Digital Week in Review: FTC Said To Be Prepping Google Probe

Emily Kostic May 2, 2011 Category Agency News

Facebook Numbers Exceed Expectations Ahead of IPO; PCW
Facebook earnings are growing faster than previously expected, and are on track to exceed US$2 billion this year, according to a Wall Street Journal report.
The Takeaway: Increased demand and higher costs for its advertising is good news for Facebook’s bottom line. The company is now on track to exceed $2 billion in earnings before interest, taxes, depreciation and amortization in 2011, according to The Wall Street Journal. That is above the numbers from Facebook that circulated several months ago when Goldman Sachs Group and Russian investment firm Digital Sky Technologies invested in the company, it wrote.

Can We Please Stop Pretending That Microsoft’s Bing Is Doing Well?; Business Insider
Microsoft’s Bing search engine is indeed gaining some share of search queries in the US market (globally, Bing is nowhere). But it is gaining this share at an absolutely mind-boggling cost. Specifically, Microsoft is gaining share for Bing by doing spectacularly expensive distribution deals, deals that don’t even come close to paying for themselves in additional revenue.
The Takeaway: Based on an analysis of Microsoft’s financial statements, Bing is paying about 3X as much for every incremental search query as it generates in revenue from that query. What does that mean? It means that for every $1 Microsoft generates from each new search query it buys, it spends $3 to get it. (And that’s just direct costs–the costs of obtaining and processing the query. It doesn’t include sales and marketing, research and development, and general and administrative costs–all of which are subtracted from the -$2 Microsoft has already lost on every new query.)

FTC Said To Be Prepping Google Probe; The Huffington Post
The U.S. Federal Trade Commission has reportedly begun to prepare an investigation of Google, according to Bloomberg. The Mountain View web giant has come under scrutiny for its domination of the online search industry. Bloomberg reports that the FTC has allegedly started to tell high-tech companies to get information ready for upcoming inquiry, said “three people familiar with the matter.”
The Takeaway: Though Google rules online search and advertising, creating a successful case against the company will hinge upon the determination that the company has used its power to unjustly keep rivals from being able to compete.

YouTube Is Said to Be Near a Major Film Rental Deal; The New York Times
A two-year effort by YouTube, owned by Google, to get major Hollywood studios to offer their new-release movies for rental is coming closer to reality.
The Takeaway: Despite YouTube’s popularity — people view videos on the site two billion times a day — its film rentals do not appear to have gained much traction. This will likely turn around once major Hollywood studios get involved in the equation.


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