FCC Comment on Expanding Consumers’ Video Navigation Choices

Disclosure: I serve as a consultant to various companies that compete with Google. I filed the underlying FCC comment at the request of the Future of TV Coalition. But no client directed my comment or had the right to revise it before submission.

Today I filed comments in the FCC’s ongoing proceeding Expanding Consumers’ Video Navigation Choices. The FCC calls the initiative "unlock the box" — allowing consumers to buy set-top boxes from any of a variety of competitive manufacturers, not just leasing from their cable companies.

On one hand, the FCC’s proposal benefits from favorable experience three decades ago. It’s hard to overstate the benefits of the 1982 FCC rule that granted consumers the right to supply their own telephone equipment — crucially including fax machines and modems.

But in the context of set-top boxes, the FCC’s approach would have implications far beyond hardware design and user interface. As I point out in my comment, alternative set-top boxes might add new forms of advertising — not just in channel guides, but in prerolls, superimposed panels, and even insertions within commercial breaks. Meanwhile alternative set-top boxes could even remove existing advertising — a particularly serious intrusion into the advertising-based model of most television programming. These tactics would undermine the basic business model and value exchange of advertising-supported video programming. What advertiser would pay top dollar to advertise in a television show if widely-used alternative set-top boxes remove the ad and substitute other ads for, no doubt, the advertiser’s direct competitors?

As it turns out, the FCC is well aware of these problems. In the FCC’s February 18, 2016 Open Commission Meeting, Ars Technica’s Jon Brodkin asked FCC Chairman Tom Wheeler about advertising issues. Their exchange:

Q: I want to ask about the issue of advertising in third-party set top boxes. You said nothing will change that. What prevents a set top box maker from putting advertising in? …

A: The rule will prohibit it. You need to have the sanctity of the content. Nobody is going to insert ads into it. Nobody is going to make a split screen where they’re putting ads next to it. Nobody is going to say it’s a frame around it, where you can say “Go to Joe’s Auto Repair.” It’s going to require the sanctity of the content be passed through unchanged.

Q: Does that include the neighborhood agreements?

A: Programming agreements are included. Programming agreements are part of the sanctity of the content. … That’s still there.

Q: So the rule will specifically prohibit extra advertising?

A: Yes sir.

(See minute 129 of the meeting video.)

Despite the clarity of Wheeler’s response, the FCC’s NPRM provides no such assurance — zero protection whatsoever against extra advertising or, for that matter, removal of existing advertising. One might that hope principles of copyright would disallow those tactics. But copyright law has struggled to address intermediaries that insert and remove advertising. (Consider a decade of adware cases, where advertisers’ ads often covered their competitors’ sites.) So if the FCC is silent on the permissibility of adding, removing, or changing advertising, it’s likely that new boxes will attempt all those methods.

Relatedly, the FCC’s proposal offers disproportionate benefits to Google, whose dominance is at this point beyond dispute. For one, Google could offer an alternative set-top box that delivers advertisements targeted based on users’ activities in Google Search, Gmail, Maps, and more. Furthermore, Google’s lawyers have taken expansive views of fair use — making them particularly well-positioned to argue the permissibility of removing other companies’ advertisements and inserting their own. To date, television has been one of the few electronic advertising spheres where Google is not dominant — so if the FCC’s approach helps Google grow there, advertisers dissatisfied with the company would have even fewer alternatives.

My bottom-line: Whatever innovations and cost-savings might result from alternative set-top boxes, I don’t see how they can outweigh the clear concerns in advertising, copyright, program integrity, and competition.

Further details in my full comments to the FCC:

Comment on Expanding Consumers’ Video Navigation Choices – Benjamin Edelman – May 23, 2016.

EC Statement of Objections on Google’s Tactics in Mobile

Today the European Commission announced a Statement of Objections to Google’s approach to Android mobile licensing and applications. Broadly, the EC’s concerns arise from Google’s contractual restrictions on phone manufacturers — requiring them to install certain apps, in certain settings, if they want other apps; preventing customizations that manufacturers would prefer; requiring manufacturers to set Google Search as the sole and default search provider.

These questions are near and dear to me because, so far as I know, I broke the story of Google’s Mobile Application Distribution Agreement contracts, the previously-secret documents that embody most of the restrictions DG Comp challenges. I described these documents in a February 2014 post:

Google claims that its Android mobile operating system is “open” and “open source”–hence a benefit to competition. Little-known contract restrictions reveal otherwise: In order to obtain key mobile apps, including Google’s own Search, Maps, and YouTube, manufacturers must agree to install all the apps Google specifies, with the prominence Google requires, including setting these apps as default where Google instructs. It’s a classic tie and an instance of full line forcing: If a phone manufacturer wants any of the apps Google offers, it must take the others also.

I offered the HTC MADA and Samsung MADA, both as they stood as of year-end 2010. So far as I know, these are the only MADA’s available on the web to this day; while Google now admits that MADAs exist (a fact unknown to the public before I posted these documents), no one has circulated any newer versions. Occasional news reports discuss new versions, most notably a September 2014 piece from The Information’s Amir Efrati reporting new and growing requirements embodied in "confidential documents viewed by The Information" but unfortunately not available to the public. So the documents I posted remain the best available evidence of the relevant restrictions.

While news reports and the EC SO offer some sense of MADA requirements, there’s no substitute for reading the plain language of the underlying contracts. I cited and quoted key sections in my 2014 piece:

"Devices may only be distributed if all Google Applications [listed elsewhere in the agreement] … are pre-installed on the Device." See MADA section 2.1.

The phone manufacturer must “preload all Google Applications approved in the applicable Territory … on each device.” See MADA section 3.4(1).

The phone manufacturer must place “Google’s Search and the Android Market Client icon [Google Play] … at least on the panel immediately adjacent to the Default Home Screen,” with "all other Google Applications … no more than one level below the Phone Top." See MADA Section 3.4(2)-(3).

The phone manufacturer must set “Google Search … as the default search provider for all Web search access points.” See MADA Section 3.4(4).

Google’s Network Location Provider service must be preloaded and the default. See MADA Section 3.8(c).

"Naked exclusion" and impeding competition

Competition lawyers offer the term "naked exclusion" for conduct unabashedly intended to exclude rivals, for which a dominant firm offers no efficiency justification. That diagnosis matches my understanding of these tactics, as the MADAs give no suggestion that Google is trying to help consumers or anyone else. Rather, the MADAs appear to be intended to push Google’s own businesses and prevent competitors from getting traction.

Consider the impact on competing firms. Suppose some competing app maker sought to increase use of one of its apps, say Yahoo seeking greater usage of Yahoo Maps. Yahoo might reasonably offer a bonus payment to, say, Samsung as an incentive for featuring the Yahoo Maps app on new phones sold via, say, AT&T. To encourage users to give Yahoo Maps a serious try, Yahoo would want its service to be the only preinstalled mapping app; otherwise, Yahoo would rightly anticipate that many users would discard Yahoo Maps and go straight to the familiar Google Maps. For $2 per phone, Samsung might be happy to remove Google Maps and preinstall Yahoo Maps, figuring any dissatisfied consumer could download Google Maps. And if some of that $2 was passed back to consumers via a lower price for purchasing the phone, consumers might be pleased too. Crucially, Google’s MADA prevents this effort and others like it. In particular, the MADA requirements prevent Samsung from removing any of the listed Google apps, Google Maps key among them. And if Samsung can only offer Yahoo the option to be a second preinstalled mapping app, it’s much less clear that Yahoo is willing to pay. In fact, based on Yahoo’s reasonable projections of user response, there may no longer be a price that Yahoo is willing to pay and Samsung is willing to accept.

The first key effect of the MADAs, then, is that they prevent new entrants and other competitors from paying to get exclusive placement. This impedes competition and entry, and streamlines Google’s dominance.

Meanwhile, the MADAs correspondingly reduce pressure on Google to provide market-leading functionality and quality. Some competing apps might be a little bit better than Google’s offerings, and a phone manufacturer might correctly assess that consumers would prefer those alternatives. But phone manufacturers can’t switch to those offerings because the MADA disallows those changes. This barrier to switching in turn discourages competing app makers from even trying to compete. After all, if they can’t get traction even when their apps are genuinely better, they won’t be able to raise capital and won’t develop the improvements in the first place.

Finally, the MADAs prevent Google from needing to pay to get and retain preferred placements and defaults. On desktop computers, search engines pay to be a browser’s default — giving additional revenue to a computer manufacturer, and reducing device cost. But MADAs allow Google to require that it be the default search provider, and require that its apps be preinstalled and prominent, all without payment to phone manufacturers.

Assessing Google’s responses

This week reporters conveyed to me Google’s responses to the EC’s SO. First, Google argued that it is merely requiring that its apps be preinstalled, not ruling out the possibility that other apps may be preinstalled too. That defense has three key weaknesses.

  • Some MADA provisions explicitly do require that Google functions be the sole or default in their spheres. Consider the requirement that Google Search be the default search provider for all Web search access points (MADA Section 3.4(4)) and the requirement that Google’s Network Location Provider service must be preloaded and default (MADA Section 3.8(c)). One can hardly overstate the importance of these two functions. Search is the most natural way to monetize users’ activities and is the natural gateway to other functions and services. Meanwhile, location providers are the crucial translation between a phone’s sensors and its inferences about the user’s geographic location — collecting and aggregating location data with exceptional commercial value though of course also special privacy consequences. In these two crucial areas, Google does exactly what its defense claims it does not — requiring not only that its services be installed, but that they be installed as the sole and exclusive default. We are fortunate to be able to read the MADAs (HTC, Samsung) to see these requirements embodied in contract language.
  • The possibility of a more intrusive restriction does nothing to deny the harm from the approach Google chose. Google sketches a different restriction on competition that would cause even larger harm — requiring not just preinstallation of Google apps but explicit contractual exclusion of competitors. But the possibility of a worse alternative does not mean Google’s approach is permitted.
  • Google’s argument runs counter to settled European competition law. Consider experience from prior EC proceedings against Microsoft. Microsoft always allowed OEM’s to install other web browsers and other media players. Nonetheless Microsoft faced EC penalties for requiring that OEM’s include Microsoft’s browser and media player. The law of the land, for better or for worse, is that dominant firms may not invoke this approach.

