"Affiliate marketing networks like Commission Junction and LinkShare are screwed. These networks also operate on a cost-per-action basis, mostly with online retailers. Even though some of them have scale, they will not have the ability to compete with Google on sheer size of network."
AdBrite coexists with Adwords despite having a similar CPC model. CJ and LinkShare can either choose to have a head-on fight with Google, and lose. Or they can innovate to provide the same product (PPA) with a better service.
It's true that the market has room for more than one player. It's just that if one of the players is Google, and since Google is offering significant integration advantages with Adwords (see comment #4 on the techcrunch article), then CJ and Linkshare are going to lose serious market share. The "800-lb gorilla" title is going to shift overnight. They are in a pickle, to be sure.
"Affiliate marketing networks like Commission Junction and LinkShare are screwed. These networks also operate on a cost-per-action basis, mostly with online retailers. Even though some of them have scale, they will not have the ability to compete with Google on sheer size of network."