Antitrust irony

YOU KNOW THE politics of antitrust enforcement have come full circle when Microsoft and AT&T are weighing in on behalf of the little guy. The two companies, along with media giant Time Warner Inc., are urging federal antitrust officials to scrutinize Google’s pending purchase of the ad agency DoubleClick, arguing that it would diminish competition in online advertising.

Microsoft has plenty of expertise in anti-competitive behavior, having been slapped with injunctions in the United States and Europe for trying to parlay its virtual monopoly over computer operating systems into other software markets. And not only was AT&T subject to a landmark antitrust settlement in 1982, its top executives used a series of mergers in the last two decades to gobble up potential competitors.

The pair argue that a combined Google and DoubleClick would have unsurpassed economies of scale and a vast amount of information about Web users’ behavior – assets that would help Google target ads more precisely, making it more attractive to advertisers and websites alike.

But as Microsoft urged less credibly during its own battles with the Justice Department, antitrust officials should bear in mind how quickly things change on the Net. Companies can shoot up (YouTube, for example) or fade (amihotornot.com) seemingly overnight. Remember that Yahoo bought Overture for $1.6 billion four years ago, yet that combination of online advertising powerhouses didn’t stop Google from becoming the behemoth it is today.

The market for advertising online is still in its infancy. Advertisers continue to experiment with ways to reach Web surfers, and they’re not yet sure how much to spend online instead of on television and other venues. And neither Google, DoubleClick nor anyone else dominate the emerging market for video advertising, which in the broadband era may emerge as the most effective and lucrative sector yet.

It’s telling that Microsoft, AT&T and Time Warner all tried to buy DoubleClick, only to be outbid by cash-happy Google. Although Google’s money shouldn’t buy it a free pass, antitrust officials should keep in mind the dynamic nature of the market they would regulate.