Second, Google told reporters that its tactics are necessary to protect the health of the Android ecosystem and to build and retain consumer trust. But this argument strains credibility. Would the Android ecosystem truly be less reliable or trustworthy if some phones came with, say, Yahoo Maps? The better assessment is that Google imposes MADA restrictions to advance its business interests. To evaluate these alternative understandings of Google’s conduct, one might depose Google employees or better yet read contemporaneous documents. Beginning in 2010, Skyhook litigation revealed some of Google’s internal email discussions in this area, revealing reveal that their purpose is competitive — "using compatibility as a club to make them [phone makers] do things we want." Further evidence against Google’s ecosystem/trust argument comes from Android’s other notable ecosystem weaknesses — from brazenly counterfeit apps to confusingly inconsistent user interfaces. Allowing those problems to fester for years, Google cannot plausibly claim significant consumer confusion or ecosystem harm from, say, a competing maps app clearly labeled as such.

Third, Google argued that dissatisfied phone manufacturers can always install core Android without any Google Mobile Services and hence without the MADA obligations. But this approach ignores commercial realities. In wealthy markets such as the EC and the US, few customers would accept an Android phone without Google Play, the app store necessary to install other apps. Without Google Play, consumers cannot get the Facebook app, the Pandora, Uber, and so on. Such a limited phone would be a nonstarter for mainstream users. Amazon’s Fire flop reveals that even Amazon, with a trusted name and distinctive positioning, could not offer a viable phone without Google Play access to install other apps. Conversely, consider how much more attractive users would have found Fire had they been able to use Google Play to get the benefit of third-party apps alongside the distinctive features Amazon provided. But Google’s MADA exactly prohibited that approach — converting a promising potential competitor into a weakling that quickly collapsed.

Looking ahead

One crucial next step is discussion of remedies — what exactly Google must do in order to correct the distortions its MADAs have created. Bloomberg reports Google reducing the number of apps phone manufacturers are required to preinstall and feature — but dropping losers like Google Plus is just tinkering around the edges.

The obvious first step is that Google should withdraw the MADA restrictions. With no more MADA, phone manufacturers could take the distinct Google apps that they want, and not others. Google has no proper reason to prevent a phone manufacturer from combining Google Play with, say, Yahoo Maps and Bing Search. Indeed, with Google’s search dominance increasingly protected from competition as Yahoo stumbles and Microsoft withdraws, these combinations are the most promising way to increase competition in mobile.

Next, it goes nearly without saying that Google should pay a substantial penalty. Billion-dollar fines have become routine in Europe’s competition cases against American tech giants, including for conduct far less brazen and less obviously calculated to impede competition. Anything less at this point would seem to be a slap on the wrist undermining the importance of the EC’s effort.

Most of all, a full remedy requires affirmative efforts to undo the harm from Google’s years of improper conduct. After Microsoft’s browser tactics were deemed unlawful, the company was for five years obliged to present a "ballot box" in which consumers affirmatively chose among the five most popular browsers — presented in random order with no default. It’s easy to envision a similar approach in mobile: Upon first activating a new smartphone, a user would choose among the top five maps apps, top five search engines, top five geolocation services, and so forth. These obligations would most naturally track all the verticals that Google has targeted through its MADA restrictions. As users saw these options, competing app makers would get a prominent opportunity to attract users at modest expense — beginning to restore the competition that Google has improperly foreclosed.

Finally, a remedy should undo the secrecy Google has imposed. I wrote in 2014 about the remarkable steps required to obtain the MADAs — documents whose very existence was purportedly confidential, and whose terms contradicted the public statements (and sworn testimony) of Google’s leaders. This secrecy prevented app developers, competitors and the general public from knowing and debating Google’s tactics and raising concerns for a prompt regulatory response. Furthermore, secrecy emboldened Google to invoke methods that would have been less attractive had they been subject to public scrutiny from the outset. As part of competition proceedings, Google should be compelled to publish key contracts, facilitating analysis and discussion by the interested public. Meanwhile, as John Gapper writes in the FT, it’s ironic for Google to claim that EU officials "could be better informed" when Google itself limits distribution of the most important documents.

Beyond the FTC Memorandum: Comparing Google’s Internal Discussions with Its Public Claims

Disclosure: I serve as a consultant to various companies that compete with Google. That work is ongoing and covers varied subjects, most commonly advertising fraud. I write on my own—not at the suggestion or request of any client, without approval or payment from any client.

Through a FOIA request, the Wall Street Journal recently obtained–and generously provided to the public–never-before-seen documents from the FTC’s 2011-2012 investigation of Google for antitrust violations. The Journal’s initial report (Inside the U.S. Antitrust Probe of Google) examined the divergence between the staff’s recommendation and the FTC commissioners’ ultimate decision, while search engine guru Danny Sullivan later highlighted 64 notable quotes from the documents.

In this piece, I compare the available materials (particularly the staff memorandum’s primary source quotations from internal Google emails) with the company’s public statements on the same subjects. The comparison is revealing: Google’s public statements typically emphasize a lofty focus on others’ interests, such as giving users the most relevant results and paying publishers as much as possible. Yet internal Google documents reveal managers who are primarily focused on advancing the company’s own interests, including through concealed tactics that contradict the company’s public commitments.

About the Document

In a 169-page memorandum dated August 8, 2012, the FTC’s Bureau of Competition staff examined Google’s conduct in search and search advertising. Through a Freedom of Information Act (FOIA) request, the WSJ sought copies of FTC records pertaining to Google. It seems this memorandum was intended to be withheld from FTC’s FOIA request, as it probably could have been pursuant to FOIA exception 5 (deliberative process privilege). Nonetheless, the FTC inadvertently produced the memorandum — or, more precisely, approximately half the pages of the memorandum. In particular, the FTC produced the pages with even numbers.

To ease readers’ analysis of the memorandum, I have improved the PDF file posted by the WSJ. Key enhancements: I used optical character recognition to index the file’s text (facilitating users’ full-text search within the file and allowing search engines to index its contents). I deskewed the file (straightening crooked scans), corrected PDF page numbering (to match the document’s original numbering), created hyperlinks to access footnotes, and added a PDF navigation panel with the document’s table of contents. The resulting document: FTC Bureau of Competition Memorandum about Google — August 8, 2012.

AdWords API restrictions impeding competition

In my June 2008 PPC Platform Competition and Google’s "May Not Copy" Restriction and July 2008 congressional testimony about competition in online search, it seems I was the first to alert policy-makers to brazen restrictions in Google’s AdWords API Terms and Conditions. The AdWords API provided full-featured access to advertisers’ AdWords campaigns. With both read and write capabilities, the AdWords API provided a straightforward facility for toolmakers to copy advertisers’ campaigns from AdWords to competing services, optimize campaigns across multiple services, and consolidate reporting across services. Instead, Google inserted contractual restrictions banning all of these functions. (Among other restrictions: "[T]he AdWords API Client may not offer a functionality that copies data from a non-AdWords account into an AdWords account or from an AdWords account to a non-AdWords account.")

Large advertisers could build their own tools to escape the restrictions. But for small to midsized advertisers, it would be unduly costly to make such tools on their own — requiring more up-front expenditure on tools than the resulting cost-savings would warrant. Crucially, Google prohibited software developers from writing the tools once and providing them to everyone interested — a much more efficient approach that would have saved small advertisers the trouble and expense of making their own tools. It was a brazen restriction with no plausible procompetitive purpose. The restriction caused clear harms: Small to midsized advertisers disproportionately used only Google AdWords, although Microsoft, Yahoo, and others could have provided a portion of the desired traffic at lower cost, reducing advertisers’ overall expense.

Historically, Google staff disputed these effects. For example, when I explained the situation in 2008, AdWords API product manager Doug Raymond told me in a personal email in March 2008 that the restrictions were intended to prevent "inaccurate comparisons of data [that] make it difficult for the end advertiser to understand the performance of AdWords relative to other products."

But internal discussions among Google staff confirm the effects I alleged. For example, in internal email, Google director of product management Richard Holden affirmed that many advertisers "don’t bother running campaigns on [Microsoft] or Yahoo because [of] the additional overhead needed to manage these other networks [in light of] the small amount of additional traffic" (staff memo at p.48, citing GOOGWOJC-000044501-05). Holden indicated that removing AdWords API restrictions would pave the way to more advertisers using more ad platforms, which he called a "significant boost to … competitors" (id.). He further confirmed that the change would bring cost savings to advertisers, noting that Microsoft and Yahoo "have lower average CPAs" (cost per acquisition, a key measure of price) (id.), meaning that advertisers would be receptive to using those platforms if they could easily do so. Indeed, Google had known these effects all along. In a 2006 document not attributed to a specific author, the FTC quotes Google planning to "fight commoditization of search networks by enforcing AdWords API T&Cs" (footnote 546, citing GOOGKAMA-0000015528), indicating that AdWords API restrictions allowed Google to avoid competing on the merits.

