Congrats, Mel Karmazin. You've won a key battle in the nearly ended war to merge your Sirius Satellite Radio
I'm serious. Now that the Justice Department has ruled that the twin towers of satellite radio can tie the knot, a door to monopolistic power has been pushed open for budding Rockefellers like DoubleGoo.
Sirius and XM, you see, accounted for all but a tiny fraction of the satellite radio market. By allowing the deal, Justice is, in effect, saying that it's OK to be a monopoly as long as you're monopolizing a market that's in trouble.
Actually, it's broader than that. Justice rarely gets in the way of any would-be monopoly. It was the Federal Trade Commission that moved to block Whole Foods'
The few that have caught the indirect eye of Justice have been nudged forward by others, such as when Advanced Micro Devices
But only Microsoft has faced the full wrath of regulators recently. It's a terrible sight, especially when a legitimate grievance is taken too far.
Madison Avenue is not enough
This time, Justice appears to be applying a Hippocratic standard to the combination. A "first, do no harm," litmus test that measures what impact, if any, a combined satellite radio empire would have on consumers. Quoting from the text of the ruling:
After a careful and thorough review of the proposed transaction, the Division concluded that the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers.
As a trust-busting former U.S. president might say, "Bully." Bully for Google. Consider the numbers. DoubleGoo has:
More than 50% of the search market.
More than 50% of the video market.
More than 70% of the search advertising market.
Impressive, yes? I'll say. Microsoft-inspired bellyaching aside, Google is in command of the markets it serves. Yet plenty of room remains for it to grow into a monopolist, especially if the Yahooligans decide not to accept a bear hug from Mr. Softy.
And it could happen a lot sooner than you think. Digital advertising is growing fast now, but ad spending usually tracks consumer spending and we already know that's headed lower. We know, too, that ads haven't helped Yahoo!
All of which is to say that -- like satellite radio -- Madison Avenue needs a fix-it plan. Acquisitions can be that plan and Google, already the dominant deliverer of digital pitches, has plenty of cash to put to work.
Yesterday's Justice Department might have stood in the way. But today, with Sirius X about to be a reality? I don't think so.
Don't forget to sign your names, Larry and Sergey.