The FTC is centering its Google antitrust investigation on Google's predatory search practices that anti-competitively abuse Google's dominant market power to thwart competition.
- As the dominant online information access gatekeeper, Google has unique market power over the one place online where every business needs to be able to compete in order to be found by potential customers.
- At core, Google's predatory search practices manipulate search results to anti-competitively advantage some Google content and disadvantage some competitors' content, all while misrepresenting to the public that Google's search business is unbiased and never manipulates search results.
Google's Predatory Search Practices
The FTC would not have launched this investigation if it did not believe Google has dominant market power in search advertising, and as such, has special legal obligations to not abuse its market dominance to impede competition -- market obligations that non-dominant firms do not have.
- Gaining or enjoying dominant market power or a monopoly is not illegal, but it is illegal to anti-competitively gain, maintain or extend dominant market or monopoly power.
Thus the focus of the FTC's antitrust investigation will most likely center around three complementary forms of Google predatory search practices that: anti-competitively undermine competition, that are provable, and that violate Google's longstanding public representations that: "We never manipulate rankings to put our partners higher in our search results..." (Important note: "deceptive practices" are illegal under the FTC's unique supplemental Section 5 antitrust authority.)
- Predatory Search Tying a top search result to Google content.
- Predatory Search Penalties to undermine Google competitors' search ranking.
- Predatory Search Exclusion to block key data sets from competitors' search results.
I. What is "Predatory Search Tying?"
- Predatory search tying is when the dominant search advertising business leverages its market power to "hardcode" algorithmic search results to guarantee Google content (like Google Maps or Google Places) the top search result ranking and the 34% of clicks/traffic that such a top ranking confers (See Chitka's Research).
- This practice is predatory and anti-competitive because Google has:
- Represented that it never manipulates search results; and
- Leveraged its unique market power to guarantee its own "partner" content automatically secures top search ranking, so that:
- Any new Google content can become dominant over time because of the anti-competitive hardcode tying advantage -- regardless of the competitive merit of the tied Google content; and
- No competitor has the opportunity to compete for the full Google audience and the most lucrative top result clicks because Google ties the top 34% of clicks/traffic to Google's benefit alone.
- Simply, no competitive provider of content can compete with a dominant search engine's content that gets an automatic top ranking regardless of merit, because the tying forecloses the opportunity for competitive content to compete for the most valuable search result ranking.
- In a word, predatory search tying means competitive online content can never win a market long term.
It is important to note that Google is well aware of the market value and power of top ranks in Google's search results. Mr. Amit Singhal, characterized Google search as "the biggest kingmaker on this earth."
II. What are "Predatory Search Penalties?"
- Predatory Search Penalties are the anti-competitive practices of a dominant search advertising business that ensure that a vertical search or other competitor to Google cannot compete with Google.
- Google can penalize competitors in many ways so that they cannot be found by users or compete. Google can:
- "Blacklist" or ban a site;
- Have a human "rater" subjectively lower the "quality score" of the site of a competitor so that it ranks low; or
- Raise the price of clicks for a competitor unilaterally and without warning.
- (This list is illustrative, not comprehensive.)
- There is substantial evidence of Google Predatory search penalties and practices in the following lawsuits against Google: Foundem, MyTriggers, TradeComet, Navx, IPlusV, to name the most public.
Google has great economic incentive to impede or eliminate vertical search competitors because vertical search represents the revenue growth frontier and real pricing power for Google.
- In normal search, Google search ad auction prices are limited by the economics/margin ceiling of the item being searched.
- That is not the case with vertical search as Google can get paid a much higher "advertising" price by more intimately and completely walking a potential customer through a complex search process to an ultimate sale.
- Simply businesses will pay much more for a delivered sale than a general referral they must sell and land themselves.
Google is also aware of its unilateral power to penalize others' rankings. Google Senior Vice President Jonathan Rosenberg said: "We won't (and shouldn't) try and stop the faceless scribes of drivel, but we can move them to the back of the arena."
III. What is Predatory Search Exclusion?
Google has long been aware of the exclusionary power of owning the easiest access to content that users most want to search. This has been a key anti-competitive practice Google has used to augment and abuse its market power.
- Google excludes search competitors' searchbots from crawling some of the largest searchable data sets in the world; YouTube and Google Books being two of the most prominent.
- Denying search competitors access to providing potential search results which many users demand, anti-competitively reinforces Google's dominance and also facilitates the other predatory search practices of search tying and search penalties.
Google has violated Section 5 of the FTC Act in representing that Google never manipulates search results for its gain, when Google systematically manipulates search results via multiple predatory search practices.
In sum, no one can compete with Google Inc. if it anti-competitively engages in predatory search practices.
- Predatory Search Tying: No content competitor can compete to win if Google ties its dominance in the search business to the #1 position in its dominant search results.
- Predatory Search Penalties: No vertical search competitor can compete with Google if Google can anti-competitively and predatorily penalize vertical search competitors so that they effectively cannot be found in Google search results.
- Predatory Search Exclusion: No search competitor can compete against anti-competitive and predatory exclusion from accessing some critically relevant search results that many users demand.
The FTC is not investigating Google for being a monopoly, it is investigating Google for the deceptive, anti-competitive, and predatory search practices of tying, penalties, and exclusion.