Google stands accused of anti-competitive behaviour, but it's not quite that simple, writes Alistair Fairweather.
It’s become a rite of passage for the world’s biggest technology companies. As soon as you’ve fought your way to the top and become the darling of both stock markets and customers, regulators begin to cry “monopoly”. It happened to IBM in the 1960s, Microsoft in the 1990s and now it’s happening to Google.
In June 2011 the US Federal Trade Commission notified Google that it was being investigated for anti-competitive behaviour in the search advertising market. By December 2011 European regulators were preparing a similar enquiry into the way Google pushes its own services (such as maps and shopping services) at the top of search results.
Neither of these cases is particularly strong. Unlike Microsoft, Google does not lock its primary customers (people who search the web) into its network. Changing between search engines is quick, easy, largely painless and completely free. Changing operating systems from Microsoft’s ubiquitous Windows to anything else is none of those things.
And in Microsoft’s case the iniquity was obvious: by bundling its own web browser (Internet Explorer) with Windows, it sought to use its market power to distort and control an entirely new market—the internet.
This is less clear in Google’s case. The low cost of switching is a compelling argument against most accusations levelled at the giant. You can’t penalise a company for simply being better than its competitors. Google’s is a natural monopoly born out of excellence, not manipulation. And it can argue that it is an online service provider, not just a search engine. It is not distorting or manipulating new markets—it is simply operating within its own territory.
But Google is doing itself no favours with announcements like the one it made on Tuesday. It introduced three new features into its flagship search engine, all of which integrate Google+ (its own social network) into search results.
To Google this makes complete sense. What better way to make its search results more socially relevant? And why not give a nice boost to its burgeoning social network? Everyone wins.
Its competitors naturally take a different view. The management of Twitter, clearly furious, have warned that the move will hurt “people, publishers, news organisations and Twitter users”—all of whom benefit from seeing tweets prominently displayed in search results.
Cornered by a reporter at the Consumer Electronics Show, Google’s executive chair, Eric Schmidt, denied that Google was favouring Google+.
He claimed that Google was willing to work with both Facebook and Twitter to integrate their data into the new search features.
Schmidt also quipped: “I do hope when you speak to Facebook, you ask them analogous questions about opening up their index and all that content that’s behind there.”
Although he was only half serious, he does have a fair point. Facebook is fast approaching a billion users, and has a much more compelling lock-in effect than Google. If all your friends are on Facebook, will you really leave for another network? It may be that the only difference between Google and Facebook is five to ten years.
But Schmidt is also being disingenuous. Social media is an entirely different market to search, and one in which Google has conspicuously failed until now. It can’t hide behind the “online service provider” label any longer. Putting Google+ at the top of its results is clearly aimed at diverting users to its own offering. Since users are the oxygen on which social media services rely, its competitors have a right to be angry.
What makes this different from other services like maps, shopping and financial data? The stakes. Those services are all ancillary offerings, designed to make Google’s search results more useful. None of them are cash cows—Google probably loses money on most or all of them. Compare that to the social media market—already worth tens of billions of dollars a year. Google wants a piece of that pie, and it’s prepared to flex its muscles to get it.
But while Google’s behaviour may be unfriendly (dare I say evil?) it’s probably not strictly illegal. Unlike Microsoft, which squashed its only competitor in the web browser market and grabbed 95% of the users, Google has barely dented Twitter or Facebook and is unlikely to derail either of them.
It’s easy to hate the big guys, and label them bullies and cheats. Regulators, like attack dogs, thrive on this stuff—it’s their whole reason for existing. But Facebook and Twitter better not shout too loudly. By 2020 those same dogs may just be turned on them.