Yahoo deal. This is why the deal is not going into effect by its own terms until mid-september. During this process we expect the ICA to help to bring domainer’s concerns to light
Fourth the European Union. They have been tougher on Microsoft in looking at competition issues and we might expect the same here. After all Google may contribute heavily to politician’s here in the states, but the EU is a different animal.
So the battle lines have been drawn.
Another call to action to raised.
Domaining hangs in the balance.