Google becoming a monopolist? Are they the new Microsoft?

By December 14, 2010 13 Comments

It looks like Google is increasingly favouring its own properties in its search results.  Techcrunch and the Wall Street Journal have both run articles to this effect in the last couple of days citing examples in local search.  It appears that Google is promoting Google Places at the expense of Yelp, Citysearch, TripAdvisor and others.  According to TechEYE Stephen Kaufer, CEO of TripAdvisor said:

since Google had made changes to the way the search engine displayed search results for local business he had lost 10 percent of his online business.

"Google does seem to be chasing us and I do not like it one bit," Kaufer said, adding that he had been in ongoing negotiations with the firm to address the situation.

Google has responded saying that they are focused on delivering the best results for users, but tellingly they ended that response by saying:

If we fail our users, competition is just a click away.

In the UK at least Google is a de facto monopoly and it isn’t true that there is a meaningful alternative which is ‘just a click away’.  Citing competition in this manner is what you’d expect from a monopolist who doesn’t fear competition.  It is no accident that Google is the subject of multiple enquiries about its market dominance and manipulating search results in this way is the most blatant example I’ve seen of Google abusing its market position.

That said, I think this conflict of interest problem has been coming for some time.  The trend in search is very much towards providing information and content direct on the search results page and given Google plays in both content and search it was always likely that they would end up favouring their own properties at some point, particularly given that they are arguably better than the competition.

The risk for Google is that opposition from the competition authorities and the public will rise and will feed off each other leading ultimately to regulation and customer defection.  However dominant and strong Google is today and however good their products are today (and they are good) if people start to use them only because they feel they have no choice resentment will rise and they will become vulnerable to competition.

Right now that competition might come from Bing, but a more likely scenario is that companies like Amazon, Kayak and Facebook will slice off a meaningful percentage of queries for themselves, and they might even be the most valuable set of queries.

I mentioned Microsoft in the title to this post because there are many parallels between where Google is today and the period when Microsoft started selling Office and other apps as well as Windows.  Microsoft started out selling a great OS and then as they moved into desktop apps it made sense to improve their performance by tightly integrating with their OS – that was great for users, but effectively locked out the competition and pretty soon the whole planet was using MS Office.  Google started out selling general search and now as they move into local search it makes sense to integrate it with their general search – that is arguably great for users, but effectively locks out the competition…..

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