The FTC staff report reveals that, even within Google, the AdWords API restrictions were controversial. Holden ultimately sought to "to eliminate this requirement" (key AdWords API restrictions) because the removal would be "better for customers and the industry as a whole" since it would "[r]educe friction" and make processes more "efficient" by avoiding time-consuming and error-prone manual work. Holden’s proposal prompted (in his own words) "debate" and significant opposition. Indeed, Google co-founder Larry Page seems to have disapproved. (See staff report p.50, summarizing the staff’s understanding, as well as footnote 280 as to documents presented to Page for approval in relaxing AdWords API restrictions; footnote 281 reporting that "Larry was OK with" a revised proposal that retained "the status quo" and thus cancelled the proposed loosening of restrictions.) Hal Varian, Google’s chief economist, also sought to retain the restrictions: "We’re the dominant incumbent in this industry; the folks pushing us to develop our PAI will be the underdogs trying to unseat us" (footnote 547, citing GOOGVARI-0000069-60R). Ultimately Holden’s proposal was rejected, and Google kept the restrictions in place until FTC and EC pressure compelled their removal.

From one perspective, the story ends well: In due course, the FTC, EC investigators, and others came to recognize the impropriety of these restrictions. Google removed the offending provisions as part of its 2013 commitments to FTC (section II) and proposed commitments to the EC (section III). Yet advertisers have never received refunds of the amounts they overpaid as a result of Google’s improper impediments to using competing tools. If advertisers incurred extra costs to build their own tools, Google never reimbursed them. And Google’s tactics suppressed the growth of competing search engines (including their recruitment of advertisers to increase revenue and improve advertising relevance), thereby accelerating Google’s dominance. Finally, until the recent release of the FTC staff report, it was always difficult to prove what we now know: That Google’s longstanding statements about the purpose of the restrictions were pretextual, and that Google’s own product managers knew the restrictions were in place not to improve the information available to advertisers (as Raymond suggested), but rather to block competitors and preserve high revenue from advertisers that used only Google.

Specialized search and favoring Google’s own services: benefiting users or Google?

For nearly a decade, competitors and others have questioned Google’s practice of featuring its own services in its search results. The core concern is that Google grants its own services favored and certain placement, preferred format, and other benefits unavailable to competitors — giving Google a significant advantage as it enters new sectors. Indeed, anticipating Google’s entry and advantages, prospective competitors might reasonably seek other opportunities. As a result, users end up with fewer choices of service providers, and advertisers with less ability to find alternatives if Google’s offerings are too costly or otherwise undesirable.

Against this backdrop, Google historically claimed its new search results were "quicker and less hassle" than alternatives, and that the old "ten blue links" format was outdated. "[W]e built Google for users," the company claimed, arguing that the design changes benefit users. In a widely-read 2008 post, Google Fellow Amit Singhal explained Google’s emphasis on "the most relevant results" and the methods used to assure result relevance. Google’s "Ten things we know to be true" principles begin with "focus on the user," claiming that Google’s services "will ultimately serve you [users], rather than our own internal goal or bottom line."

With access to internal Google discussions, FTC staff paint quite a different picture of Google’s motivations. Far from assessing what would most benefit users, Google staff examine the "threat" (footnote 102, citing GOOG-ITA-04-0004120-46) and "challenge" of "aggregators" which would cause "loss of query volumes" to competing sites and which also offer a "better advertiser proposition" through "cheaper, lower-risk" pricing (FTC staff report p.20 and footnote 102, citing GOOG-Texas-1486928-29). The documents continue at length: "the power of these brands [competing services] and risk to our monetizable traffic" (footnote 102, citing GOOG-ITA-05-0012603-16), with "merchants increasing % of spend on" competing services (footnote 102, citing GOOG-ITA-04-0004120-46). Bill Brougher, a Google product manager assessed the risks:

[W]hat is the real threat if we don’t execute on verticals? (a) loss of traffic from Google.com because folks search elsewhere for some queries; (b) related revenue loss for high spend verticals like travel; (c) missing opty if someone else creates the platform to build verticals; (d) if one of our big competitors builds a constellation of high quality verticals, we are hurt badly

(footnote 102, citing GOOG-ITA-06-0021809-13) Notice Brougher’s sole focus on Google’s business interests, with not a word spent on what is best for users.

Moreover, the staff report documents Google’s willingness to worsen search results in order to advance the company’s strategic interests. Google’s John Hanke (then Vice President of Product Management for Geo) explained that "we want to win [in local] and we are willing to take some hits [i.e. trigger incorrectly sometimes]" (footnote 121, citing GOOG-Texas-0909676-77, emphasis added). Google also proved willing to sacrifice user experience in its efforts to demote competing services, particularly in the competitive sector of comparison shopping services. Google used human "raters" to compare product listings, but in 2006 experiments the raters repeatedly criticized Google’s proposed changes because they favored competing comparison shopping services: "We had moderate losses [in raters’ assessments of quality when Google made proposed changes] because the raters thought this was worse than a bizrate or nextag page" (footnote 154, citing GOOGSING-000014116-17). Rather than accept raters’ assessment that competitors had high-quality offerings that should remain in search results, Google changed raters’ criteria twice, finally imposing a set of criteria in which competitors’ services were no longer ranked favorably (footnote 154, citing GOOGEC-0168014-27, GOOGEC-0148152-56, GOOGC-0014649).

Specialized search and favoring Google’s own services: targeting bad sites or solid competitors?

In public statements, Google often claimed that sites were rightly deprioritized in search results, indicating that demotions targeted "low quality," "shallow" sites with "duplicate, overlapping, or redundant" content that is "mass-produced by or outsourced to a large number of creators … so that individual pages or sites don’t get as much attention or care." Google Senior Vice President Jonathan Rosenberg chose the colorful phrase "faceless scribes of drivel" to describe sites Google would demote "to the back of the arena."

But when it came to the competing shopping services Google staff sought to relegate, Google’s internal assessments were quite different. "The bizrate/nextag/epinions pages are decently good results. They are usually well-format[t]ed, rarely broken, load quickly and usually on-topic. Raters tend to like them. …. [R]aters like the variety of choices the meta-shopping site[s] seem… to give" (footnote 154, citing GOOGSING-000014375).

Here too, Google’s senior leaders approved the decision to favor Google’s services. Google co-founder Larry Page personally reviewed the prominence of Google’s services and, indeed, sought to make Google services more prominent. For example: "Larry thought product [Google’s shopping service] should get more exposure" (footnote 120, citing GOOG-Texas-1004148). Product managers agreed, calling it "strategic" to "dial up" Google Shopping (footnote 120, citing GOOG-Texas-0197424). Others noted the competitive importance: Preferred placement of Google’s specialized search services was deemed important to avoid "ced[ing] recent share gains to competitors" (footnote 121, citing GOOG-Texas-0191859) or indeed essential: "most of us on geo [Google Local] think we won’t win unless we can inject a lot more of local directly into google results" (footnote 121, citing GOOGEC-0069974). Assessing "Google’s key strengths" in launching product search, one manager flagged Google’s control over "Google.com real estate for the ~70MM of product queries/day in US/UK/De alone" (footnote 121, citing GOOG-Texas-0199909), a unique advantage that competing services could not match.

Specialized search and favoring Google’s own services: algorithms versus human decisions

A separate divergence from Google’s public statements comes in the use of staff decisions versus algorithms to select results. Amit Singhal’s 2008 post presented the company’s (supposed) insistence on "no manual intervention":

In our view, the web is built by people. You are the ones creating pages and linking to pages. We are using all this human contribution through our algorithms. The final ordering of the results is decided by our algorithms using the contributions of the greater Internet community, not manually by us. We believe that the subjective judgment of any individual is, well … subjective, and information distilled by our algorithms from the vast amount of human knowledge encoded in the web pages and their links is better than individual subjectivity.

2011 testimony from Google Chairman Eric Schmidt (written responses to the Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights) made similar claims: "The decision whether to display a onebox is determined based on Google’s assessment of user intent" (p.2). Schmidt further claimed that Google displayed its own services because they "are responsive to what users are looking for," in order to "enhance[e] user satisfaction" (p.2).

The FTC’s memorandum quotes ample internal discussions to the contrary. For one, Google repeatedly changed the instructions for raters until raters assessed Google’s services favorably (the practice discussed above, citing and quoting from footnote 154). Similarly, Page called for "more exposure" for Google services and staff wanted "a lot more of local directly into search results" (cited above). In each instance, Google managers and staff substituted their judgment for algorithms and user preferences as embodied in click-through rate. Furthermore, Google modified search algorithms to show Google’s services whenever a "blessed site" (key competitor) appeared. Google staff explained the process: "Product universal top promotion based on shopping comparison [site] presence" (footnote 136 citing GOOGLR-00161978) and "add[ing] a ‘concurring sites’ signal to bias ourselves toward triggering [display of a Google local service] when a local-oriented aggregator site (i.e. Citysearch) shows up in the web results" (footnote 136 citing GOOGLR-00297666). Whether implemented by hand or through human-directed changes to algorithms, Google sought to put its own services first, contrary to prior commitments to evenhandedness.

At the same time, Google systematically applied lesser standards to its own services. Examining Google’s launch report for a 2008 algorithm change, FTC staff said that Google elected to show its product search OneBox "regardless of the quality" of that result (footnote 119, citing GOOGLR-00330279-80) and despite "pretty terribly embarrassing failures" in returning low-quality results (footnote 170, citing GOOGWRIG-000041022). Indeed, Google’s product search service apparently failed Google’s standard criteria for being indexed by Google search (p.80 and footnote 461), yet Google nonetheless put the service in top positions (p.30 and footnote 170, citing GOOG-Texas-0199877-906).

