Sunday, October 5, 2008

Tim Carter argues that “the Google-Yahoo! arrangement is both beneficial and pro-competitive” because advertisers, and not Google, ultimately set the price for online search ads (“Ad pact pluses,” Commentary, Sept. 28). This is like arguing that consumer demand, rather than overseas commodities speculators, sets gasoline prices at the pump.

Mr. Carter entirely misses the fundamental economic problem. This deal is an effective merger that will give Google 90 percent control of online ad searches. While it’s true that advertisers will continue to compete against one another in auctions for ad placement, Google’s new monopoly control will enable it to effectively set the floor prices for those ads. That’s why the Association of National Advertisers, the National Association of Hispanic Publications and so many others have said that ad prices will surely rise as a result of the newer and mightier Google monopoly; and that will ultimately translate into higher consumer prices for online merchandise and services.

The Clayton Antitrust Act frowns on, if not outright forbids, 90 percent control of a defined market. If this month’s Wall Street meltdown taught us anything, it is that allowing corporate barons to ignore the legal rules and run roughshod over consumers is, ultimately, very foolish economics.


President National Association of Hispanic Publications


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