POOR Google. The company that set out to change the world of computing without becoming an imperial market force looks more like Microsoft every day. As Jeff Horwitz notes, the company is being sued over a number of claims of predatory pricing, and it's attracting increasing interest from the trust-busters in the Justice Department. Any day now we'll be seeing Larry Page and Sergey Brin doing the Bill Gates perp walk up Capitol Hill.

But Google has a defence ready—it's just not that big:

As might be expected, Google's presentation highlights the company's many good works and "don't be evil" corporate philosophy. But there's another element at front and center of the presentation: According to Warner and Kovacevich, their company holds only a 2.66 percent share of its total market. If that number seems low for the runaway success story of the Internet age, Google wants you to believe that it's just a question of market definition. Google rejects the idea that it's in the search advertising business, an industry in which it holds more than a 70 percent share of revenue. Instead, the company says that its competition is all advertising, a category broad enough to include newspaper, radio and highway billboards.

I think that this is both correct and misleading. On the one hand, there are a lot of substitutes for Google's advertising business, both traditional (newspaper and radio) and non-traditional (craigslist). It's obvious that Google's activities are related to these markets, because Google's activities have affected the profitability—and ultimately the business models—of a number of ad revenue-based sectors. On the other hand, that's somewhat irrelevant. Google's argument here is akin to a firm saying that it's not a monopolist because it isn't in the airline business, it's in the transportation business. But the competitive asymmetry is obvious; an airline can influence profitability for a competing rail line on short-haul trips, but a monopolist airline has a pretty free hand to price long-haul or overseas travel as it wishes.

In other words, the fact that Google can influence newspaper profitability doesn't mean that newspapers are providing any kind of competitive check on Google online. The online market is sufficiently different that Google can and does possess signficant market power. Now that alone doesn't mean that Google should face antitrust action from the government, as Mr Horwitz notes. It does suggest that to defuse antitrust sentiment, Google will have to come up with something better than "we're just not that big".