Is Google Really Anticompetitive?

Ever since Google was first registered as a domain back in 1997 it has had an undisputed, game changing impact on marketing and everyday life, and over the years they have faced a number of claims and lawsuits that they are anticompetitive.

The Federal Trade Commission (FTC) considered suing Google for antitrust violations in 2012. The allegations claimed that Google used a rival company’s content for it’s own websites which included using product reviews and rankings that belonged to Amazon. When Amazon instructed Google to stop, Google responded by threatening to remove Amazon from their search engine.

Needless to say in 2013 the FTC voted to drop the case, but since details were leaked in early 2015 there has been pressure to reopen the investigation.

In August 2015, Google came out publicly in a blog post rejecting claims made by the European Commission (EC) that they are anti-competitive. The claims laid out in a Statement of Objections (SO) claim that the paid advertising displays Google uses in it’s SERPs divert the attention and traffic of users away from organic results and shopping services.

These are allegations that Google denies and claims are ‘unfounded’ and that no evidence exists to support such claims and, using their own data they concluded that “product search is robustly competitive.”

The blog post, titled Improving Quality Isn’t Anti-Competitive, Google SVP and General Counsel Kent Walker responded to the SO with:

“We don’t think this format is anti-competitive. On the contrary, showing ads based on structured data provided by merchants demonstrably improves ad quality and makes it easier for consumers to find what they’re looking for. We show these ad groups where we’ve always shown ads (to the right and at the top of organic results) and we use specialised algorithms to maximise their relevance for users. Data from users and advertisers confirms they like these formats. That’s not “favouring” — that’s giving our customers and advertisers what they find most useful.”

The Statement of objections filed in April 2015 alleged that Google intentionally skews search results in favour of its own services – for example, if a user enters a query with the intent of shopping, the search results produced would be biased in such a way that Google Shopping (formerly Google Product Search) results are favoured.

The European Union (EU) and Google approached a settlement in 2014, however in June 2015 it became apparent that this deal had fallen through and the EU filed a 100-page charge against Google for antitrust violations and alleging antitrust violations that vary from local services, shopping and ecommerce searches and travel services. EU’s Antitrust Chief Margerthe Vestager, has the power to fine companies up to 10% of their annual revenue.

(Table taken from theeword.co.uk)
In Europe, Google has a 92% share of all searches conducted in Europe facing strong competition from Yahoo, Bing, Yandex and smaller, newer engines such as DuckDuckGo.

In the UK Google dominates the search engine landscape with 88.38% share (as of April 2015) and is more than comfortably ahead of Bing (11.43%) and Yahoo (10.07%).

In response to the SO, Walker has described the suggested EU remedies as “peculiar and problematic”. One suggestion being that Google allows a third party to control and manage Google’s paid advertising space. Google says that allowing a third party with an alternate agenda to manage this space would only harm and relevance of it’s own search results and that it isn’t legal or justifiable to force Google the “duty to supply its own rivals.”

“Our search engine is designed to provide the most relevant results and most useful ads for any query. The more relevant the ads, the better they perform in connecting potential buyers and sellers, the more value they generate for everyone.”

According to Walker, recent market trends indicate that the search industry is “competitive and dynamic” with new search engine start ups challenging the market. In the countries included in the EU’s allegations, Google delivered more than 20-billion organic, free clicks to competing ecommerce sites such as Amazon and other local shopping sites.
Google was given a deadline of August 17 to submit their response but was given a two week extension. The EU have also outlined that the reorganisation of the company and the formation of Alphabet would not have any impact on the claims made.

The allegations of anticompetitiveness made by the EU aren’t the first (and more than likely won’t be the last) made against Google, for example Yelp made claims that Google is providing inferior (and anticompetitive) results by favouring their own products.

Partnering with Tim Wu (the man who coined the phrase ‘net neutrality’) Yelp and co-authors alleges that Google is ‘knowingly degrading’ search results by including unnatural Google service results. The study finds that users are 45 percent more likely to click on organic search results (rather than the Google influenced results). This is ‘proof’ that Google is compromising the service that it offers for the sake of putting their own services in the shop window. The report then goes on to liken Google to a monopoly.

There is a common misconception that all you have to do is kick up a fuss and take action against a large company, like Google, to show that it has a monopoly within a specific market.

However having a monopoly isn’t illegal, it becomes illegal when the monopoly abuses its position in an anticompetitive way, and this behaviour has to be shown to be negatively impacting on users.

The idea that Google is purposely providing inferior search results is an important factor in proving antitrust, but is it possible to prove and is it really happening?

Search results aren’t an exact science and anyone working within the SEO industry knows this. It’s also fact that Google aren’t in the habit of openly talking about or disclosing exactly how their search algorithm works (including the Panda and Penguin updates) or which one of the 200 ranking factors carries most weight. In reality there are probably less than a handful of people outside of a circle within Google who understand exactly how the algorithm works and even then, they will be legally obliged to keep very quiet.

The claims made by Yelp et al are based on usage, a form of reverse engineering of a service they don’t actually understand. Scientifically speaking, this has got to be a flawed process. It’s also difficult to replicate search intent enough to represent a large sample.

Proving that users are being adversely affected using how much they click as a basis for investigation has a number of potholes. The largest pothole being that Google’s strategy is to reduce the number of clicks that a user has to make. The One Box aims to provide users with as much information surrounding their query without forcing them to have to make any clicks at all.

With this in mind, would this mean that a user who searched for Wayne Rooney’s date of birth and was presented with the below result is dissatisfied with the service?

So in this instance satisfaction was achieved without a single click. Yelp el al’s paper also focused on hyperlocal results which are known to be subjective.

The other side to the coin is of course that Google dominates the search market and has too much power for anyone to leave, as Amazon discovered in 2012/2013 and as did Spain when Google shut down all Spanish operations as the country attempted to pass a law requiring aggregators to pay publishers for linking to their content.

In recent months, Google has seen a shift in power as it loses much of its dominance to Facebook as the social network has improved its native video and content offerings and is rumored to be in the alpha stage of testing a new Twitter-style breaking news app. Facebook has also improved its semantic search engine, graph search.

It’s one thing to argue that because Google is a large company it abuses its power and promotes its own services ahead of others, but it’s another to argue that sanctioning Google will create a better, fairer marketplace for users.