The FTC’s documents also call into question Eric Schmidt’s 2011 claim (in written responses to a Senate committee) that "universal search results are our search service — they are not some separate ‘Google product or service’ that can be ‘favored.’" The quotes in the preceding paragraph indicate that Google staff knew they could give Google’s own services "more exposure" by "inject[ing] a lot more of [the services] into google results." Whether or not these are "separate" services, they certainly can be made more or less prominent–as Google’s Page and staff recognized, but as Schmidt’s testimony denies. Meanwhile, in oral testimony, Schmidt said "I’m not aware of any unnecessary or strange boosts or biases." But consider Google’s "concurring sites" feature, which caused Google services to appear whenever key competitors’ services were shown (footnote 136 citing GOOGLR-00297666). This was surely not genuinely "necessary" in the sense that search could not function without it, and indeed Google’s own raters seemed to think search would be better without it. And these insertions were surely "strange" in the sense that they were unknown outside Google until the FTC memorandum became available last week. In response to a question from Senator Lee, asking whether Google "cooked it" to make its results always appear in a particular position, Schmidt responded "I can assure you, we’ve not cooked anything"–but in fact the "concurring sites" feature exactly guaranteed that Google’s service would appear, and Google staff deliberated at length over the position in which Google services would appear (footnote 138).

All in all, Google’s internal discussions show a company acutely aware of its special advantage: Google could increase the chance of its new services succeeding by making them prominent. Users might dislike the changes, but Google managers were plainly willing to take actions their own raters considered undesirable in order to increase the uptake of the company’s new services. Schmidt denied that such tampering was possible or even logically coherent, but in fact it was widespread.

Payments to publishers: as much as possible, or just enough to meet waning competition?

In public statements, Google touts its efforts to "help… online publishers … earn the most advertising revenue possible." I’ve always found this a strange claim: Google could easily cut its fees so that publishers retain more of advertisers’ payments. Instead, publishers have long reported — and the FTC’s document now explicitly confirms — that Google has raised its fees and thus cut payments to publishers. The FTC memorandum quotes Google co-founder Sergey Brin: "Our general philosophy with renewals has been to reduce TAC across the board" (footnote 517, citing GOOGBRIN-000025680). Google staff confirm an "overall goal [of] better AFS economics" through "stricter AFS Direct revenue-share tiering guidelines" (footnote 517, citing GOOGBRAD-000012890) — that is, lower payments to publishers. The FTC even released revenue share tiers for a representative publisher, reporting a drop from 80%, 85%, and 87.5% to 73%, 75%, and 77% (footnote 320, citing GOOG-AFS-000000327), increasing Google’s fees to the publisher by as much as 84%. (Methodology: divide Google’s new fee by its old fee, e.g. (1-0.875)/(1-0.77)=1.84.)

The FTC’s investigation revealed the reason why Google was able to impose these payment reductions and fee increases: Google does not face effective competition for small to midsized publishers. The FTC memorandum quotes no documents in which Google managers worry about Microsoft (or others) aggressively recruiting Google’s small to midsized publishers. Indeed, FTC staff report that Microsoft largely ceased attempts in this vein. (Assessing Microsoft’s withdrawal, the FTC staff note Google contract provisions preventing a competing advertising service from bidding only on those searches and pages where it has superior ads. Thus, Microsoft had little ability to bid on certain terms but not others. See memorandum p.106.)

The FTC notes Microsoft continuing to pursue some large Google publishers, but with limited success. A notable example is AOL, which Google staff knew Microsoft "aggressively woo[ed] … with large guarantees" (p.108). An internal Google analysis showed little concern about losing AOL but significant concern about Microsoft growing: "AOL holds marginal search share but represents scale gains for a Microsoft + Yahoo! Partnership… AOL/Microsoft combination has modest impact on market dynamics, but material increase in scale of Microsoft’s search & ads platform" (p.108). Google had historically withheld many features from AOL, whereas AOL CEO Tim Armstrong sought more. (WSJ reported: "Armstrong want[ed] AOL to get access to the search innovation pipeline at Google, rather than just receive a more basic product.") By all indications Google accepted AOL’s request only due to pressure from Microsoft: "[E]ven if we make AOL a bit more competitive relative to Google, that seems preferable to growing Bing" (p.108). As usual, Google’s public statements contradicted their private discussions; despite calling AOL’s size "marginal" in internal discussions (p.108), a joint press release quotes Google’s Eric Schmidt praising "AOL’s strength."

A Critical Perspective

The WSJ also recently flagged Google’s "close ties to White House," noting large campaign contributions, more than 230 meetings at the White House, high lobbying expenditures, and ex-Google staff serving in senior staff positions. In an unusual press release, the FTC denied that improper factors affected the Commission’s decision. Google’s Rachel Whetstone, SVP Communications and Policy, responded by shifting focus to WSJ owner Rupert Murdoch personally, then explaining that some of the meetings were industry associations and other matters unrelated to Google’s competition practices.

Without records confirming discussion topics or how decisions were made, it is difficult to reach firm conclusions about the process that led the FTC not to pursue claims against Google. It is also difficult to rule out the WSJ’s conclusion of political influence. Indeed, Google used exactly this reasoning in critiquing the WSJ’s analysis: "We understand that what was sent to the Wall Street Journal represents 50% of one document written by 50% of the FTC case teams." Senator Mike Lee this week confirmed that the Senate Committee on the Judiciary will investigate the possibility of improper influence, and perhaps that investigation will yield further insight. But even the incomplete FTC memorandum reproduces scores of quotes from Google documents, and these quotes offer an unusual opportunity to compare Google’s internal statements with its public claims. Google’s broadest claims of lofty motivations and Internet-wide benefits were always suspect, and Google’s public statements fall further into question when compared with frank internal discussions.

There’s plenty more to explore in the FTC’s report. I will post the rest of the document if a further FOIA request or other development makes more of it available.

Digital Business Models Should Have to Follow the Law, Too

Digital Business Models Should Have to Follow the Law, Too. HBR Online. January 2, 2015.

A timeless maxim suggests that it’s better to ask forgiveness than permission. Nowhere is that more prominent than in the current crop of digital businesses, which tend to skirt laws they find inconvenient. Though these services and their innovative business models win acclaim from consumers and investors, their approach to the law is troubling — both for its implications for civil society and in its contagious influence on other firms in turn pressured to skirt legal requirements.

Google’s Tying and Bundling

Disclosure: I serve as a consultant to various companies that compete with Google. That work is ongoing and covers varied subjects, most commonly advertising fraud. I write on my own—not at the suggestion or request of any client, without approval or payment from any client.

Google often argues that “competition is one click away” — as if Google’s many successes result solely from competition on the merits. Let me offer a different perspective: After early success in search and search advertising, Google used its strength in those sectors to increase its likelihood of success elsewhere — even where competitors’ offerings were objectively preferable and even where consumers would have preferred alternatives had that choice been genuinely available.

For example, in September 2013 web sites buzzed with the news that users would be required to create Google+ social networking accounts to comment on YouTube videos. There was no obvious reason why a user should need to join Google’s social network in order to post a brief comment on a video. Indeed, for years users had routinely posted via separate YouTube accounts. Google claimed that improvements would increase the quality of YouTube comment discussions and to prevent spam, but there was no obvious reason why those benefits required using Google+. That said, critics quickly saw the strategic implication: Google+ was years late to the market; other social networking services were far better established and already enjoyed much more success. But Google could use its other powerful properties, YouTube among others, to increase the pressure for users to join Google+.

Nor was Google+ unusual in benefiting from Google’s other products. In the context of mobile phones and tablets, Google had established a series of restrictions requiring that if a manufacturer sought to install any Google service–such as Maps, YouTube, or the Google Play store for installing other apps from Google and others–the manufacturer must accept a variety of obligations. For example, the manufacturer must install all the Google apps that Google specified–even if the manufacturer preferred another app. Furthermore, Google required that apps icons be placed in the locations that Google specified, including multiple entries on the device’s prominent “home” screen. The device must use Google Location Services, not competitors’ offerings, even if competitors’ offerings were faster, more accurate, or more protective of privacy. And manufacturers must take all these actions for Google’s benefit without any payment from Google. As a result, competing apps had to struggle to reach users–resorting to soliciting user installations one-by-one, rather than faster and more predictable bulk installations by device manufacturers.

Most obviously, Google’s core search service systematically favors Google results. Search for a stock ticker symbol, and you’re encouraged to go to Google Finance. If a video is deemed relevant, it will almost always be from YouTube. And so on. Sometimes these services are just as good for consumers; sometimes, not. But for any user unwilling to spend extra time requesting other services–day in and day out, ad infinitum–Google’s offerings become the easy and obvious defaults in every affected sector. Yelp may be a little better or even a lot better. But when Google puts Google Local front and center, many users will go there instead.

