Google And Competition Need Government Regulation

Google’s competitive practiced had dominated the headlines this week, thanks to the company’s “Search Plus Your World” features (extensive integration of Google+ into search results, but not extensive integration of competing social networks Twitter and Facebook), but it is really just the latest episode in the ongoing complaints against the Internet’s dominant search player.

Senators Herb Kohl and Mike Lee recently write the Federal Trade Commission a letter calling for investigation into Google’s practices. “Given the scope of Google’s market share in general Internet search, a key question is whether Google’s using its market power for steering users to its own blog products or secondary services and discriminating against other websites with which it compete,” the letter said.

The FTC already has an investigation going on, of course, and now, Bloomberg is reporting that this is expanding it to include Google+ scrutiny.

Do you think the government understands the Internet well enough to regulate it? Tell us what you think in the comments.

Something tells us recent events will only be used to fuel the fire of complaints to that effect, with Twitter and Facebook now speaking out against Google. Privacy watchdog EPIC is already considering a complaint to the FTC about Search Plus Your World, as well.

Competitors in the travel industry formed the FairSearch Coalition, initially to try and see Google’s acquisition of ITA Software (which would go on to power Google’s Flight Search) blocked. The acquisition was not blocked, but the group continues to campaign against what it considers to be Google’s abuse of power.

WebProNews spoke with Ben Hammer of FairSearch, who says what the group is focused on now that authorities in the U.S. and the European Union and around the world “have already established that Google has monopoly power in search on the Internet” would be: “is Google violating the law in ways that abuse that power to sort of tilt the playing field to itself, and basically restrict the options that consumers on the Internet have to find information, and then also get all the benefits that come from competition on the Internet?”

We asked Hammer what makes FairSearch think Google favors its products any more than any other search engine does. It is, after all, a fact that Bing’s results contain links to Microsoft’s own services. Bing director Stefan Weitz noted that the search engine’s goal is for users to stay on Bing’s site: “We’re taking Bing to a place you can actually accomplish things and do things, rather than send you off to those [other] sites,” he is quoted as saying.

“The group was formed by a number of companies that looked at how Google was already operating in other markets, and were concerned about how they’d operate in travel,” said Hammer. “As those concerns got greater awareness or were validated in some ways by the U.S. justice department that was reviewing that merger, we continued to hear from other companies in markets outside of travel – that said, ‘We’ve experienced this first hand. We know that Google takes our content and uses it to direct people back to their own services and away from ours. We know that Google puts links to its own products that compete with ours at the top of the page, eating up the most valuable real estate that people click on the most on its own pages. That makes it harder for us to get the traffic that we would normally get. We know that Google will bid against us in getting the most valuable advertising on its own pages…’”

Note, that this response didn’t exactly answer the question.

In November, Cyber Monday and Black Friday sites (including the official site of the group that created Cyber Monday — were removed completely from Bing’s search results). When asked specifically about the incident, he said he was not familiar with the topic, but that “this group from day one has been focused on what Google is doing with monopoly power.”

A different standard, he says, is applied to companies like Google because of this power.

“Most people understand that Microsoft [part of the coalition] and our other competitors complain constantly about Google, but they also know that Google builds our search results for users, not websites, and that the laws are designed to protect consumers, not competitors,” a Google spokesperson tells WebProNews. “The fundamental openness of the Internet means that consumers have infinite choices and can always switch to Bing, Facebook, Kayak, or Expedia with just one click.”

WebProNews also spoke with Berin Szoka, the President of free market think tank TechFreedom who has some criticisms of FairSearch itself.

“I think it’s unfortunate that a lot of the tech policy debates really come down to motives,” he says, noting that the coalition is simply an alliance of Google’s competitors.

“Microsoft’s Bing is, if anything, much more biased than Google. You might say that’s OK because they’re not a dominant firm, so maybe they can do things that Google can’t, but if bias is your only way of distinguishing what’s competitive and what’s not competitive, it really is a problem that the industry norm, which is bias, is in fact the very thing that FairSearch is complaining about. Really, the analysis has to go a lot more beyond that and ask where there’s some example of consumer harm.”

“In this case, it’s hard to actually see any consumers complaining, as opposed to just Microsoft’s compatriots and this coalition,” he adds.

He goes on to make the case that we should be skeptical anytime competitors try to use regulators for competition, not only because it can hurt a company like Google, but that it could hurt the next Google by setting precedents.

He also compares the whole thing to SOPA, saying, “There are few people here in D.C. that really understand how the Internet works well enough to even have an intelligent conversation about how government can improve things.”

“I think when you see a company like Facebook, as large as it is, and as much of a lead in that area as it does, teaming up with a company like Microsoft, I think that is in fact the way competition works. It doesn’t happen necessarily in this space directly.”

Google has a site dedicated to what it calls “facts about Google and competition.” On the site, Google says, “As Google has grown, we’ve faced more questions about our approach to competition. This kind of scrutiny goes with the territory when you’re a large company. However, we’ve always worked hard to ensure that our success is earned the right way – through technological innovation and great products, rather than by locking in our users or advertisers, or creating artificial barriers to entry.”

“It takes a broadband connection to get onto the Internet, but consumers don’t need Google to access the web,” Google continues. “Google serves more like a GPS on the Internet highway—not an on-ramp. It helps people get around, but it’s not necessary. If someone knows where he wants to go, he can navigate to those destinations directly, whether it’s Craigslist, the New York Times websites, or icanhascheezburger.com. But, if he doesn’t know where he’s going, he can use a ‘GPS’ (a search engine like Google or Bing), a ‘map’ (a list of links or portal like Yahoo’s directory), directions or recommendations from a friend (links from Twitter or Facebook friends), or even a mobile application version of the service (for example, the NY Times iPhone application). Search engines are popular and useful, but they’re just one of many ways to navigate the web.”

“The Internet was built on fundamentally open architecture,” Google says. “Anyone at home with a computer and a web connection can type in the address of a website and navigate straight to that site. Google is one click away from losing every customer. There are virtually no switching costs, and there are many other valuable web services competing for traffic. If someone wants to use a competing search engine all they need to do is type ‘www.yahoo.com’ into a web browser.”