By DAVID LAZARUS
Wednesday, April 18, 2007
You want to know what Web 2.0 is really about? It's about who makes the most money off the largest captive audience since the invention of television. And nothing underlines the stakes of this contest like Google's planned $3.1 billion takeover of online ad agency DoubleClick.
The deal would marry two of the largest databases of Internet users' behavior, creating a virtual one-stop-shop for any business trying to sell anything to anyone.
It could also pose new threats to people's privacy as technological advances outpace existing rules and regulations.
"The new landscape of online advertising hasn't gotten enough attention," said Chris Hoofnagle, a fellow at the University of California Berkeley Center for Law and Technology. "We do not know if people are being tracked in an identifiable manner, how this information is used or how it will be used in the future."
It's telling that the most prominent opponents of the Google-DoubleClick deal are Microsoft, the world's largest maker of computer operating systems, and AT&T, one of the world's largest telecom companies. Both have powerful interests in profiting from online ad dollars.
"This proposed acquisition raises serious competition and privacy concerns in that it gives the Google-DoubleClick combination unprecedented control in the delivery of online advertising and access to a huge amount of consumer information by tracking what customers do online," Microsoft general counsel Brad Smith said in a statement.
"This merger has implications for any company, large or small, that does business on the Internet because it will allow Google to pick winners and losers in the Internet ad space," said Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs.
How might a merged Google-DoubleClick impact Net users? Mark Welch, an Internet marketing consultant in Hayward, Calif., offers this scenario:
"Let's say your wife is unhappy and has been going online to look for divorce attorneys. Then you go online later and visit the New York Times site, and a banner ad comes up for a divorce attorney."
Clearly this represents a unique opportunity for that lawyer, who has gotten his name into a household that may desire his services. But has the wife's privacy been violated? Has her otherwise private search resulted in an unintended revelation for her husband?
And what if the Association of Divorce Attorneys (which I just invented) decides it wants to purchase a list of prospective clients, just as mortgage brokers purchase lists of real estate leads? Does Google-DoubleClick recognize this and similar requests as a potential revenue bonanza?
"From a business standpoint, it's really nice to work with just one company for your Internet advertising needs," said Pamela Swingley, president of Savvy Internet Marketing in Orinda, Calif. "I'm sure Google will be able to segment this all sorts of ways."
But she added: "Underneath this all is something very scary _ the power that Google's going to have."
David Ewing, president of San Francisco Consulting Group, a marketing firm, agreed that a merger of Google and DoubleClick would have enormous benefits for advertisers, not least providing a better sense of who's being reached online.
"For example, you can see them using this to see how effective a YouTube ad is," he said.
But what about privacy issues?
"Consumers are moving toward a trend where they don't care so much about privacy," Ewing replied. "The case for privacy on the Internet is eroding rapidly."
At the Web 2.0 Expo in San Francisco on Tuesday, Google's chief exec, Eric Schmidt, made light of the fact that the DoubleClick deal was being criticized by Microsoft and AT&T _ two companies that aren't exactly strangers to antitrust concerns.
"They're wrong," he said.
That may or may not be the case. But it's the real question Web 2.0 enthusiasts should be asking.
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