WSJ Column Misses the Mark on FTC’s Google Review
August 21st, 2012 | | SUBSCRIBE
“What people really want are answers,” Wall Street Journal columnist L. Gordon Crovitz recently opined in a column defending Google’s acquisition of the Frommer’s travel brand and criticizing the ongoing Federal Trade Commission investigation of the company. It’s not the first time Crovitz has bought into Google’s spin on its anticompetitive behavior and misrepresented the views of FairSearch.org.
Yes, we all like quick answers, but we also like ones we can trust. Google is a monopoly that controls more than 79% of all the searches in the U.S., and even more in mobile search. That means it has unique power to influence consumer behavior in the marketplace.
Thomas Barnett, co-chair of the Antitrust & Consumer Law Practice Group at Covington & Burling LLP and counsel to Expedia, explained the changing nature of Google’s business last year in testimony before Congress.
Google was purely a search engine with the incentive to direct each user as quickly as possible to the websites most likely to be most relevant to the user’s query. More recently, however, Google has expanded into other products and services that include the provision of information (such Google Places, Google News, Google Finance, or YouTube) and specialized “vertical” search services that operate in a specific area (such as Google Maps, Google Product Search, or Google Flight Search).
Barnett then explained what these changes mean for how the company does business.
Google’s incentives have changed. Now it has an incentive to steer users to its own web pages and away from competing websites to enable it to increase its revenues. Google earns additional revenues from selling advertisements on the Google pages to which it steers users. Second, by displacing competition in adjacent markets, Google reinforces its search dominance by stifling the development of nascent competitors.
Former Google exec Marissa Mayer acknowledged the company’s move to preference its own content a few years back at a conference, saying: “To the degree that we host content, we ultimately have a monetary incentive to drive people to those pages if those pages have ads on it.” (Yes, there’s video.)
Jeremy Stoppelman, CEO of Yelp, explained last year what Google’s move into content means for innovation: “Allowing a search engine with monopoly market share to exploit and extend its dominance hampers entrepreneurial activity.”
As Google comes to control more and more sources of content, consumers need to know Google is playing fair and not using its dominant position to disadvantage competitors.
That’s why it’s absolutely critical for the FTC and other government agencies around the world to closely examine Google’s business practices, particularly when it comes to how Google displays its own content. Enforcement of existing antitrust laws will ensure competition and innovation in online search flourishes in a way that benefits consumers. And just as importantly, it will also avoid the need for more burdensome and rigid government regulation that could hamper growth.
Posted in Deceptive Display, General, Search Manipulation
Tags: Congress, Expedia, Federal Trade Commission, Frommer's, Google Finance, Google Flight Search, Google Maps, Google News, Google Places, Jeremy Stoppelman, Marissa Mayer, Wall Street Journal, Yelp, YouTube