Today I’m posting an article exploring a series of incidents where Google used similar methods–broadly, tying and bundling–to expand its dominance into additional markets. In each market, I present the details of Google’s approach, then assess concerns under antitrust law. Selected examples:

If a ___ wants ___ Then it must accept ___
If a consumer wants to use Google Search Google Finance, Images, Maps, News, Products, Shopping, YouTube, and more
If a mobile carrier wants to preinstall YouTube for Android Google Search, Google Maps (even if a competitor is willing to pay to be default)
If an advertiser wants to advertise on any AdWords Search Network Partner All AdWords Search Network sites (in whatever proportion Google specifies)
If an advertiser wants to advertise on Google Search as viewed on computers   Tablet placements and, with limited restrictions, smartphone placements
If an advertiser wants image ads Google Affiliate Network (historic)
If an advertiser wants a logo in search ads Google Checkout (historic)
If a video producer wants preferred video indexing YouTube hosting
If a web site publisher wants preferred search indexing Google Plus participation

My bottom line: Google’s use of tying portends a future of reduced choice, slower innovation, lower quality, and higher prices. To date, Google has focused its harshest terms on advertisers, but after paying Google some $60+ billion each year, advertisers recoup these expenses through higher prices to consumers. Meanwhile, if a broad class of opportunities are effectively off-limits to competitors because Google either has claimed those sectors or is positioned to be able to claim them whenever it chooses, the incentive to invest is sharply attenuated. These are exactly the practices that competition law seeks to prevent.

My full article:

Leveraging Market Power through Tying and Bundling: Does Google Behave Anti-Competitively?

(update: published as “Does Google Leverage Market Power Through Tying and Bundling?” Journal of Competition Law & Economics 11, no. 2 (June 2015): 365-400.)

The Darker Side of Blinkx

Video and advertising conglomerate Blinkx tells investors its "strong performance" results from "strategic initiatives" and "expanding demand, content, and audiences." Indeed, Blinkx recently climbed past a $1.2 billion valuation. At first glance, it sounds like a great business. But looking more carefully, I see reason for grave doubts.

My concerns result in large part from the longstanding practices of two of Blinkx’s key acquisitions, Zango and AdOn. But concerns extend even to Blinkx’s namesake video site. In the following sections, I address each in turn. Specifically, I show ex-Zango adware still sneaking onto users’ computers and still defrauding advertisers. I show the ex-AdOn traffic broker still sending invisible, popup, and other tainted traffic. I show Blinkx’ namesake site, Blinkx.com, leading users through a maze of low-content pages, while charging advertisers for video ads systematically not visible to users.

The Legacy Zango (Adware) Business

In April 2009, Blinkx acquired a portion of Zango, a notorious adware vendor known for products that at various times included 180 Search Assistant, ePipo, Hotbar, Media Gateway, MossySky, n-Case, Pinball, Seekmo, SpamBlockerUtility, and more. Zango was best known for its deceptive and even nonconsensual installations — in write-ups from 2004 to 2008, I showed Zango installing through security exploits (even after design updates purportedly preventing such installations by supposed rogue partners), targeting kids and using misleading statements, euphemisms, and material omissions, installing via deceptive ActiveX popups, These and other practices attracted FTC attention, and in a November 2006 settlement, Zango promised to cease deceptive installations as well as provide corrective disclosures and pay a $3 million penalty.

Few users would affirmatively request adware that shows extra pop-ups, so Blinkx and its distributors use deceptive tactics to sneak adware onto users’ computers. In a representative example, I ran a Google search for "Chrome" (Google’s well-known web browser), clicked an ad, and ended up at Youdownloaders.com — a site that bundles Chrome with third-party advertising software. (The Youdownloaders footer states "The installers are compliant with the original software manufacturer’s policies and terms & conditions" though it seems this claim is untrue: Chrome Terms of Service section 5.3 disallows copying and redistributing Chrome; 8.6 disallows use of Google’s trademarks in a way that is likely to cause confusion; 9.3 disallows transfer of rights in Chrome.) In my testing, the Youdownloaders installer presented offers for five different adware programs and other third-party applications, among them Weather Alerts from desktopweatheralerts.com. Installation video.

I consider the Youdownloaders installation deceptive for at least four reasons: 1) A user’s request for free Chrome software is not a proper circumstance to tout adware. The user gets absolutely nothing in exchange for supposed "agreement" to receive the adware; Chrome is easily and widely available for free, without adware. It is particularly one-sided to install five separate adware apps — taking advantage of users who do not understand what they are asked to accept (including kids, non-native speakers, and those in a hurry). 2) On the Weather Alerts page of the installation, on-screen statements mention nothing of pop-up ads or, indeed, any advertising at all. In contrast, the FTC’s settlement with Zango requires that disclosure of advertising practices be "clear and prominent," "unavoidable," and separate from any license agreement — requirements not satisfied here. 3) The Youdownloaders user interface leads users to think that the bundled installations are compulsory. For example, the "decline" button (which lets a user reject each adware app) appears without the distinctive shape, outline, color, or font of an ordinary Windows button. 4) Users are asked to accept an objectively unreasonable volume of agreements and contracts, which in my testing include at least 14 different documents totaling 37,564 words (8.5 times the length of the US Constitution).

Tellingly, Blinkx takes considerable steps to distance itself from these deceptive practices. For example, nothing on Blinkx’s site indicates that Weather Alerts is a Blinkx app or shows Blinkx ads. The Desktopweatheralerts.com site offers no name or address, even on its Contact Us form. Weather Alerts comes from a company called Local Weather LLC, an alter ego of Weather Notifications LLC, both of Minneapolis MN, with no stated affiliation with Blinkx. Weather Notifications’ listed address is a one-bedroom one-bathroom apartment — hardly a standard corporate office. Nonetheless, multiple factors indicate to me that Desktop Weather Alerts is delivers a version of Zango adware. For one, Desktop Weather Alerts popups use the distinctive format long associated with Zango, including the distinctive browser buttons at top-left, as well as distinctive format of the advertisement label at bottom-left. Similarly, many sections of the license agreement and privacy policy are copied verbatim from longstanding Zango terms. Within the Weather Alerts EXE, strings reference 180search Assistant (a prior Zango product name) as well as 180client and various control systems long associated with Zango’s ad-targeting system. Similarly, when Weather Alerts delivers ads, its ad-delivery communications use a distinctive proprietary HTTP syntax both for request (to showme.aspx, with a HTTP POST parameter of epostdata= providing encoded ad context) and response (a series of HTML FORM elements, most importantly an INPUT NAME=ad_url to indicate the popup to open). I have seen this syntax (and its predecessors) in Zango apps for roughly a decade, but I have never seen this syntax used by any advertising delivered by other adware vendors or other companies. Moreover, when a Blinkx contractor previously contacted a security vendor to request whitelist treatment of its adware, the Blinkx representative said "The client is Blinkx … Your engine … was flagging their installer package SWA as SevereWeatherAlerts…" (emphasis added). Notice the Blinkx representative indicating that SWA (another Local Weather program, virtually identical save for domain name and product name) is "their" app, necessarily referring to Blinkx. Finally, in a February 2014 presentation, Blinkx CEO Brian Mukherjee included the distinctive Local Weather icon (present throughout the LW app and in LW’s installation solicitations) as part of the "Blinkx Ecosystem" — further confirming the link between LW and Blinkx. Taken together, these factors give good reason to conclude that Local Weather is applications are powered by Blinkx and part of the Blinkx network. Furthermore, in my testing Blinkx is the sole source of advertising for Weather Alerts — meaning that Blinkx’s payments are Weather Alerts’ primary source of revenue and primary reason for existence. (Additions made February 13, 2014, shown in grey highlighting.)

Blinkx/Zango software continues to defraud affiliate merchants. Blinkx/Zango software continues to defraud affiliate merchants.

Meanwhile, Zango-delivered advertising remains a major cause of concern. Zango’s core advertising product remains the browser popup — a disruptive form of advertising unpopular with most users and also unpopular with most mainstream advertisers. Notably, Zango’s popups perpetrate various advertising fraud, most notably ‘lead stealing" affiliate windows that cover merchant sites with their own affiliate links. If the user purchases through either window, the Zango advertiser gets paid a commission — despite doing nothing to genuinely cause or encourage the user’s purchase. (Indeed, the popup interrupts the user and thereby somewhat discourages a purchase.) At right, I show a current example: In testing of January 19, 2014, Blinkx/Zango sees a user browsing Walmart, then opens a popup to Blinkx/LeadImpact (server lipixeltrack) which redirects to LinkShare affiliate ORsWWZomRM8 and on to Walmart. Packet log proof. Thus, Walmart ends up having to pay an affiliate commission on traffic it already had — a breach of Walmart’s affiliate rules and broadly the same as the practice for which two eBay affiliates last year pled guilty. I’ve reported Zango software used for this same scheme since June 2004. As shown at right and in other recent examples, Zango remains distinctively useful to rogue affiliates perpetrating these schemes. These rogue affiliates pay Blinkx to show the popups that set the scheme in motion — and I see no sign that Blinkx has done anything to block this practice.

Rather than put a stop to these practices, Blinkx largely attempts to distance itself from Zango’s legacy business. For one, Blinkx is less than forthright as to what exactly it purchased. In Blinkx’s 2010 financial report, the first formal investor statement to discuss the acquisition, Blinkx never uses the word "Zango" or otherwise indicates the specific company or assets that Blinkx acquired. Rather, Blinkx describes the purchase as "certain net assets from a consortium of financial institutions to facilitate the growth of the video search and advertising businesses." If a reader didn’t already know what Blinkx had bought, this vague statement would do nothing to assist.

