So it sounds like in a story in the Wall Street Journal, which says the Justice Dept. has just hired a hotshot litigator to look into Google’s power in online advertising. The story says this is the strongest sign yet that the government may try to quash a deal in which Google proposes to run its search ads on Yahoo’s sites. But it raises the possibility that Justice could pursue a broader review or challenge to Google’s growing power.

Silicon Alley Insider thinks that’s what tanked Google’s stock by about 5% Monday, though it appears the story came out after the market closed. In any case, I don’t expect a near-term impact on Google beyond what happens with the Yahoo deal, because I would think Justice will have to work a good long time to amass enough of a case to take a serious action.

Why? Because Google’s power so far is in a particular piece of the online ad business: search ads. Of course, search ads are wiping the floor with most other kinds of online ads right now, but Google still has nowhere near the kind of dominance Microsoft, say, has in operating systems. Google is essentially nowhere in display and it hasn’t been able to do much with video ads yet. The threat of total Google dominance in online advertising is real, but it’s still mostly on the come.

What’s more, I would think Justice would need to show customer harm. That may exist, or may be threatened, but I don’t think it’s a slam-dunk case yet. In particular, it’s hard to see consumer harm at this point. But I’m obviously no antitrust expert. Perhaps it’s enough to show that Google’s dominance, with Yahoo or by itself, is likely to raise prices for advertisers, who are of course Google’s customers. As I wrote yesterday, I’m still puzzled why it’s assumed the deal will result in higher prices for keywords, since Yahoo presumably would be doing much better in search right now if it delivered precisely the same results on the same keywords as Google, but at a lower cost. If Yahoo’s cheaper, it almost has to be because the clicks don’t convert to sales as well as clicks as Google, no? But maybe the mere fact that prices will be higher, regardless of the value delivered, is enough to trigger antitrust problems. (Did I mention I’m not an antitrust expert?)

Anyway, the key point here is that it’s now a different world for Google. I wrote well over a year ago that Google was in danger of getting too powerful for its own good. As Microsoft knows well, working under a government microscope can, for better or worse, change how a company does business. Google may have reached that point now.

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