Last week Joshua Wright posted a critique of my January 2011 Measuring Bias in ‘Organic’ Web Search (with Ben Lockwood). Some quick thoughts –
First, there’s some important common ground here: Wright and I both find that Google shows many of its own results, and does so in prominent positions.
Now, Wright says Bing presents its own results slightly often more than Google does so. In contrast, important portions of my analysis indicated that own-service links are particularly prominent at Google. Why the gap between my analysis and Wright’s? One key challenge is the lack of a natural basis of comparison. Suppose Google controlled 50% market share while five competitors held 10% each. Then we could compare Google’s results to a possible consensus among the others — better revealing whether and when Google favors its own services. But in fact the runners-up are much smaller: after Bing+Yahoo, we reach smaller firms like Blekko, each with market share far below 1%. Without a competitive marketplace providing a baseline, comparisons between search engines are necessarily difficult. So it’s no surprise that the numbers come out differently depending on the approach.
Wright criticizes my decision to examine brief, popular searches rather than a selection of actual user searches. But searches are messy and idiosyncratic: Each day at Google, 20% to 25% of searches are completely new, never before seen. Wright favor analysis of searches seen in AOL logs, but this method tends to emphasize unusual searches like "dog who urinate on everything" and "you’re pregnant he doesn’t want the baby" (the first two examples in Paul Boutin’s 2006 examination of AOL logs). In contrast, I chose to focus on short, simple searches where biased results have a particularly broad effect.
Wright argues that if Bing presents its own results as often as Google does, then own-service links must be pro-competitive, raising no antitrust concern. I disagree. The same behavior can have very different consequences when performed by a dominant firm versus a smaller competitor. Indeed, section 2 of the Sherman Act only applies to companies with market power. Meanwhile, companies without market power may engage in the exact conduct that Section 2 prohibits. For example, Microsoft faced antitrust litigation when it included Internet Explorer in Windows, even as Apple permissibly included its Safari browser in MacOS.
Wright suggests that antitrust investigation of Google is stillborn for lack of consumer harm. I see two problems with this argument. First, competitive foreclosure is a sufficient cause for concern. Certainly Google’s own-service links can stymie competition: It’s a tall order to start the next Yelp if Google may adjust its algorithm to always put Google Places first. From 2006 through June 2011, ads from Google Checkout merchants featured a special logo — a benefit unavailable to merchants using competing checkout systems (like PayPal). Even the perception of such favoritism can disrupt competition: In June 2011 a Google Offers salesperson told a merchant that signing up with Offers would provide "SEO benefits" to make the merchant "number one in Google." Google quickly disavowed that statement, but on Wright’s theory, this tactic would be entirely permissible. Imagine the harm to Groupon, LivingSocial, and fellow travelers if Google gave Offers advertisers the favored map placement that AdWords advertisers already enjoy. In my view, that’s the wrong result. New providers necessarily rely on Google to reach users, but their business plans won’t work if Google can systematically favor its own services at competitors’ expense.
Second, when Wright says there’s no consumer harm, he has the wrong consumers in mind. The folks paying the bills for Google are advertisers — and advertisers pay a high price that has only grown as Google gains market share.
Ultimately, Google’s antitrust problems go far beyond algorithmic search preference. Google’s harsh treatment of advertisers smacks of market power; an advertiser with a real choice of ad networks would not accept Google’s high prices and one-sided terms. Google’s dealings with mobile handset makers similarly draw on Google’s dominance: If there were numerous popular third-party operating systems for mobile handsets, Google wouldn’t be able to compel manufacturers into dropping third-party software like Skyhook; and if there were numerous strong vendors for search, maps, videos, and other core mobile apps, Google wouldn’t be able to bundle its mobile apps to compel handset manufacturers to take all of these as a condition of preinstalling any of them. At every turn, we see Google leveraging its dominance in certain sectors to shore up its position in others – and that’s a n approach that rightly raises significant antitrust concern.