Even when Blinkx discusses the Zango acquisition, it is less than forthcoming. UK news publication The Register quotes an unnamed Blinkx spokeswoman saying that Blinkx "purchased some technical assets from the bank [that foreclosed on Zango] including some IP and hardware, which constituted about 10 per cent of Zango’s total assets." Here too, readers are left to wonder what assets are actually at issue. A natural interpretation of the quote is that Blinkx purchased trademarks, domain names, or patents plus general-purpose servers — all consistent with shutting the controversial Zango business. But in fact my testing reveals the opposite: Blinkx continues to run key aspects of Zango’s business: legacy Zango installations continue to function as usual and continue to show ads, and Blinkx continues to solicit new installations via the same methods, programs, and partners that Zango previously used. Furthermore, key Zango staff joined Blinkx, facilitating the continuation of the Zango business. Consider Val Sanford, previously a Vice President at Zango; her LinkedIn profile confirms that she stayed with Blinkx for three years after the acquisition. I struggle to reconcile these observations with the claim that Blinkx only purchased 10% of Zango or that the purchase was limited to "IP and hardware." Furthermore, ex-Zango CTO Ken Smith contemporaneously disputed the 10% claim, insisting that "Blinkx acquired fully 100% of Zango’s assets."

Blinkx has been equally circumspect as to the size of the ex-Zango business. In Blinkx’ 2010 financial report, Blinkx nowhere tells investors the revenue or profit resulting from Zango’s business. Rather, Blinkx insists "It is not practical to determine the financial effect of the purchased net assets…. The Group’s core products and those purchased have been integrated and the operations merged such that it is not practical to determine the portion of the result that specifically relates to these assets.” I find this statement puzzling. The ex-Zango business is logically freestanding — for example, separate relationships with the partners who install the adware on users’ computers. I see no proper reason why the results of the ex-Zango business could not be reported separately. Investors might reasonably want to know how much of Blinkx’s business comes from the controversial ex-Zango activities.

Indeed, Blinkx’s investor statements make no mention whatsoever of Zango, adware, pop-ups, or browser plug-ins of any kind in any annual reports, presentations, or other public disclosures. (I downloaded all such documents from Blinkx’ Financial Results page and ran full-text search, finding no matches.) As best I can tell, Blinkx also failed to mention these endeavors in conference calls or other official public communications. In a December 2013 conference call, Jefferies analyst David Reynolds asked Blinkx about its top sources of traffic/supply, and management refused to answer — in sharp contrast to other firms that disclose their largest and most significant relationships.

In March-April 2012, many ex-Zango staff left Blinkx en masse. Many ended up at Verti Technology Group, a company specializing in adware distribution. Myriad factors indicate that Blinkx controls Verti: 1) According to LinkedIn, Verti has eight current employees of which five are former employees of Zango, Pinball, and/or Blinkx. Other recent Verti employees include Val Sanford, who moved from Zango to Blinkx to Verti. 2) Blinkx’s Twitter account: Blinkx follows just nineteen users including Blinkx’s founder, various of its acquisitions (including Prime Visibility / AdOn and Rhythm New Media), and several of their staff. Blinkx follows Verti’s primary account as well as the personal account of a Verti manager. 3) Washington Secretaty of State filings indicate that Verti’s president is Colm Doyle (then Directory of Technology at Blinkx, though he subsequently returned to HP Autonomy) and secretary, treasurer, and chairman is Erin Laye (Director of Project Management at Blinkx). Doyle and Laye’s links to Blinkx were suppressed somewhat in that both, at formation, specified their home addresses instead of their Blinkx office. 4) Whois links several Verti domains to Blinkx nameservers. (Details on file.) Taken together, these facts suggest that Blinkx attempted to move a controversial business line to a subsidiary which the public is less likely to recognize as part of Blinkx.

The Legacy AdOn Business

In November 2011, Blinkx acquired Prime Visibility Media Group, best known for the business previously known as AdOn Network and MyGeek. I have critiqued AdOn’s traffic repeatedly: AdOn first caught my eye when it boasted of relationships with 180solutions/Zango and Direct Revenue. New York Attorney General litigation documents later revealed that AdOn distributed more than 130,000 copies of notorious Direct Revenue spyware. I later repeatedly reported AdOn facilitating affiliate fraud, inflating sites’ traffic stats, showing unrequested sexually-explicit images, and intermediating traffic that led to Google click fraud.

Similar problems continue. For example, in a February 2013 report for a client, I found a botnet sending click fraud traffic through AdOn’s ad-feeds.com server en route to advertisers. In an August 2013 report for a different client, I found invisible IFRAMEs sending traffic to AdOn’s bing-usa.com and xmladfeed.com servers, again en route to advertisers. Note also the deceptive use of Microsoft’s Bing trademark — falsely suggesting that this tainted traffic is in some way authorized by or affiliated with Bing, when in fact the traffic comes from AdOn’s partners. Moreover, the traffic was entirely random and untargeted — keywords suggested literally at random, entirely unrelated to any aspect of user interests. In other instances, I found AdOn receiving traffic directly from Zango adware. All told, I reported 20+ distinct sequences of tainted AdOn traffic to clients during 2013. AdOn’s low-quality traffic is ongoing: Advertisers buying from AdOn receive invisible traffic, adware/malware-originating traffic, and other tainted traffic that sophisticated advertisers do not want.

An AdOn staff member touts multiple incriminating characteristics of AdOn traffic. An AdOn staff member touts multiple incriminating characteristics of AdOn traffic.

Industry sources confirm my concern. For example, a June 2013 Ad Week article quotes one publisher calling AdOn "just about the worst" at providing low-quality traffic, while another flags "crazy traffic patterns." In subsequent finger-pointing as to tainted traffic to OneScreen sites, OneScreen blamed a partner, Touchstorm, for working with AdOn — wasting no words to explain why buying from AdOn is undesirable. Even intentional AdOn customers report disappointing quality: In comments on a posting by Gauher Chaudhry, AdOn advertisers call AdOn "the reason I stopped doing any PPV [pay-per-view] … this is bot traffic", "junk", and "really smell[s] like fake traffic." Of 31 comments in this thread, not one praised AdOn traffic quality.

Recent statements from AdOn employees confirm undesirable characteristics of AdOn traffic. Matthew Papke’s LinkedIn page lists him as Director of Contextual Ads at AdOn. But his page previously described AdOn’s offering as "pop traffic" — admitting undesirable non-user-requested pop-up inventory. His page called the traffic "install based" — indicating that the traffic comes not from genuine web pages, but from adware installed on users’ computers. See screenshot at right. All of these statements have been removed from the current version of Matthew’s page.

Problems at Blinkx.com: Low-Quality Traffic, Low-Quality Content, and Invisible Ads

Alexa reports a sharp jump in Blinkx traffic in late 2013. Alexa reports a sharp jump in Blinkx traffic in late 2013.

Alexa reports a sharp jump in Blinkx traffic in late 2013. Zango adware caused my computer to display this page from the Blinkx site, full-screen and without standard window controls.

Blinkx’s namesake service is the video site Blinkx.com. Historically, this site has been a bit of an also-ran — it’s certainly no YouTube! But Alexa reports a striking jump in Blinkx popularity as of late 2013: Blinkx’s traffic jumped from rank of roughly 15,000 worldwide to, at peak, rank of approximately 3,000. What could explain such a sudden jump?

In my automated and manual testing of Zango adware, I’ve recently begun to see Zango forcing users to visit the Blinkx site. The screenshot at right gives an example. My test computer displayed Blinkx full-screen, without title bar, address bar, or standard window buttons to close or minimize. See also a partial packet log, wherein the Blinkx site attributes this traffic to Mossysky ("domain=mossysky"), one of the Zango brand names. It’s a strikingly intrusive display — no wonder users are complaining, about their computers being unusable due to Blinkx’s unwanted intrusion. See e.g. a December 2013 Mozilla forum post reporting "my computer has been taken over by malware, half the links are inaccessible because of hovering links to Blinkx," and a critique and screenshot showing an example of these hovering links. On a Microsoft support forum, one user reports Internet Explorer automatically "opening … numerous BLINKX websites" — as many as "20 websites open at one time, all Blinkx related."

Moreover, Alexa’s analysis of Blinkx visitor origins confirms the anomalies in this traffic. Of the top ten sites sending traffic to Blinkx, according to Alexa, six are Blinkx servers, largely used to forward and redirect traffic (networksad.com, advertisermarkets.com, networksads.com, advertiserdigital.com, blinkxcore.com, and networksmarkets.com). See Alexa’s Site Info for Blinkx.com at heading "Where do Blinkx.com’s visitors come from?"

Strikingly, Zango began sending traffic to Blinkx during the winter 2013 holiday season — a time of year when ad prices are unusually high. Zango’s popups of Blinkx seem to have ended as suddenly as they began — consistent with Blinkx wanting extra traffic and ad revenue when ad prices are high, but concluding that continuing this practice at length risks excessive scrutiny from both consumers and advertisers.

Meanwhile, examining Blinkx.com, I’m struck by the lack of useful content. I used the Google search site:blinkx.com to find the parts of the Blinkx site that, according to Google, are most popular. I was directed to tv.blinkx.com, where the page title says users can "Watch full episodes of TV shows online." I clicked "60 Minutes" and received a page correctly profiling the excellence of that show ("the granddaddy of news magazines"). But when I clicked to watch one of the listed episodes, I found nothing of the kind: Requesting "The Death and Life of Asheboro, Stealing History, The Face of the Franchise," I was told to "click here to watch on cbs.com" — but the link actually took me to a 1:33 minute home video of a dog lying on the floor, "Husky Says No to Kennel", syndicated from YouTube, entirely unrelated to the top-quality 60 Minutes content I had requested. (Screen-capture video.) It was a poor experience — not the kind of content likely to cause users to favor Blinkx’s service. I tried several other shows supposedly available — The Colbert Report, The Daily Show with Jon Stewart, Family Guy, and more — and never received any of the listed content.

