Slashdot reports that Microsoft and at&t are afraid that the Google-Doubleclick deal will hurt the competitiveness of the markte place. I really wonder about it and I think it's mostly sour grapes and net neutrality that is playing here. A short rant/analysis from me was the result. I'll post it here as well. There is more to it, but I don't have the time to do a full analysis.
Interesting that AT&T joined in. They are moving against Google to support their Net Neutrality position. But let us look at how much money there really is in this market and then see whether an almighty Google might actually be able to hurt AT&T. Google currently makes 10 billion a year from 281 million broadband users worldwide. That's is $35/broadband user/year or $2.90 a month. Just look at the price of AT&T's offering and you can see that Google's ARPU is no more than a few percent of AT&T's ARPU (Average Return per User). Google's ARPU is supporting various content offers through this businessmodel, more than 40% of the ARPU flows to the content owner. So at the moment AT&T can beat up Google for a maximum of $2 per month per customer.
So how big could Google's ARPU grow? In a country like The Netherlands 5.7 billion a year is spent on advertising to about 7 million households. This makes 67/household/month (and this number isn't growing too much) This is the total advertising expenditure on the national market and includes all major media: Newspapers, television, direct mail, cinema, magazines, billboards, internet etc etc etc. If Google can get part of that on a global scale, it amounts to a major amount of money. But now look at it from ARPU point of view. It would be hard for Google to get more then 10-15% of this market space ($6-$10/household/month) because they would have to replace all the existing ways of doing advertising and these are still powerful and sustain many content business models)
If a telco can his hands on google's revenues, they might be able to knock a few dollars of the price of a broadband connection. But $6-$10 isn't going to pay for the line and the costly upgrades. Just go and look up the financial information of telco's to see how big they are and how much money they spend on a yearly basis. Google is dwarfed by that. (Broadband reports said that telco's would spend $41 billion on network upgrades just this year, Google made only $10 billion last year) Odlyzko was right when he said: "Content isn't King" and we can add to that "Advertising will never be king".
So when AT&T says that Google is making money over their networks. We are talking about change compared to what AT&T is charging its customers.
Will Google get a dominant position? Only if they offer content providers the most money for showing a banner and advertisers the greatest amount of clickthroughs. That is why Microsoft and Yahoo are loosing out. The offer less adviews per day, that generate less clickthroughs per thousand adviews and pay less per click and offer advertisers less conversions. Why would you use them? Nobody in the equation is getting better by using Microsoft and Yahoo not the content provider and not the advertiser.
Now lets hope Google pays some attention to my pitch for Adsense for Charity The idea is that anyone using Adsense can designate a percentage of their Adsense revenues for good causes or open source projects. Even if we are only talking about a very small percentage of Adsense users doing this, we still would be talking about millions of dollars per year) So please help out in spreading this idea, by linking to it or spreading it onwards.