Press Release

Google’s Monopoly Power Raises More Concerns


Fri, Sep 9, 2011 at 3:52 pm

    Google’s Monopoly Power Raises More Concerns

    More examples of Google’s powerful grip on the Internet surfaced this week and its acquisition of the venerable restaurant reviewer, Zagat, raised new concern about how the Internet giant will use its monopoly power in the future.

    Being a monopoly is not in itself illegal. If you developed the position naturally without breaking any laws, there’s no problem.  Some markets tend naturally toward monopoly.  But if you abuse monopoly power to your advantage, then you’re breaking the law and face consequences from the Department of Justice or the Federal Trade Commission.

    With around 70 percent of searches in the United States being done on Google, it’s clear Google has monopoly power over Internet search.  The question is whether the Internet giant is using that power illegally.  I’ve long argued it is.  Antitrust officials in Europe, the Texas Attorney General and now the FTC think there is substantial enough cause for concern that all have launched full-blown antitrust investigations.

    These aren’t case-by-case reviews of whether a particular proposed acquisition might be anti-competitive, but rather are probes into Google’s core business and method of operation.

    The week started with yet another example of Google’s power and its unwillingness to take responsibility to help innocent victims who are hurt by its activities.  We’ve all heard of the damage that is inflicted when, for no clear reason a company that had ranked high in the search results is inexplicably doomed to appear pages down. There is no reason, no explanation, no appeal.  Google has decided to tweak an algorithm.

    The latest example of Google’s high-handed arrogance was documented in a New York Times article, “Closed, Says Google, but Shops’ Signs Say Open.”   David Segal reported that it is “is surprisingly easy to report a business as closed in Google Places, the search giant’s version of the local Yellow Pages.”   The result is that businesses that are open, are reported as closed by Google.  Probably the mischief is done by underhanded competitors. Segal continued:

    “On Google Places, a typical listing has the address of a business, a description provided by the owner and links to photos, reviews and Google Maps. It also has a section titled ‘Report a problem’ and one of the problems to report is ‘this place is permanently closed.’ If enough users click it, the business is labeled ‘reportedly closed’ and later, pending a review by Google, ‘permanently closed.’ Google was tight-lipped about its review methods and would not discuss them.

    You’d think that before posting such a devastating description about a business, somebody might make a telephone call and verify the report.  Ah, but that would not “scale.” Let algorithms and blind “crowd-sourcing” carry the day.

    A little more than a year ago Consumer Watchdog’s study, “Traffic Report: How Google is Squeezing out Competitors and Muscling Into New Markets” outlined how Google’s positioning its own products and services ahead of competitors’ in Universal Search results had a detrimental effect on the competition.  The negative impact on Mapquest for example was clear.

    Thursday our friends at the Electronic Privacy Information Center (EPIC) sent a letter to the FTC expressing concern that Google’s “subjective, secretive ranking criteria” of video searches on YouTube favored Google’s own material about “privacy over non-Google material that would have ranked higher with the use of objective, transparent criteria.” EPIC’s letter concluded:

    “EPIC respectfully requests that the Commission, as part of its investigation into Google for potential antitrust violations, investigate the extent to which Google’s rankings preference its own content over information that is more newsworthy, more significant, and in fact of greater interest to Internet users. Google’s dominance of the search marketplace should not influence the marketplace of information and ideas to Google’s advantage.”

    Given the examples of Google’s arrogant, anti-competitive and self-serving behavior, the announcement of  a reported $125 million deal to buy the restaurant reviewer, Zagat, raises concerns about its plans for the future.

    Traditionally Google said its mission was to “organize the word’s information and make it universally accessible. ”  Increasingly Google is moving to own the information.  That would be the case with Zagat’s reviews.

    Based on Google’s  past practice, it seems all too likely that Google/Zagat reviews will soon get the top spot in search results, ahead of competing services like Yelp.  The executives in the Googleplex will explain away the algorithmic tweak that accomplishes this as all about “improving the users’ experience.”  In fact it will all be about using monopoly power to improve Google’s bloated bottom line.

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