May 25, 2006

Is VeriSign's buyout of GeoTrust anti-competitive?

In the rather slack and happy marketplace for certificates, I mentioned that Verisign had decided to buy out GeoTrust for wads of cash. Nice news for the owners.

Dan Gillmor opposes this saying

This deal would be great for VeriSign, but terrible for the marketplace. It would consolidate one company's control over an essential part of the Internet infrastructure.

I realize the Bush administration doesn't enforce antitrust laws very often anymore. But this buyout should be blocked. It's anticompetitive, period.

Should it? Are VeriSign's actions anti-competitive? Or is the entire market anti-competitive? In the market for CAs and certificates, it seems to me the greater problem for the market for certs is that the market is structurally unsound. IMO, it is best modelled as a franchise, and not considered in any value or product terms.

So much so that it makes no difference whether it is one company ruling or many. Changing the market by blocking companies while leaving the structure unchanged is just fiddling while Rome burns. It's a textbook example of a Porterian nightmare, it deserves its final resting ground in a Kennedy case study. What do we get by pretending that congressmen know something about institutional economics when in practice they simply vote with their wallets in a favour market?

Better to keep them out of it, is my call. Let the marketplace bypass certs as it is doing.

Posted by iang at May 25, 2006 06:33 AM | TrackBack
Post a comment

Remember personal info?

Hit preview to see your comment as it would be displayed.