In parallel, the Blinkx site simultaneously perpetrated a remarkable scheme against advertisers: On the video index page for each TV show, video advertising was triggered to play as I exited each page by clicking to view the supposed video content. Because the supposed content opened in a new tab, the prior tab remained active and could still host a video player with advertising. Of course the prior tab was necessarily out of visibility: Blinkx’s code had just commanded the opening of a new tab showing the new destination. But the video still played, and video advertisers were still billed. Screen-capture video.

Industry sources confirm concerns about Blinkx ad visibility. For example, a December 15, 2013 Ad Week piece reported Vindico analysis finding just 23% of Blinkx videos viewable (defined as just 50% of pixels visible for just one second). By Vindico’s analysis, an advertiser buying video ads from Blinkx suffers three ads entirely invisible for every ad visible even by that low standard — a remarkably poor rate of visibility. In contrast, mainstream video sites like CBS and MSN enjoyed viewability rates two to four times higher.

Putting the Pieces Together

  Q3 ’13 Headcount ’13 Revenue ($mm) revenue / headcount ($k)
Tremor 287 $148 $517
YuMe 357* $157 $440
RocketFuel 552 $240 $434
Criteo 452 $240 $532
Blinkx 265** $246*** $927

* Q3 ’13 headcount not available. 357 is 2012 year-end. S&M spend up ~50% in 2013. Adjusted revenue/headcount is $293k
** Q3 ’13 headcount not available. 265 is 2012 year-end. S&M spend up ~15% in 2013. Adjusted revenue/headcount is $803k.
*** 2013 revenue estimate based on Bloomberg consensus estimates

Comparing Blinkx’s revenues to competitors, I am struck by Blinkx’s apparent outsized success. See the table at right, finding Blinkx producing roughly twice as much revenue per employee as online video/display ad networks and advertising technology companies which have recently made public offerings. Looking at Blinkx’s sites and services, one doesn’t get the sense that Blinkx’s service is twice as good, or its employees twice as productive, as the other companies listed. So why does Blinkx earn twice as much revenue per employee? One natural hypothesis is that Blinkx is in a significantly different business. While other services make significant payments to publishers for use of their video content, my browsing of Blinkx.com revealed no distinctive content obviously licensed from high-quality high-cost publishers. I would not be surprised to see outsized short-term profits in adware, forced-visit traffic, and other black-hat practices of the sort used by some of the companies Blinkx has acquired. But neither are these practices likely to be sustainable in the long run.

Reviewing Blinkx’s statements to investors, I was struck by the opacity. How exactly does Blinkx make money? How much comes from the legacy Zango and AdOn businesses that consumers and advertisers pointedly disfavor? Why are so many of Blinkx’s metrics out of line with competitors? The investor statements raise many questions but offer few answers. I submit that Blinkx is carefully withholding this information because the company has much to hide. If I traded in the companies I write about (I don’t!), I’d be short Blinkx.

This article draws in part on research I prepared for a client that sought to know more about Blinkx’s historic and current practices. At my request, the client agreed to let me include portions of that research in this publicly-available posting. My work for that client yielded a portion of the research presented in this article, though I also conducted significant additional research and drew on prior work dating back to 2004. My agreement with the client did not oblige me to circulate my findings as an article or in any other way; to my knowledge, the client’s primary interest was in learning more about Blinkx ‘s business, not in assuring that I tell others. By agreement with the client, I am not permitted to reveal its name, but I can indicate that the client is two US investment firms and that I performed the research during December 2013 to January 2014. The client tells me that it did not change its position on Blinkx after reading my article. (Disclosure updated and expanded on February 4-5, 2014.)

I thank Eric Howes, Principal Lab Researcher at ThreatTrack Security, and Matthew Mesa, Threat Researcher at ThreatTrack Security, for insight on current Blinkx installations.

Misrepresentation of Fuel Surcharges in Airline Price Advertising with Xiaoxiao Wu

Air travel tickets often include surprisingly large amounts described as “tax.” In one round trip New York-Paris ticket we quoted in January 2012, the fare was listed as $230 while “tax” was listed as $598.14 — fully 72% of the listed total. If government taxes were actually as large as Air France claims, many passengers might want to complain to responsible politicians and regulators. And passengers might have a different view of cramped seating, unpalatable food, or other service shortfalls on a $230 ticket versus a $828.14 ticket. But in fact, specifically contrary to Air France’s characterization of $598.14 as “tax,” the majority of the “tax” was not charged by any government, airport, or similar authority, and rather was retained by Air France to defray its ordinary operating expenses.

Our investigation uncovers a variety of examples in which airlines have mischaracterized various surcharges as “tax” and otherwise failed to satisfy applicable price advertising regulation. We present proof in both screenshots and recorded telephone calls, preserving clear records of carriers’ misrepresentations. Details:

Misrepresentation of Fuel Surcharges in Airline Price Advertising

Advertising Disclosures in Online Apartment Search with Paul Kominers

A decade ago, the FTC reminded search engines of their duty to label advertisements as such. Most general-purpose search engines now do so (though they’re sometimes less than forthright). But practices at specialized search engines often fall far short.

In today’s posting, Paul Kominers and I examine leading online apartment search services and evaluate the disclosures associated with their paid listings. We find paid placement and paid inclusion listings at each site, but disclosures range from limited to nonexistent. Where disclosures exist, they are largely hidden behind multiple intermediate pages, effectively invisible to most users. We propose specific ways these sites could improve their disclosures, and we flag their duties under existing law.

Advertising Disclosures in Online Apartment Search

Google Tying Google Plus and Many More

Disclosure: I serve as a consultant to various companies that compete with Google. But I write on my own — not at the suggestion or request of any client, without approval or payment from any client.

This week Google announced Google Search Plus Your World (“Google Search Plus” for short). Reaction has been critical. Danny Sullivan says Google Search Plus “pushes Google+ over relevancy,” and he offers compelling examples demonstrating this favored treatment. Meanwhile, EPIC executive director Marc Rotenberg argues that Google is “using its market dominance in a separate sector [search] … to fight off its challenger Facebook” — essentially, alleging that Google is tying Google+ to Google Search, forcing users to accept the former if they want the latter.

As Danny and Marc point out, Google is favoring its own ancillary services even when other destinations are objectively superior, and Google is using its dominance in search to compel users to accept Google’s other offerings. But this problem is much bigger than Google Search Plus: Google has used similar tying tactics to push dozens of its products for years. I’m working on a detailed article with numerous examples plus relevant antitrust analysis. But with Google Search Plus prompting so much interest, I wanted to flag other areas where Google has invoked these tactics.

This piece proceeds in three parts: I evaluate the competitive implications of Google favoring its own services, including the special benefits Google grants to its own services. I show how Google penalizes those who decline to participate in its tied offerings, including using tying to force others to submit to Google’s will even in areas where Google is not yet dominant. Finally, I briefly survey the legal implications and propose a promising but lightweight remedy to begin to curtail the harmful effects of Google’s tying.

My takeaway: Google’s tying tactics should not be permitted. Google’s dominant position in search requires that the company hold itself to a higher level of conduct, including avoiding tying its other products to its dominant search service. Google has repeatedly crossed the line, and antitrust enforcement action is required to put a stop to these practices.

The Competitive Implications of Favoring Google’s Own Services

I’ve found more than a dozen Google services receiving favored placement in Google search results. Consider Google Blog Search, Google Book Search, Google Checkout, Google Health, Google Images, Google Maps, Google News, Google Realtime, Google Shopping, and Google Video. Some have developed into solid products with loyal users. Others are far weaker. But each enjoys a level of favored placement in Google search results that other services can only dream of.

Google uses premium placements and traffic guarantees to address the “chicken and egg” problem that undermines the launch of many online businesses. For example, many retailers might be pleased to be listed (and even be willing to pay to be listed) in a review site or product search site that has many readers. But finding those readers cost-effectively requires algorithmic search traffic, which a new site cannot guarantee — hindering the site’s efforts to attract advertisers. So too for books, local search, movies, travel, and myriad other sectors. Ordinary sites struggle to overcome these challenges — for example, buying expensive pay-per-click advertising to drive traffic to their sites, or beginning with a period in which they have undesirably few participants. In contrast, anyone assessing the prospects of a new Google service knows that Google can grant its services ample free traffic, on demand and substantially guaranteed. Thus, the success of a new Google service is much more predictable — reducing Google’s barriers to expansion into new sectors. Indeed, if partners recognize that Google can send such traffic whenever it chooses to do so, they may even be willing to join before Google turns on the spigot.

Conversely, Google’s ability to favor its own service dulls the incentive for others to even try to compete. Who would risk capital, energy, and talent in building a new image search engine when Google presents Google Image Search results automatically? A new entrant might be 20% better, by whatever metric, but Google’s automatic provision of a “good enough” option dulls users’ interest in finding a best-of-breed alternative. The problem is particularly acute because the top-most result enjoys 34%+ of all clicks — so when Google takes that position for itself, there’s far less for everyone else.

Google also grants its ancillary services the benefit of certain placement. Ordinary sites have little assurance of what algorithmic search traffic they will receive. They may rank highly for some terms and worse for others. Furthermore, rankings often vary over time, including sudden changes for no apparent reason. As a result, most sites struggle to build business plans around algorithmic search traffic; indeed, companies have laid off staff after unexpected drops in algorithmic search traffic. In contrast, Google’s own services can feel confident in the traffic they will receive from Google — allowing them to plan budgets, advertising sales, hardware requirements, and overall strategy.

