Is the tech sector running scared of Google?
By Will BeckerApr 30th 2013
Last week, Google’s settlement offer to the EU Competition Commission was revealed. Predictably, the offer was pretty half-hearted. But the UK online comparison industry, which will be heavily affected, has so far remained publicly silent. Google was hoping to address the EU’s concerns that its promotion of its own vertical search services is anti-competitive (amongst other charges). Many of TotallyMoney.com’s peer group, money comparison sites, are greatly affected by Google’s vertical search services since they derive a big chunk of their traffic from Google’s search pages. So, I find the lack of public comment from our industry extraordinary. TotallyMoney.com, (much to our chagrin) doesn’t derive a big proportion of our visitors from Google so really I should be the last person sticking my head above the parapet to comment. Are our competitors not going to publicly contribute to this debate and let Google steer consumers away from them unchallenged? It’s such an important issue that it doesn’t make sense to me, except in light of fear of Google retribution. Has Google really got our industry running scared?
I wrote before about how Google’s over-promotion of its own services might not be in the consumer interest. Its comparison services arguably do not yet measure up to the competition and would likely rank behind them if Google’s usual signals were used to judge relevance and ranking. Google’s proposed compromise is to “clearly label” its own services and to make sure that competitive alternatives are listed nearby. We already know that won’t be enough. ICOMP, a group representing organisations affected by Google’s alleged anti-competitive behaviour, quickly issued a preliminary response: “too little, too late...It is clear that mere labelling is not any kind of solution to the competition concerns that have been identified.” I agree with that. Google’s AdWords search ads are ample demonstration of Google’s ability to “subtly” label to avoid consumer distraction. And making sure other vertical search services are listed nearby needn’t be any different from the status quo today. By putting itself first with a large, dynamic format, Google’s able to suck up a disproportionate share of traffic relative to the dowdy uncommercialised links below. Or it can even push those links “below the fold” (see image).
What should Google be required to do?
ICOMP argues: “Google should implement the same ranking policy to all websites. This should include their own vertical services, which currently have their ranking unfairly manipulated to appear at or near the top of search results.” That’d be tough on Google; it’s highly restrictive of their choice of how to present results to users, how to continue to refine their service. But I think that tough is necessary. Google, in my view, has overstepped the mark. In the UK, at least, it has a great responsibility because its market dominance means it’s so much more than just the search engine that it once was. It has become many people’s primary portal to everything they do on the web and Google is working to normalise that behaviour. The excellent, (free) Chrome browser encourages fewer people to type a domain directly for instance. The excellent (free) Android operating system likewise. We’re not just “searching”, Google is simply a terrific gateway/homepage/operating system. That potentially suffocates all vertical search competition, and allows Google to extract rents from a huge proportion of internet transactions. Crucially, while Google’s dominance in web search is indisputably because its service is superior, its potential dominance of vertical search derives not from a superior product, but from its dominance of web search. In fact, as I argued before, its vertical search services are inferior to the competition on some dimensions. They’re good enough that they don’t render Google’s entire search service inferior, but in our industry, at least, they’re not deserving of special promotion. They just earn more money for Google.
This is an issue of major importance. Google makes the web work well, but we shouldn’t automatically agree with Eric Schmidt that it’s empowering the UK tech sector. It’s a key part of web infrastructure but it’s also extracting huge, monopoly rents from the UK tech sector – an issue I’ll cover another time. So it’s vital that major comparison players put pressure on Google. And not just in private – that won’t lead to the kind of political pressure that would be helpful here. I’d like to see the major comparison sites commenting. They may be fearful that this would cause a rupture in their relationships with Google and possible commercial retribution. But I just don’t think Google’s that sort of company. Google’s not interested in a battle with us vertical search minnows anyway. Even Britain’s biggest web company is surely not on their global radar. Good for those companies who have publicly signed up with ICOMP, sure they’ve got their own interests at heart, but I think in this case their commercial interest is in line with the public interest.