Impact of the AOL/Google Deal on Market Efficiency

By Scott

I thought I would share a comment I just posted to Did-It’s blog post regarding Kevin Lee’s analysis of the AOL/Google deal. With each passing day, I’m becoming more and more concerned with the precedent this deal will set. Perhaps I’m being a little alarmist with the comment below, but I think history justifies my concerns.

With respect to Google “helping?? to improve the visibility of AOL properties in the search engine result pages; I think this deal raises a very important question:

Will this set new precedent, or has the precedent already been set?

In other words, why are we so sure that Google has refrained from offering an “unfair?? advantage to large advertisers in the past?

To me, this is not as much of an ethical issue as it is a market efficiency issue.

In SEM, millions of companies, acting in their own selfish interest, in the absence of true unfair advantage, have been forced to focus on what’s best for the end-user to gain long-term advantage in both natural and sponsored listings.

The fact that small businesses represent more than 50% of online e-commerce sales supports the notion that the Internet does level the playing field, and by giving unfair advantage to big companies, with big pockets, the efficiency of this marketplace will be jeopardized.

This AOL deal could just be the beginning of a new movement, by the world’s biggest companies, to quash small businesses on the Internet’s “main street?? in favor of cookie-cutter lattes, bad bagels, and gardens with smelly olives.

Scott Smigler, Exclusive Concepts, Inc

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