By all indications, free traffic from Google Search has played a valuable role in launching many Google businesses. For example, Google Maps usage remained sluggish until Google started to present inline Google Maps directly within Search Results, a practice that began in earnest in 2007. As Consumer Watchdog’s 2010 “Traffic Report” shows, this change precipitated a sharp increase in Google Maps’ market share: Traffic to Google Maps tripled while traffic to competing map sites fell by half.

So too for Google’s launch of Google Finance. service. For example, as of December 2006, Hitwise reported that fully 57% of traffic to Google Finance came from Google Search. By 2009, just 29% of Google Finance traffic came from other Google properties. By providing its ancillary services with additional traffic, when desired and in large quantities unavailable to others, Google gives its ancillary services a greater chance of achieving widespread usage and attracting users and advertisers.

The Special Benefits Google Reserves for Its Own Services

When Google presents its ancillary services within search results, it gives its services distinctive layout and format benefits unavailable to other sites. For example, Google Maps appears with an oversized full-color embedded map, whereas links to other map services appear only as plain hyperlinks. So too for links to Google Shopping, which often feature tabular reports of product pictures, vendors, and prices, whereas competing comparison shopping search engines receive only bare text. Until June 2011, Google Checkout advertisers enjoyed a special logo adjacent to their AdWords ads — particularly valuable since image advertisements were essentially nonexistent throughout that period. But advertisers who chose other streamlined checkout tools (like Paypal) got no such benefit. Favored treatment extends to the most obscure Google services. Even Google Health listings received a distinctive layout and colored image.

Furthermore, when Google favors its own ancillary services, it sometimes bypasses the algorithms that ordinarily allocate search results. By all indications, Google staff manually override algorithmic results, manually specifying that specific Google services are to appear in specific positions for specific keywords. Of course no other site enjoys such overrides.

Google also seems to exempt its own services from the “host crowding” rules that ordinarily assure source diversity. In 2007, Google’s Matt Cutts stated that a single page of results will feature “up to two results” from a single host, though he added that for a domain that “is really relevant” Google “may still return several results from that domain” (emphasis added). But it seems Google waives this rule for its own services. In April 2011, Aaron Wall flagged a search yielding five separate Google Books results among the ten links shown in the first page of Google Search. A commenter found another search term for which nine separate results all pointed to Google Books. (I have a screenshot on file.) On one view, Google Books indexes the work of multiple authors and publishers, and diversity among those authors and publishers provides adequate representation of alternative viewpoints. Yet other repositories also aggregate material from independent authors (consider books at Amazon, or any of thousands of online discussion forums), but only Google seems to enjoy an exception from “host crowding” rules.

Google Effectively Penalizes Those who Decline to Participate In Its Tied Offerings

I joined Google Plus not because I wanted to participate, not to take a look around, but because I perceived that Google would grant my site preferred placement — more algorithmic traffic — if I linked my Google Plus account to my web site and online publications. It’s hard to figure out whether I was right. But SEO forums are full of users who had the same idea. So Google can force users to join Google Plus to avoid receiving, or expecting to receive, lower algorithmic search ranking. Certainly myriad sites added Google +1 buttons (giving Google both data and real estate) not because they genuinely wanted Google buttons on their sites, but because they feared others would overtake them in search results if they failed to employ Google’s newest service.

If an airline declines to participate in Google Flights, its listings are labeled 'no booking links available.' Google fails to offer a more helpful link or booking shortcut, even though it could easily do so.If an airline declines to participate in Google Flights, its listings are labeled “no booking links available.” Google fails to offer a more helpful link or booking shortcut, even though it could easily do so.

Google uses similar tying tactics to compel use of its other services. Consider airlines negotiating terms for appearance in Google Flight Search. If Southwest Airlines prefers not to be included in Expedia, it can easily stay out (and in fact it has). Better yet, a diligent airline can negotiate with various travel sites to seek improved terms — playing one travel site against another to reduce fees. But Google’s dominant position impedes any such negotiation. There’s only one Google Flight Search at the top of Google search results, and any airline that refuses Google’s terms is left behind: Google presents a “no booking links available” bubble, even though Google could easily send bookings to an airline web site without any commercial relationship with the site and without requiring payment from the site. (For an example, click to browse Southwest flights Boston-BWI in May — simple HTML and JavaScript, essentially a “deep link.”)

At the very least, Google could link to an airline’s home page in the bottom right, where the “Book” link usually appears; the bottom-right corner is the standard location for a button to continue a multi-step process, and that’s the location where Google has trained users to look to proceed with booking. In contrast, Google’s bottom-left links are easily overlooked. With so many better options available to Google, Google’s decision to withhold this link looks like intentional punishment for any airline that rejected Google’s terms.

Google links to the 'owner site' only at the far bottom of the drop-down -- putting all advertisers in more prominent positions.Google links to the “owner site” only at the far bottom of the drop-down — putting all advertisers in more prominent positions.

Meanwhile, by effectively compelling participation, Google enjoys high revenue from competing bidders. Consider the drop-down lists Google now shows with hotel listings, presenting advertisements for multiple booking services. A user can enter desired dates to receive a price quote from each booking service, with one-click access to the chosen vendor. But some users prefers to book with a hotel directly — perhaps to reduce booking complexity (less finger-pointing if something goes wrong) or enjoy loyalty program benefits. (Users may also know that hotels pay substantial commissions to the web sites that gather reservations, and some users may wish to spare hotels those costs.) If a consumer clicks the “owner site” link, the consumer will find that his booking dates are discarded, requiring reentry. And even though the “owner site” is the single most authoritative listing for a given property, Google puts all booking services above — here too, favoring advertising revenue over user convenience. It’s an experience savvy hotels would decline completely if Google offered that choice. Instead, Google makes this drop-down compulsory, and there’s no way a hotel can opt out.

To its credit, Twitter has recognized the value of the data it holds and has declined to let Google harvest that data on terms Google dictates. But when Twitter complained about Google’s favored treatment of Google Search Plus, Google responded: “We are a bit surprised by Twitter’s comments about Search plus Your World, because they chose not to renew their agreement with us last summer.” Google’s response completely misses the point. For one, as Danny Sullivan points out, Google fails to use Facebook and Twitter content it knows about (without needing a data license). Furthermore, Google equally fails to use content from thousands of other sources — from smaller social networks, for example. Instead, Google favors its own service.

Over and over, Google has tied its services in various combinations to compel (or attempt to compel) others to bend to its will.

  • Google told Yelp it had to let Google present Yelp reviews in Google Places if Yelp wanted to remain in ordinary Google Search. That is, Google tied its dominant search service (where Yelp wanted to stay visible) to its upstart Places service (which Yelp did not care to support).
  • Google’s contradictory statements left newspapers believing for years that they had to participate in Google News if they wanted to remain in Google Search. (See e.g. the multiple contradictory postscripts in Danny Sullivan’s August 2009 posting about newspapers’ concerns — indicating that even he struggled to understand Google’s true policy. I have other inconsistent statements on file.) For newspapers, then, Google also effectively tied its dominant search service (where newspapers absolutely wanted to be listed) to Google News (which newspapers tended to view skeptically). By the time Google clearly stated that newspapers could exit Google News while staying in Google Search, Google News had achieved enough traction that leaving was a much less desirable choice.
  • For years, Google’s YouTube offered filtering technology (to identify and remove copyrighted works) only to companies that granted licenses to YouTube, on the terms YouTube sought, but not on companies that refuse Google’s terms. To get the filter — the only quick, effective way to block infringing content — rights-holders had to accept Google’s license terms.

I’ll have more examples in my forthcoming paper.

On one level, these are standard “all-or-nothing” tactics: Google has something others want, and Google only provides the desired service if it gets it way. But the impact is clear: Google’s multiple mutually-reinforcing tying arrangements extend Google’s position of dominance, forcing prospective business partners to bend to Google’s will, and enlarging Google’s control over ever more sectors.

Legal Implications

When Google presents its ancillary services in its search results, it engages in classic “tying” behavior, raising concern under US and European antitrust law. Certainly Google’s search service is dominant, and US and EU investigations have already held as much — triggering the heightened duties of those with a dominant position.

Yet Google offers its search results only with its own ancillary services. In particular, Google gives no mechanism for users to obtain Google Search with others’ ancillary services or with no ancillary services at all. This tactic has already led Google to dominance in blog search, book search, image search, maps, news, and product search, and it is amply clear how this tactic could soon lead Google to dominance in reviews, local search, and travel search (satisfying the “dangerous probability” test in Verizon v. Trinko note 4). Is Google likely to succeed in social? It seems network effects offer somewhat greater protection to Facebook and Twitter than they do to review sites or travel search sites. But when Google uses the same tying strategy to claim a leg up in myriad sectors, it’s no great stretch to view the strategy with equal skepticism wherever it arises.

In Remedies for Search Bias, I offered several suggestions to blunt the worst of these practices. Most relevant: Google should let users swap its own services for competitors’ offerings. Consider users’ ability to choose their preferred web browser, media player, email program, and myriad other applications — choices that facilitates continued competition and innovation in all these areas. Yet a user at Google.com has zero ability to eschew Google Maps for Mapquest, or to replace Google Places reviews with Yelp. The first time a user runs a search calling for a review, Google could ask the user for his preferred review provider, and an unobtrusive drop-down box would let the user make changes later. Similar prompts would appear, as needed, for other key sectors — limited, of course, to areas where Google seeks to promote an offering of its own. I was thrilled when, in a little-noticed remark last summer, Danny Sullivan endorsed this approach (“hey eric: how about letting people choose their shopping, local, etc. one box provider?”). It’s an elegant and straightforward solution, sidestepping the most complicated questions of “regulating search” but putting an important check on Google’s abuse of its dominant position in search.