The evidence mounts that Google is increasingly throwing its monopoly weight around anti-competitively without much apparent fear of antitrust enforcement. This Google antitrust update will spotlight:
- New evidence of Google's unfettered "kingmaking" power (lack of search neutrality) to anti-competitively self-deal with highest search rankings and sabotage competitors' rankings;
- Google's latest anti-competitive pattern of behavior, i.e. Google's wholesale-retail vertical squeeze play; and
- Why the antitrust risk Google faces comes from the EU and the DOJ, not from the FTC.
I. Latest Evidence of Google's Anti-competitive Search Discrimination:
Google's behavior continues to raise serious antitrust concerns about whether Google's dominant search business is treating competitors neutrally as it claims, or whether it is anti-competitively picking itself and its partners as content winners and its competitors as content losers.
- Google's website assures users: "We never manipulate rankings to put our partners higher in our search results and no one can buy better PageRank."
- Mounting evidence indicates this representation is patently false and a deceptive trade practice.
A. Search Discrimination:
"The fortunes of whole companies and countless careers live and die by their rankings in search results" stated Matt Warman, Consumer Technology Editor for the Telegraph, in his recent article featuring Google's top search rank managers, whose candid comments raised new antitrust questions about Google's search neutrality.
- Google's ranking team head Amit Singhal hailed Google as "the biggest kingmaker on this earth."
- This was a telling word choice of how Google's search ranking leaders view Google's power.
- The dictionary definition of "kingmaker" is: "a person who has great power and influence in the choice of a ruler, candidate for public office, business leader or the like."
- Mr. Singhal makes it clear that Google well understands that Google not only has kingmaking power, but also is the "biggest kingmaker on this earth."
- Google search kingmakers also tell us in the article that they change Google's secret search algorithm about 600 times a year or about one and a half times every day.
- Despite the daily changes, Mr. Singhal assures us of Google's ongoing search neutrality in stating: "All rankings are decided algorithmically, and the focus is on user benefit, not advertiser or commercial benefit."
- However, just last year Google's SVP Jonathan Rosenberg indicated the opposite on Google's official blog: "We won't (and shouldn't) try to stop the faceless scribes of drivel, but we can move them to the back row of the arena."
- It is nice that Mr. Singhal claims that the 600 Google employee changes his human team programs into the Google "algorithm" always benefit the user and not advertisers or Google, but the evidence mounts that Google indeed discriminates for its own content and against competitors' content.
- See: Foundem's filing; InsideGoogle.org's analysis; TradeComet's lawsuit against Google; MyTriggers' lawsuit; and just reported today a Navx complaint to the French antitrust authorities, the fourth EU antitrust complaint against Google following Foundem, ejustice.fr and Ciao.
B. Blatant Ranking Manipulation and Misrepresentation
Google-DoubleClick recently unwittingly presented damning evidence against itself that Google is blatantly breaking its website pledge "We never manipulate rankings..."
- Check out Google-DoubleClick's ranking of "The 1000 most-visited sites on the web."
- Note there is no asterisk or disclaimer on the ranking on this web-page, only a link "learn more about this list."
- Note that conveniently all of Google's competitors are at the top of the ranking, but Google or none of its many most-popular-in-the-world sites like Google: Search, YouTube, Maps, Earth, News, Finance, Picassa, Adsense, Adwords, Docs, Analytics, are on this Google ranking of "The 1000 most-visited sites on the web" -- even though they would be included in any honest and neutral site ranking.
- Note that the media is tricked to report on this deceptive ranking as if it is neutral. For example, see PC Magazine's article: "Facebook Obliterates Rivals in Google list of Top Sites."
The obvious reason for Google manipulating this ranking is to hide the overwhelming evidence that Google's search engine discrimination has propelled many Google-owned "partner" sites to high Google rankings in order to make them among the most-visited sites on the web.
- The "kingmaking" power of Google ranking its own sites first in search results was recently documented by new research by the online ad network Chitka, as reported by Search Engine Land.
- Chitka's research showed that the #1 result position in a Google search, yields 34% of all traffic, twice the #2 result position.
- For the first time, we have research that confirms the value/incentive of Google's non-neutral self-dealing itself the #1 result position in Google searches.
Can you imagine what the media would have reported if they were presented a neutral and honest ranking of "The 1000 most-visited sites on the web?"
- It probably would have been, Google cumulatively is the most visited site in the world, or xx of the top xx visited sites in the world are Google's, which shows Google is rapidly extending its search monopoly over a wide variety of search content.
- (See chart and Googleopoly IV: The Googleopsony Case: How Google extends its search monopoly to monopsony over digital information")
If Google was indeed a neutral and not an anti-competitive search engine, why wouldn't Google be open and transparent, and fairly represent the actual rankings of "the 1000 most-visited sites on the web and not Google's manipulative and deceptive selective ranking?
- What is Google hiding?
- Why the elaborate and sophisticated cover-up of these relevant and telling data that only Google can track comprehensively?
- Does Google believe that an honest/neutral ranking would undermine trust in Google?
