Google becoming a monopolist? Are they the new Microsoft?

By December 14, 2010Google, Microsoft

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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  • martinowen

    Looking at the issue form the point of view of the local business you might be searching for…. A Google local result is preferable to a generic international booking site – who may take 25% commission for their booking. Google local is removing the intermediary and leaving more money with the actual service provider. The mk1 Web booking sites are those who are suffering. Quite so. The people who are getting the benefit are the accuracy of local information being presented to the user and the owner of the local business.

  • Google could easily use data it has access to, to identify growing trends in the content space and then use that to inform internal development. Once the service is built then it can grab attention (and marketshare) at negligible cost i.e. by ensuring strong organic rankings and free PPC. While they may argue that some of this data is readily accessible i.e. Google Trends, it is fair to say that the reliability of the data in the public domain is questionable. Search for ‘online calendar’ and you’ll see the strong positioning of the Google version (in both PPC and Organic). In terms of competition in the UK I do not think any of the potential competitors have much of an incentive to invest in their search products given the dominance Google has. Even if you did produce better search results (ultimately subjective) people are unlikely to switch and the cost of trying to market to them would be significant. The only way you might achieve it would be via a game changing play i.e. rewarding people (but of course that opens up likelihood of people behaving opportunistically).

  • A Google local result is preferable to a generic international booking site.

  • It is a fact that Google is free of competition as no one ever competed Google were able to create some damage. So, they are currently looking to advertise their own product. Local search proves my point exactly…Isn’t it?
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  • I agree. And in this situation the regulator needs to step on to keep them honest or we will all suffer.

  • If Google is always truly presenting the best result then the only people to complain will the be the less good sites who are losing out. Right now I’m not sure that is the case – many Yelp pages have more information than Google places, and as I understand it they are biased towards merchants who have claimed their Google Places page – and those might not be the best merchants.

  • AlanP

    Nic, it’s been clear wahile that “Page 1” results for consumer goods searches have been poor and I am now increasingly seeing it with info requests (lots of sites that copy Wikipedia content to draw you on, and just throw Ads at you).

    I know enough about search algorithms to know these are able to be edited out – non trivial, but far from impossible – which leads me to think its a will, not skill thing.

  • Maybe Steve Ballmer will ride to our rescue 🙂

  • Its always theirs first for everyone, in some stage of their life or another. This is evident on greedy less Google too…
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