Google’s Turn

It’s no surprise that Google is now under the competition authority’s microscope in Brussels. This, after all, is the company with a 90 percent share of the explosively growing Internet ad market in Europe. Indeed, back home, where it has “only” an 80 percent market share, the Justice Department effectively blocked Google from an ad-sharing alliance with Yahoo. Nonetheless, we’re anxious about the potential impact of the investigation – in particular, the effect on Google’s incentives to innovate.

The main issues seem to be: (a) whether Google is using its market power to overcharge for ad space, and (b) whether the company is putting competitors at a disadvantage in search rankings. Expect more complaints grounded in Google’s exercise of market power on a variety of other fronts.

The only thing we are sure of at this point is that Google is about to learn what Microsoft discovered when it was top dog in computer technology. Remaining number one requires not only beating the competition in product markets, but also outplaying them in the political game in Washington and Brussels, not to mention Beijing, Tokyo and Seoul.

So be it. One hopes, though, that the trustbusters recognize that there is much more at stake here than the price of Internet ads. In markets driven by rapid technological and organizational change, innovation is king. And the last thing anybody (other than its competitors) should want is a Google that spends more time looking over its proverbial shoulder than thinking up new ways to dazzle consumers.