C. New Big Blatant Conflict of Interest
Google has confirmed it "will indeed open its own SEO specialization firm sometime in mid 2010" per MyBestRatedWebHosting.com.
- Per the article: "Google came close to creating a controversy and SEO competition frenzy back in 2008 when it acquired DoubleClick. Part of DoubleClick’s internet ad and search services included an SEO optimization firm, Performics. However, to avoid controversy, Google did divest itself of Performics almost immediately by selling it, saying, “It’s clear to us that we do not want to be in the search engine marketing business. Maintaining objectivity in both search and advertising is paramount to Google’s mission and core to the trust we ask from our users.”"
It will be interesting to see how Google squares this circle.
- How does creating a "Two-Tiered GoogleNet" where some can pay an extra $300,000.00 a year to get higher search rankings via Google's inside information into the search algorithm, square with Google's pledge that "no one can buy higher PageRank?"
- Isn't this a blatant exercise of monopoly power, a public "bait and switch," deceptive business practice, where those harmed have no real competitive alternative?
II. Google's Anti-Competitive Wholesale-Retail Vertical Squeeze Play
A. ITA Software acquisition?
The latest Google acquisition development is that Google is reportedly in talks to aquire ITA software, the company that provides the back-end technology and software that powers much of the Internet's airline/travel reservation systems.
- The apparent Google monopolization "play" here is that Google's dominant wholesale scale would combine ITA's best in class online travel reservation software with Google's lowest price cloud computing and unique access to most all Internet users via Google's monopoly search service.
- Thus an ITA acquisition would enable Google to launch an unbeatable Google Travel vertical to take on Expedia, Orbitz, et al, because Google's search engine could then self-deal and discriminate in favor of Google Travel with higher search rankings -- the same anti-competitive self-dealing playbook Google used to dominate Google Earth, Google Maps, YouTube, etc.
B. Google NewsPass
Another recent Google antitrust development was reported by PaidContent.org: "A Google-paid content system for publishers may be available by year end."
- The Google vertical monopolization play here is to leverage Google's dominant wholesale cloud computing scale to deliver an unmatchably low micropayment processing cost -- with its already successful retail disintermediation of 25,000 news sources via Google News and its ability to discriminate in favor of Google-aligned news over non-Google aligned news providers -- in order to vertically squeeze the news business with monopoly low cost of wholesale production and monopoly retail distribution.
For those good at pattern recognition, Google figured this monopolization wholesale-retail vetical squeeze play long ago in providing out-sourced search to AOL and others. Google is a significant part of why AOL is a shadow of its former self and unable to grow fast enough in online advertising.
- While the DOJ was smart and tough enough to stop this monopolization wholesale-retail vertical squeeze play in blocking the proposed Google-Yahoo ad agreement, Google is smiling all the way to the monopoly bank that antitrust authorities have not yet figured out how Google has, and is routinely pulling this same monopolization wholesale-retail vertical squeeze play to extend its search advertising monopoly into an increasing swath of content industries.
- By leveraging its wholesale monopoly cost structure with its retail monopoly gatekeeper access power -- to self-deal and direct users to use Google owned/aligned content -- is how Google has vertically squeezed out the competition and enthroned their own content as king of an increasing number of content verticals: Maps, YouTube, Finance, News, Books, etc. (Many more appear on the horizon: travel, real estate, mortgages, health, etc.)
III. Why the antitrust risk Google faces is from the EU and/or the DOJ, not the FTC.
The question is when will either the DOJ or the EU launch an antitrust investigation into Google's ongoing and accelerating monopolization behavior, or file an antitrust lawsuit against Google, given the mounting evidence above and the growing number of pending private antitrust suits and complaints.
The DOJ has already proved smart and tough enough to understand this monopolization wholesale-retail vertical squeeze play. The open question is if the light bulb has gone off in their heads that Google has mastered this anti-competitive strategy and is rapidly repeating it with the proverbial simplicity of "lather, rinse, repeat."
- The DOJ's record in spotting Google's monopolization behavior is 2-0; having spotted and stopped it in Google-Yahoo and twice opposing the Google Book Settlement as anticompetitive in court.
On the other hand, the FTC is 0-2, in spotting Google's monopolization behavior even when they took several months each to investigate, but still approve the Google-DoubleClick and Google-Admob acquistions. History has already shown that the FTC's approval of DoubleClick tipped Google to monopoly that DOJ had to clean up after the FTC. Moreover, the FTC proved unwilling and/or unable to enforce antitrust law in the Google-AdMob review.
IV Conclusion:
In short, the evidence of Google's monopolization behavior mounts. And Google's favored anti-competitive strategy, its wholesale-retail vertical squeeze play, to sabotage and eliminate competition, is in full bloom and full view to antitrust authorities who have the will to enforce antitrust law and preserve competitive marketplaces.
- The unprecedented speed with which Google is extending its monopoly power into multiple content verticals is breathtaking, time is of the essence.
- Google clearly interprets antitrust inaction as tacit "permission" to continue its inexorable monopolization of all kinds of digital information and distribution.
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