Google's Move Into Music and TV Will Draw Antitrust Troubles
Over the last year Google (GOOG) has announced plans to begin offer music and television services. These ambitious projects are necessary for the company to continue to grow. But they will also create serious antitrust problems related to how Google ranks its own products through its dominant search engine, which controls 65% of the US market.
Recent articles on these upcoming services have highlighted what seems to be the common perception among executives in the music and television business. Take this quote from the Financial Times, "Google and YouTube are a global phenomenon with a hell of a lot of eyeballs -â€" more than any cable or satellite service," said one executive with knowledge of the plans. "They've talked about how many people they could steer to this . . . it's a huge number."
The language that's important there is "how many people they could steer to this...". The sentiment was repeated in an article from Reuters by another unnamed executive, this time in the music industry. "Finally here's an entity with the reach, resources and wherewithal to take on iTunes as formidable competitor by tying it into search and Android mobile platform. What you'll have is a powerful player in the market that's good for the music business."
And there's the rub. Industry execs may be drooling over the prospect of Google competing with Apple (APPL) in music and television, providing them with some much needed leverage. But Google is already running into anti-trust trouble over how its search engine ranks results. Just last week the Texas attorney general opened up an investigation into what it calls Google's "search neutrality". And a week before that the Department of Justice asked for more information on Google's proposed deal with flight information company ITA.
The real issue here is that Google wants to move beyond the simple ten blue links that were the foundation of its business to offer premium services. When the company was making its money on being the best at organizing the web, it was easier for it to defend the black box algorithms that determined search rankings. The most relevant results were in Google's own best business interest. But if, in the near future, someone searches for a song or tv show, and both Google and Apple can offer it to them directly, how will the search engine decide which result to favor?
Image from Flickr user Brian Turner
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